Boardwalk Pipeline Partners (BWP) 30 Oct 172017 Q3 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Third Quarter 2017 Boardwalk Pipeline Partners Earnings Conference Call. [Operator Instructions].

As a reminder, this conference call may be recorded. I would now like to introduce your host for today's conference, Ms. Molly Whitaker, Director of Investor Relations and Corporate Communications. ahead. go Please

our Good quarter Crystal. I'm and to Stan welcome to Jamie and Thank our Buskill, earnings morning, call third CFO. Horton, Mr. by XXXX joined Partners. and for the CEO; be Mr. you, today everyone, President Boardwalk pleased Pipeline

associated our would www.bwpmlp.com. website like release of please call, the copy you this download at If earnings a with it from

for such may to to certain risks and company those call. we also release remind today, our flow. call this obligation the during forth you to EBITDA the forward-looking would statements during based and including prepared the by a measures. any our non-GAAP remarks remind this may statement Actual wide-ranging Following like facts historical set over to as We earnings your questions. on due financial most GAAP results and that that regard made differ expectations. statements company those projected such Statements reconciliation discuss to we like SEC financial will earnings refer materially our turn this management's statement call matters beliefs The measures, using this forward-looking for any call to adjusted comparable With disclaims would forward-looking will of are to are information related include in expressly you that in These cash conference this of or that and use call distributable not measures, in in morning, available any the are revise nature. are documents. I are update achieved forward-looking that to from please assumptions statements. currently uncertainties,

over turn Now the Horton. to I would like Stan to call

the and Molly, issued release we review morning. press the Thank hope to everyone. had good this I opportunity you've you, morning,

cover the of and per will third a In year been to will reporting XXXX results. commercial then provide $X.XX update, a distribution financial unit we quarterly I has a or Jamie earnings, good $X.XX Boardwalk. addition announced annualized. for quarter

continued We year's trend which results our of proceeding growth a financial step year. our favorable of quarter long-term with last positive Construction compared is risk. a our executed addressing Third toward is the well. projects recontracting agreement with customers, one recently

transportation commitments this filing on our October in Lateral we on an taken an and well Laterals Energy steps can April of new of Fayetteville from provides impact agreement Boardwalk restructuring. as overview existing through contract and release issued continuing The and dynamics annual early as the that for to interim Greenville from our press market firm competitive illustrates reduced XXXX. had near-term to have and the Texas transportation Lateral, has term, signed we We executed contracts original contract contracts and see Laterals pressures capacities approval, commodity to lower the form changed, contracted agreement enhance marketplace. offer, Fayetteville XXXX on XXXX in for have contract drilling Greenville in the We the that capacity press interstate on signed a agreed FERC's provide and Since opportunities Fayetteville on firm of transportation the services agreements reduce we Gas for Fayetteville contracts some Shale. transportation signed, remaining our that pipeline Fayetteville new issued Texas was October, Southwestern Lateral our the with in capacity the Subject on through restructured to the are system. release Southwestern that the XXXX announcing FERC have an the we prices and revenue Greenville and on Southwestern's

anticipate by flowing provides of both adding Gas or action and commodity this of near Fayetteville FERC market Lateral. We Fayetteville revenue The volume will the deal I Texas commitments is would commitment the of Fayetteville the laterals. and Shale supply from or it for production also offers note gas could dynamics very revenue gas upside additional And the that term, that combination the on connected plays our a this generation near be provides access longer-term it in originating longer-term originating the through area. end-use fees Although to the usage on offers that take the future. are market a supplies. And dynamics firm specific the Moorefield to customers Moorefield Southwestern's differ. in area each in impacting transaction deal years revenue Fayetteville XX in reduction overall transportation and to

earnings we our Bend our $X.X LNG cubic projects. Coastal service X.X is Midstream $XX Project The backlog, billion billion. the additional growth our million an added offtakers to transportation at Now Since of largest provide now projects Louisiana will of total call, which of for on have that update is feet firm last Freeport Header an export a project to day facility. the approximately Boardwalk

parts this pipeline shippers to new firm a XX-mile on capacity both system enhancements header of an of pipeline existing as South X and header As Exchange Gulf our from contracted transportation cubic X.X Perryville billion with day our a a are new the project, projects. reminder, have through there interconnection feet

and Regarding enhancements nearly schedule proceeding South's year-end. system header XXXX. of by to this the is commissioning Gulf station the placed to as meter and February of the planned, be complete in existing Construction pipeline XX-mile to underway. X of service expected is construction the into be compressor is is continues portion is complete. project The stations and Construction pipeline X on header, of on

customers for for XXXX that Now the of X for Train for no contractual May and contracted Train later date X. contracted customers start is XXXX Freeport's than February have our

power South provide will with customers firm compression proceeding services X new in and Gulf also to plant transportation the Louisiana of are that addition through projects We laterals.

day provide approvals. projects service service these XXXX, of of in XXX,XXX a is firm placed first The be to pending transportation and MMBtu will expected approximately into customary

customary subject has and date targeted approvals. firm XXXX, project service, The MMBtu a in-service other second will a transportation of approximately XXX,XXX and FERC provide of day to

brine of projects transportation customers ethylene the Evangeline. for with through expansion our contracts. Collectively, and projects, cracker including on and infrastructure and Louisiana projects Charles, of related The in-service Boardwalk fee supply in ethane storage a growth south Midstream's service from construction an to project XXXX. provide We and are the year the on by other fixed service, Louisiana, long-term projects the billion of growth our remainder of dates time are for this to petrochemical firm to serve project budget wells Louisiana gas run backed these development new are Sasol proceeding treating and Lake progressing the of and area, $X.X

Permian open we or Katy, on the for day a PXK delivery Channel Sempra Houston Katy season up September natural the Permian project demand basin a nonbinding for that gas with billion open Ship of centers. The season open transport XX. and the joint quarter, X During cubic production the closed third to to feet to the pipeline, center from announced venture -- a would

own during only of with We thank losses during over to Boardwalk continue our to employees have though months. focus This incurred disruptions want part this due dedication our for our conversations experienced the I take focus with with and minute for potential several to hurricanes project. past as their damage. the their no employees' even storms. to personal minimal in a hurricanes property X were few the and dealt employees was dealing customers we

we progress the with pleased made during I'm the quarter. Now

in construction major we to and XXXX take significant risk, the progress Southwestern the contract a we With our our growth expiration restructuring, step projects. addressing made XXXX on of

financial I'll turn for Jamie the Now the update. to call over

and Stan, morning, everyone. good you, Thank

X%. approximately of barrels net We This gas of due recorded liquids increase XXXX. approximately natural we quarter, expenses, completed $XXX million by projects, lending fuel in TBtu revenues, XX of our $X partially parking decrease was and the increase offset at primarily an million, the XXX storage in a For million and quarter and $X million to our third or recently transportation growth and of of revenues. transported

fuel comparable employee-related X% Net lower was was of and transportation from $XXX and $XXX X%. $XXX an third or reflect the quarter in due quarter, million generated quarter the decrease increase million capital $XX $XX XXXX. Excluding maintenance for to the XX% in $XX third for the million million compared the income in or $XX increase $XXX capital. operating quarter, flow the million of of We and expenses. comprised Net invested last third revenue cash quarter, EBITDA The We or million million, cost. $XX the generated and million million decrease reported $XX of quarter million for $XX the period distributable from distributable million, expenses million increase decrease EBITDA of capital $XXX an depreciation, XXXX. primarily $XXX the cash of growth the in of flow income, was and million in to operating year. we reported operating was expenses of which a in for

under capital X extended For banks their of capital XXXX, the date ended announced months growth the cash and one then, million approximately expenditures to revolving that of ratio did banks agreement of of our We total billion revolving When billion and full maturity of $XX a EBITDA, didn't facility. we're million of City forecasting from to In sale extended facility capacity not related debt-to-EBITDA Flag participate by May the And Last capacity of their $XXX commitment debt our another quarter the the of we million million, extension May of position our that of with the year million but or in with maintenance on quarter party. the ended assets borrowing XXXX, participate new $XXX our third XXXX. excluding our $X.X until $X.X party certain over cash, quarter, since plant we in credit XX the subordinated quarter, and $XXX the and with trailing netting sold we extension. X.Xx. credit debt capital. loss $XXX that the the the

$X.XXX the contract result, credit under million revenues we transportation transportation extended this contract. the million, to reduced transportation that to restructuring moment reservation that May billion contracts The Texas our At want billion billion. X the sale facility at a processing $XX or firm of time. had with the XXXX, transactions Collectively, have assets impacts billion revenues negatively earlier South of our were a been XXXX and billion recent the these I $X.XXX to XXXX. impacts negatively million. Southwestern by take explain on by impact firm $X.XXX events the has reservation $X XXXX $X.X beginning of $X.XXX under by $X year disclosed to As of of

$X.XX However, since XXXX $X.XXX the of billion or the executed contracts, transportation reservation beginning increasing of XXXX, million to adding $XX firm several an additional we billion. revenues have to

restructuring started of $XXX South impacts X $XXX The sale asset or million. $XX million year contract. we For under impacts revenues million. the XXXX transportation our reduced transportation by of these the negatively with the with million, $XX of by $X firm Collectively, by processing the XXXX, XXXX million to $XXX contracts and million negatively Southwestern Texas events

However, in the $XXX $XX firm revenues contracts entered transportation add into million XXXX million. to an we million to $XXX new of have XXXX, the increasing reservation additional

That million XXXX well over XX-year that due the the demand shippers remarks, lower to on charges morning for refer the Gulf will the of operator plan $XXX year-end I not some turn part XXXX. and call our these information. table. the Now approximately to expansion as in questions. my XX-Q in the add to filed for to We XXXX numbers to XXXX the as electing with when is contract South earlier expire Please this we of to further now compared at update renew concludes capacity our

And [Operator from Gershuni Shneur UBS. first from our question comes Instructions].

believe beyond these the to until sell understood the intentions tell end there's a had Maybe $XX your the XXXX? at capacity. had to call, details you in capacity to last up you us you are remarks you XXXX. able interesting start if I shipper said gave that And be some you correctly I you of with there. extend from of prepared people recontracting notice million XXXX? start beyond said does offset recontacting off, really some just free Jamie, can't their Does Because what

those talk number. to we into that contracts, revenues average $XX talk are to it the to I 'XX multiyear of a let open $XX million, the million I'll numbers. by impacts but the in 'XX capacity. I'll of Stan But don't weighted several but that contract have entered

evergreen you contracts, our So customer us provision, extent rates, to they firm transportation far as an with and extend it's the difficulty when a recontract have that are they today mean, can a the that agreement at call that. that capacity has that a has current correct on to where I

to not do provisions. at only rates, at that anyone capacity evergreen expect last those said we provision, evergreen that allows I call to However, think current I earnings the who really them exercise has that recontract an

really So impediment. not an it's

on capacity firm that, that addition do sell on time could on firm Gulf South, In so that and a time have to do we Gulf available we to basis. on and a Crossing from basis

on there So is of recontracting the or Gulf really today. no Crossing capacity Gulf impediments South to

Crossing, both competing with that the that Gulf today. as step many approval that the to Gulf Federal Commission Gulf service up have pipeline the for down will Regulatory hook Midship Energy pipeline of Crossing recontracting at is Crossing. very, the Regulatory been in area, positive pipeline Federal filed to has not That is I and on to is at Bennington Commission Now construct the that in the think very a pending and mentioned Bennington, times, I Pipeline, supplies Energy

continue Midship Gulf we the capacity, from South on in XX months time, Crossing but not to with in only probably for have discussions to on same the at XX that Pipeline pipeline producers being is the on while Gulf point So service.

So us And doing plenty about that. time capacity. producers impediments to with discussions there's true for again no to there's have of those

before, I think of issue timing. As I an said it's

producers then the discussions by the Federal take contract Energy construction Commission, to think serious Regulatory place. want approved some pipeline to commence, and will I think see I

hook I'm That to like is a and plays, can Gulf So development. very STACK, positive anytime pipeline new that up a bullish you like Crossing. SCOOP

follow-ups. two Yes,

able optimist mentioned so On to are had the about you forth. you last inherently call, and recontract that being an

over chains develop you to -- do the example, Is confidence ability the same the you've the continue little sort Or need improving of market so, so? on down of be or your of in the do seems the move staying in sort XX dislocations last or days some seen terms sort the there your to to field a of of Midships FERC market for sign As that off, kind further? to there. in

been I've of There I gas lot for idle. seen am be I've an out the time. a never just optimist. of SCOOP/STACK. in a pipelines business long major interstate to this is transported

transporting about I on when think the day. day Pipeline the fully Midship today. out Bcf built Pipeline We're over billion feet Gulf a the it's X.X cubic of capacity X is Crossing a

So I volumes bullish be there's am to to that there going recontract.

pipeline Now has put basis service. differentials since in into have that come

time. growth about forthright basis the affect the volumes in We a outlook are generation, natural that United the electric States, and I longer-term LNG, there, especially in do take the do have Gulf gas of and been Coast for market transported. look area very growth industrial with But that. volumes the growth differential be volumes over around to we're in the of more more with with seeing the means

that be I'm So and bullish. going are I'm bullish these utilized recontracting the that heavily out, as that to be going is to something look pipelines can I handle. we

away with I call, Southwestern got this the we a important thought see mentioned of a deal there's And also term, Haynesville Fayetteville Pipeline long-term to the area the was out Barnett. that very took we've problematic the were the We'd put like the think get into on area. for risk in most we drilling I'm to short-term a term, drilling the agreement had the that from Short outlook long bullish. said like that And recontracting of as continue And significant enter on certainly, with is that Midship last think us. service, I the able more from to a outlook. out I've earnings Fayetteville. fact I and things, in recontracting to I us

this was you operating bottling in Boardwalk's one were sort Flag costs related. to interesting about related final year-over-year There some if sold? just that Is interesting wondering question, diversions being the City more just and revenues I quarter. Great. And talk can swings.

that. is Yes. it Part of

In fact, processing Flag reduction in plant. the driving three the employee-related that one there's City if you reduction, at the look is expenses, things of sale the

going All costs price, those capital incentive lower the the capitalized which from right the We unit higher valuations. placed now, projects lower to of we have expansion service. we that due were X of have labor the have offset costs more the And on. helped phantom projects due impacts amount stock into to

this would controlling been have operating costs. able We a our add for and of is regards disciplined that costs number a great a that, company to I to very doing And emphasis our with to now. keep place flat relatively on years

question from next Our Tonet JPMorgan. from comes Jeremy

$XX at a of bit Jamie. And it on hear the you million, somewhere was and this million if where line last bounce quarter, up expect $XX what's in was little reasons we closer Just a general provide I wondering last back bit that to where X? from looking closer can laid a a there the level just want rate. maybe the it been administrative that a between as as I'm to normalized true and here? where million normal Any out Or last do step run it the there. the to is thoughts or pick past And was to seeing $XX you down the of there far year. $XX kind million, question it's G&A there,

previous labor items question, down. capitalization three is on The The City step of normal. a Sure. is the of permanent than Flag higher obviously sale mentioned I the

what think to capitalization. side Really you'll costs we have So the how really on price movement see as much stock up because it you'll if unit, phantom on capital there. incentive I the goes with does down, G&A go less depends get

you. Got

[indiscernible] low to bounces not but XXs it the quite maybe So back

think the I is $XX.X guess. higher than to my going million be it's

project comments, expand proposed a as the you you Katy the competing out this wondering just if that to benefit more And the great. proposed Okay, what some as bit was other just project see in versus to can far of the I then, there. projects I Stan, you wondering Permian mentioned

me of that. in Sempra and you the final the parties more first continuing Well, and around trying, to open proceed investment season let this at a time, are the bit Boardwalk all, that commitments little a point towards during sufficient an the detail interest project's with nonbinding all expressed decision. give status, consolidate dialogue to

would including that anchor eventually do out had X shippers. area. are a pipelines will that Permian there response, qualify be built the that have those believe We of positive We as

to Katy-Houston Agua will to that's opinion, be to one of have our built and Ship area, Channel pipeline be the in where my we think built I And those Dulce. the will pipelines pipeline. build other proposed

pipelines producers I So you the and and are on you're decision to I But tell to which of with Again, two during investment think I the we'll going proceeding, open Houston season, to date and you'll see this of two the in the to on users had I pipeline. upon definitive but you am discussions final in pipelines at are point X Ship we've expect get something end time, do couldn't happen. bullish some I the responses I built. we're again, to in not at don't see area. point encouraged. exactly a and some could got going But built, to going that timing area give a that we is this that that's and be what order discussions be I the time one Agua there'll think Dulce. Agua Dulce be pipelines that one to think to Channel Based those

follow-up a revenues. the in Coastal Bend contracted When, flows XXXX expecting the you then that flows out XXXX cash don't far on include header coastal those as revenues, you the there. laid as And just Jamie, you're cash

May about kind February this You're and Train those on you're signed hit for X, at how up point. X kind Train for thinking that's expecting, cash on at of and those of those XXXX flows signed to point, this

together. That's assumes XXXX. first firm how in the which, date, laid the of is It reservation quarter out, as certain contractual table's put Stan the

reservation not Header. fees related to Coastal XXXX Bend numbers So the any do include

Darren comes Our from James. question from next Horowitz Raymond

it Permian market, provide XXX, on synergistic question, the it the you different system Katy When Ship tie Texas a maybe for Houston or last that to and is to getting Channel how outlet into have question further, South maybe First important about the uplift Index think you gas just to gas? get that where to into line. the

line. It wanted converted are our sold in mentioned over Katy The support my to of we wet call to pipeline processing that pipeline to would interconnect Index discussed Index we and get remarks, the last the dry the And takes that the Edna reason Dulce Well, service to all south into pipeline way the that City the the to -- earnings that I pipeline of it end in about we as putting the capital back upgrade is did with Flag back significant down good to process market. from during the pipeline one that to service. processing was the gas to XXX plant a into Agua gas that City things Dulce Permian dry volumes gas we of Flag briefly return fact Agua had of Corpus our plant. XXX portion that to

So to shippers interstate into is for both yes, market but of our the the is new ones able plants, pipeline that potentially that to that facilities. potential that South be we the markets, feed with diverse Gulf Coast going certainly, synergistic pipeline think our down and connectivity Pipeline. constructed pipeline, a also other projects gas there on PXK that But Texas today Permian to to a into South one take areas over Katy is and lot of not only LNG we to to the Boardwalk are Katy be or good to LNG think Gulf

not converging your on to at you're that going you and potential when going to market. looks trying there's like more But or of commitments of competitive gas get, what just are do, to seeing? it level what look on that competitors of some to lot be Stan, importantly, Corpus how the you're do proposing Christi think you based do market's the commitments a

you is incremental do needed Corpus? how in down think much So capacity inlet

train. million than of starting it facility of are plant a lot If Corpus market. Cheniere. materialize that's a depends Corpus Corpus, did at to LNG expansion Corpus on that on Certainly construction the The third there the $XXX as is day the they loads industrial in an markets on some there. incremental. important of another more There's Well, industrial that, add could down

So on to happens a kind numbers on number that what think, quickly the Cheniere dependent, it, put really I of and how with heavily happens.

give And last the for once outlook specifically then how that my Okay. phase Jamie, you to just function's can that on higher Header us, X question system, X Bend more phase XX-mile the complete? Coastal the And that EBITDA contribution once is Perryville's step header complete? connection

I say XXXX. year-end on will our with exact But provide to is firm update provide table individual projects. because at we the don't plan I can't reservation guidance this, numbers

the that So project the contribution from you'll comes XXXX numbers. out, in when have that

generating While as projects what we that's specific your of of rates return as will models, these I us. regulated what aggregate, projects, these guidance don't solid, in give if on think you you're projects have good, that for told the people, building do

return projects for not trying impute about. you're far we of be going in off rate to So a regulated good, returns using that talked these to various

would to remarks. for And you. Molly no like over closing now phone our from showing questions lines. conference the turn to Thank further I'm back I Whitaker any

us your [indiscernible] Boardwalk you Partners. to morning like Once again, continued in Pipeline we'd and interest for for thank this

www.bwpmlp.com. website day. at conference a you, great call. have our a this As is replay on concludes reminder, today's This online and available an Thank of call

you in today's This the Everyone thank may does conference. participating you and great have for gentlemen, program, all a Ladies day. disconnect. conclude and