Guidance Range Details
Paul Fremont – Jefferies: So when I add the individual segments, I get $1.72 to $1.86. Is there something that’s preventing you from getting to, sort of, the some of the segments that’s keeping the top end of your guidance range at $1.80?
Sean Trauschke – CFO, OGE Energy Corp.; and President and CFO, OG&E: Paul, this is Sean. Really, what we’ve done here is we recognize we’ve increased our guidance for the midstream businesses. What we were trying to communicate was the third quarter is such a large quarter for the utility, and it’s based on normal weather. We’re going to leave that where it is; and when we come out of the third quarter, we’ll adjust the utility guidance at that time if necessary. So it’s really – really what this action is based on is the impact of the Midstream partnership.
Paul Fremont – Jefferies: I guess my follow-up question would be, if the court denies your request for a rehearing, what should we assume is going to be your strategy with respect to compliance? I mean, would you plan on then appealing up to the Supreme Court level, or would you at that point basically present some formal plan to the state?
Peter B. Delaney – Chairman, President and CEO, OGE Energy Corp. and OG&E Electric Services; and CEO, Enogex LLC: Paul, it’s Pete. As I mentioned in my comments, we will appeal and what’s required is we need to get all of the 10 judges’ majority vote to hear our appeal. And, of course, that’s probably – we’re fighting uphill on that one. And if we’re to lose that if you appeal to the Supreme Court the timeline, the stay would be lifted probably in most – it could be continued, but that would be a real stretch, we believe. So, in fact, if you were successful, the time would be pretty far down the road in our implementation. So, we are now planning and doing everything we need to do to be able to implement a compliance plan within the 55 months, which may – that clock may start ticking here this fall. So, we’re moving ahead with our planning and design and everything we need to do to – and, of course, scrubbing is a preferred path that we’re looking at this point in time…
Paul Fremont – Jefferies: Can you at all discuss sort of the options of going with gas versus scrubbing the existing coal?
Peter B. Delaney – Chairman, President and CEO, OGE Energy Corp. and OG&E Electric Services; and CEO, Enogex LLC: Sure. I mean, it’s the economic analysis that we’re looking over the long-term in terms of impact on customers, and I mentioned field diversity, which is believed over the long-term, continues to be a real issue, that given not only the economic and pricing changes associated with natural gas versus coal, there is a lot of operational issues as well that in terms of fuel supply the disruptions and the one set of conditions that you don’t get in the other. We do operate here in Oklahoma in an environment of extreme weather conditions. And so, we really believe in having diversity. So, we’re going to look to maintain that. Of course, we’re going to do what we can to mitigate the impact on our customers because it is significant.
Brian Russo – Ladenburg Thalmann: Just a follow-up on the previous question on the guidance. If we assume normal weather at the utility in the third quarter, does that put you above the high end of the range of $1.80?
Sean Trauschke – CFO, OGE Energy Corp.; and President and CFO, OG&E: Yeah, I think the way we’ve been thinking about, Brian, if you just assume the utility at the midpoint of the guidance range, assuming normal weather, that’s a $1.42, right. You take the midpoint of the Enable guidance range of essentially $0.40 and you assume a couple of pennies loss there at the holding company, you are right there at that $1.80 range, right?
Brian Russo – Ladenburg Thalmann: Okay, got you.
Sean Trauschke – CFO, OGE Energy Corp.; and President and CFO, OG&E: So that’s why we’re pointing you there. And so, obviously, if things go well and the weather improves this summer, that would be positive; if the weather doesn’t materialize or other things occur, it wouldn’t be as positive. But that’s how we got to that $1.80. Does that help?
Brian Russo – Ladenburg Thalmann: Yes, it does. Thank you. My next question just on the EPA compliance timeline; assuming the court rejects the rehearing or votes against your stay in the rehearing and you have 55 months to comply, in terms of the timeline, it seems like that would be sometime in early 2018. Is that accurate?
Peter B. Delaney – Chairman, President and CEO, OGE Energy Corp. and OG&E Electric Services; and CEO, Enogex LLC: Yeah, that’s like springtime around, yeah. That’s more or less accurate, Brian.
Brian Russo – Ladenburg Thalmann: When would you think, if you did have to install scrubbers, when do you think that spend would start to pick up?
Peter B. Delaney – Chairman, President and CEO, OGE Energy Corp. and OG&E Electric Services; and CEO, Enogex LLC: Well, we’re doing a lot – I don’t (think) we’re ready to disclose that at this point in time. But, I don’t know – I’m looking at Sean to see if he knows how long it takes to put a scrubber in, but you’ve got a lot of engineering and design work upfront. So which is what we’re really – we’ve been studying that and we’re going to accelerate that, and to break ground, it’s going to be still quite away. We are looking at what we can do. Of course, the best thing is to again defer that out as far as you can from a capital expenditure requirement, and have them all go on that. If it’s April 1 of 2018 – I’m not saying that’s the exact date that you want them all to start that day and convert them over in terms of having to control systems or whatever; but we’ve got outages and things to – our scheduled outages and things to look at. So they’re doing a lot of analysis to see what’s the best way and how we can back end the compliance.
Brian Russo – Ladenburg Thalmann: Lastly, just financing scenarios for this magnitude of CapEx. Can we assume that the cash flows from the Midstream joint venture combined with operating cash flow and debt can finance the majority of the spend, thereby mitigating any kind of meaningful external equity needs?
Sean Trauschke – CFO, OGE Energy Corp.; and President and CFO, OG&E: Brian, this is Sean. I think that’s a fair statement that certainly the cash flow from Midstream will mitigate any equity needs. I think one variable in there is Pete mentioned we have 55 months to comply. And so, as we shape our construction schedule, it’s really going to be dependent to a large degree on the intensity and the timing of the investments over that 55-month horizon. So, to say it another way, if it’s pretty flat each of the four and a half years, that’s a little easier thing for us to handle than if at all was front-end-loaded or something. But I think your thesis is right. As we’ve said many times, Enogex previously was a use of capital for us. Now, Enable is going to be a source of capital for us and so our cash and it certainly will mitigate future equity.
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