Boardwalk Pipeline Partners L.P. (BWP)

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Boardwalk Pipeline Partners, LP (BWP)

Q1 2010 Earnings Call

April 26, 2010 9:00 am ET

Executives

Allison McLean -Director of Investor Relations

Rolf Gafvert – CEO

Jamie Buskill – CFO

Analysts

Elvira Scotto – Credit Suisse

Stephen Maresca – Morgan Stanley

Sharon Lui – Wells Fargo

Ross Payne – Wells Fargo

John Edwards – Morgan Keegan

[James Janthel – Height]

Emily Wang – Raymond James

Harry Mateer – Barclays Capital

Presentation

Operator

(Operator Instructions) Welcome to the First Quarter 2010 Boardwalk Pipeline Partners LP Earnings Conference Call. I would now like to turn the presentation over to your host for today’s call, Ms. Allison McLean, Director of Investor Relations.

Allison McLean

Welcome to the first quarter 2010 earnings call for Boardwalk Pipeline Partners LP. I’m Allison McLean and I’m pleased to be joined today by Mr. Rolf Gafvert, our CEO and Mr. Jamie Buskill, our CFO.

If you’d like a copy of the earnings release associated with this call, please download it from our website at www.bwpmlp.com. Following our prepared remarks this morning we will turn the call over for your questions.

We would like to remind you that this conference call will include the use of statements that are forward looking in nature. Statements in the earnings call related to matters that are not historical facts are forward looking statements. These statements are based on management’s beliefs and assumptions using currently available information and expectations. Actual results achieved by the company may differ materially from those projected in any forward looking statement. The company expressly disclaims any obligation to update or revise any forward looking statements made during this call.

I’d also like to remind you that during this call today we may discuss certain non-GAAP financial measures such as EBITDA and distributable cash flow. With regard to such financial measures, please refer to our earnings release for reconciliation to the most comparable GAAP measures.

Now I’d like to turn the call over to Mr. Rolf Gafvert.

Rolf Gafvert

I hope all of you have had a chance to review the press release we issued earlier this morning. We had a strong first quarter due to the revenue growth from our major expansion projects. Revenues were up 35% and EBITDA was up 44% over the first quarter 2009. Last Thursday we declared a quarterly distribution of 50.5 cents per unit. Distributions to unit holders have increased each quarter since our IPO in 2005.

I will now provide an update on our business and then Jamie will discuss our financial performance in greater detail.

Three new compressor stations were added to our pipeline this quarter. In January we added the Bald Knob compressor station to the Fayetteville lateral, and the Isola compressor station to the Greenville lateral. In March we added the Mira compressor station to our Gulf Crossing pipeline. With these compressors in service we are now currently capable of delivering approximately 1.1 bcf per day on the Fayetteville lateral, 1 bcf per day on the Greenville lateral, and approximately 1.7 bcf per day on Gulf Crossing.

The majority of our operating capacity is under firm contract, with a weighted average contract life of approximately 50 years. Each year a portion of our contract expires and we must focus on new angle of remarketing that. Pricing spreads between different seat and market locations has recently narrowed. We are now starting to see market conditions that may be difficult to capture contract terms, similar to the terms of our expiring contracts. Furthermore, our interruptible and short-term firm remedies have been impacted and could continue to be negatively impacted if current market conditions have not improved.

However, the growth in natural gas supply primarily from shale gas has created new opportunities. Our Haynesville and Clarence Grove projects both driven by supply growth on the Haynesville shale are proceeding as planned and we anticipate these projects will be placed in service on time and within budget.

The Haynesville project has been approved and has a late fourth quarter 2010 anticipated in service date. The Clarence compressor project is subject to further approval and has an anticipated in service date of late 2011. Behind these two projects are estimated to costs $250 million. These projects demonstrate the attractiveness of the Boardwalk footprint and our ability to develop projects that allow us to leverage our existing infrastructure even in challenging market conditions.

We continue to explore opportunities to expand. One area of interest in the Eagle Ford shale an emerging supply source located near our system in [inaudible]. The Eagle Ford shale is viewed by many as a very profitable production area given the high content of crude oil and natural gas liquids that accompany the natural gas production in that region.

Boardwalk is currently exploring opportunities to expand our business by leveraging our existing infrastructure. We’re also exploring opportunities to connect to other supply sources in other geographic regions.

That concludes my overview for Boardwalk. I would now like to turn the call over to Jamie who will share with you the financial results for the first quarter.

Jamie Buskill

Operating revenues for the first quarter 2010 were $301 million an increase of $78 million or 35% from $223 million for the comparable period in 2009. The increase was driven by transportation revenues from increased available capacities and through put from our pipeline expansion projects and higher storage and parking lend revenues which were approximately $4 million above last year due to favorable natural gas price spreads and additional storage capacity made available from the Western Kentucky storage expansion.

Read the rest of this transcript for free on seekingalpha.com