Boardwalk Pipeline Partners LP Earnings Call Insights: Update on Major Projects and Annual Decline

Boardwalk Pipeline Partners LP (NYSE:BWP) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Update on Major Projects

Mark Reichman – Simmons: Just wanted to find out if can just provide an update on the major projects that you’ve outlined in recent investor presentations. Have there been any changes to the amount of capital investment estimated or any changes to the in-service dates, like, for example, on the gas-fired electric power generation projects, I think the capital investment was estimated to be $50 million. Does this new contract increase that amount at all? And then the second question is, and I may have missed it, what do you forecast maintenance CapEx to be in 2013?

Stanley C. Horton – President and CEO: I’ll take the first part and let Jamie take the second part. The $50 million that was quoted in previous presentations related to the one power project in Texas and a second power project in Louisiana, and those capital expenses have not changed. The power load that we just picked up with Kentucky Utilities at Cane Run, there’s almost no capital that has to be spent on that project, just the installation of a meter station. The other capital forecast that we’ve given you for Southeast Expansion and the cavern at Petal 12A, none of those capital costs have changed appreciably at all.

Mark Reichman – Simmons: And then also the in-service dates are still intact?

Stanley C. Horton – President and CEO: Yes.

Jamie L. Buskill – CFO, SVP and Treasurer: Yes. Now, one thing, Mark, you may be a little confused by is we say we would spend $200 million capital in 2012 and we came in right below $150 million, and where we thought we were going to spend $200 million in ’13, we’re going to spend $250 million. That’s just the carryover the $50 million and it’s just fact that the costs are going to come in, in the first part of the year rather than end of 2012.

Mark Reichman – Simmons: And then maintenance CapEx for ’13?

Jamie L. Buskill – CFO, SVP and Treasurer: Maintenance CapEx at this point; it’s probably going to be similar to our 2011 rate which we had about $95 million in 2011 and that’s roughly what we anticipate with 2013.

Mark Reichman – Simmons: Even with the acquisition of Louisiana Midstream?

Jamie L. Buskill – CFO, SVP and Treasurer: Yes.

Annual Decline

John Edwards – Credit Suisse: Just, Stan, I think you had mentioned about $40 million annual decline from capacity remarketing, contract rollups, et cetera. Is that something you think will continue for several years beyond this year or is that just a 2013 number we should be thinking about.

Stanley C. Horton – President and CEO: That’s just a 2013 number that you ought to be thinking about. If you go back and look at 2012, we pretty much offset with new contracts, some of the contract term backs. So, each year is a little different. It’s tough to forecast out. But the numbers that I quoted you were for 2013.

John Edwards – Credit Suisse: Then how much capacity is rolling off this year and then if you could give us an idea of how much is rolling off in 2014?

Jamie L. Buskill – CFO, SVP and Treasurer: For this year, the dollar amount that Stan mentioned was $125 million. When you get beyond that – if you look at ’14, it’s really hard to say what that number ultimately will be because as you deal with some of the contracts in the current year, they may just roll a year which adds to it. But looking ahead, ’14 looks to be more of a comparable year which we’ve all along is roughly $100 million a year in transportation contracts.

John Edwards – Credit Suisse: Then on the growth CapEx, I think you said you’re coming in about $250 million for 2013 and then can you give us any kind of granularity on how that’s being allocated?

Jamie L. Buskill – CFO, SVP and Treasurer: Not by project. I mean, the big projects are the ramp-up, the Eagle Ford expansion that we have going on and then the brine expansion that Stan mentioned. Those are really the two primary drivers. We’ll start incurring some costs with our Southeast Market Expansion, but the bulk of those costs will be in 2014.

John Edwards – Credit Suisse: Can you just remind us about what’s the project cost in that Southeast Market Expansion?

Jamie L. Buskill – CFO, SVP and Treasurer: It’s approximately $300 million.

A Closer Look: Boardwalk Pipeline Partners Earnings Cheat Sheet>>