Boardwalk Pipeline Partners Earnings Call Insights: Total Debt, Expanded Growth Opportunities

On Monday, Boardwalk Pipeline Partners LP (NYSE:BWP) reported its third quarter earnings and discussed the following topics in its earnings conference call. Take a look.

Total Debt

Harry Mateer – Barclays Capital: Jamie, first question. Can you just give us the number on total debt at the end of 3Q? Then second question, can you just talk a little bit about how tariffs on roll over transportation contracts might have trended during the quarter and is that trend similar to last few quarters, accelerating or decelerating?

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Jamie L. Buskill – CFO, SVP and Treasurer: As far as total debt, total debt at the end of the quarter was $3.164 billion and the equity was $3.625 billion. As relating to contract renewals, the second part of that question, for 2012, as we stated before, the contract renewals are basically flat to what they came to us at in prior periods, but you may recall during the last earnings call, Stan talked about the current market dynamics and the impact they may have on our firm transportation revenues beyond 2012, and as we start to look at 2013, the amount of contracting capacity coming up for renewal is higher than in recent years as we start to experience contract renewals related to some of our earlier expansion projects in our Gulf South system and since the inception of those contracts the base of spreads have compressed significantly. So, although, we can’t really predict the ultimate outcome for contract renewals in 2013 at this time, we do expect that the revenues earned from these contracts in 2013, will be less than what was being earned previously. Now, as we’ve outlined in our strategy, what we’ve been trying to do is grow the in-use market on both our Gulf South and Texas Gas pipelines, which will utilize some of that capacity as those contracts come on, and those contracts include the initiatives underway regarding Texas and Louisiana gas-fired generation projects, the Southeast market expansion project that Stan mentioned earlier.

Expanded Growth Opportunities

Paul Jacob – Raymond James: Just looking at the PL Midstream acquisition and the expanded growth opportunities there that you kind of highlighted during your comments, how do you think about CapEx in 2013, given that expanded portfolio of growth and then heading into 2014?

Jamie L. Buskill – CFO, SVP and Treasurer: Well, we really haven’t given guidance yet on 2013, that’s something we’ll probably do on our fourth quarter earnings call. It does give us opportunity to grow that asset, as Stan mentioned we’ve got a few projects underway today and we think there will be others that come in the future as well.

Paul Jacob – Raymond James: Then I guess would it be fair to say that it’s going to be similar to what it was in 2012 or nothing?

Jamie L. Buskill – CFO, SVP and Treasurer: I’d really rather not comment. We just got that drop down. We’re integrating the asset. We’ll provide more color to the future growth on that probably again in the fourth quarter earnings call.

Paul Jacob – Raymond James: Then just to make sure that I understand this. So the maintenance CapEx that you’re targeting for 2012 is in line with the 91 million that you’d set prior?

Jamie L. Buskill – CFO, SVP and Treasurer: Yes, that’s correct. We still think that’s a good estimate for the year and I think we’re about 51 million at the end of the nine months.

Paul Jacob – Raymond James: Then on the Southeast market expansion. Are there further opportunities to extend your footprint for gas-fired power or is this kind of the majority of what you guys are looking at right now?

Stanley C. Horton – President and CEO: No. We have other opportunities. In fact, this project can easily be expanded up to about 750 million cubic feet a day with just some addition of some compression facilities on it. But right now the firm market commitments we have are the 450 million a day, but it does have the ability to be upsized to the extent that the market asks for that additional service.