Boardwalk Pipeline Partners L.P. (BWP)

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Boardwalk Pipeline Partners, LP (BWP)

Q3 2012 Earnings Call

October 29, 2012 9:00 am ET

Executives

Molly Ladd Whitaker

Stanley C. Horton - Chief Executive Officer of Boardwalk GP LLC, President of Boardwalk GP LLC and Director of Boardwalk GP LLC

Jamie L. Buskill - Chief Financial Officer of Boardwalk GP LLC, Senior Vice President of Boardwalk GP LLC and Treasurer of Boardwalk GP LLC

Analysts

Harry Mateer - Barclays Capital, Research Division

Paul Jacob

John Edwards - Crédit Suisse AG, Research Division

Robert J. Schweich - Burnham Securities Inc.

Elvira Scotto - RBC Capital Markets, LLC, Research Division

Curt N. Launer - Deutsche Bank AG, Research Division

Yves Siegel

Presentation

Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Q3 2012 Boardwalk Pipeline Partners Earnings Conference Call. My name is Marie, and I will be your operator today. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded. And now, I would like to turn the call over to Molly Whitaker, Director of Investor Relations and Corporate Communications. Please proceed, ma'am.

Molly Ladd Whitaker

Thank you, Marie. Good morning, everyone, and welcome to the third quarter 2012 earnings call for Boardwalk Pipeline Partners, LP. I am Molly Whitaker, and I am pleased to be joined today by Mr. Stan Horton, our President and CEO; and Mr. Jamie Buskill, our CFO.

If you would 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 statements that are forward-looking in nature. Statements in this 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 a reconciliation to the most comparable GAAP measures.

Now I'd like to turn the call over to Stan Horton.

Stanley C. Horton

Thank you, Molly, and good morning, everyone. I hope you've had a chance to review the earnings press release that we issued this morning. In addition to reporting earnings, we also announced a quarterly distribution of $0.5325 per unit or $2.13 annualized.

Since our second quarter call, we've been busy. We announced and closed on the acquisition of PL Midstream, we executed firm agreements on our Southeast market expansion project and we continue to make progress on our financial metrics and improve capital structure.

Turning now to an update on our growth activities. Since I joined Boardwalk, we've been communicating that part of our strategy is to diversify into the midstream energy businesses beyond our core natural gas pipelines and storage. Our first major initiative was forming Boardwalk Field Services in the fourth quarter of 2011, which expanded our footprint into the gas gathering and processing businesses.

Earlier this month, we acquired PL Midstream, which provides transportation and storage services of natural gas liquids. In addition to diversifying Boardwalk into the liquids transportation and storage business, this acquisition is strategic for a number of other reasons, including, first, the assets are high-quality and strategically located to serve the attractive and rapidly growing petrochemical industry in Southern Louisiana area. Second, PL Midstream has a strong growth record and a number of ongoing growth projects. The senior management has joined Boardwalk team and will continue to manage the company, which we have renamed Boardwalk Louisiana Midstream, LLC.

Allen Kirkley, who had been the President and CEO of PL Midstream, has joined us as the President of Boardwalk Louisiana Midstream; and Kevin Miller, who had been the Chief Operating Officer of PL Midstream, has joined us as Senior Vice President and Chief Operating Officer of Boardwalk Louisiana Midstream.

Prior to joining PL Midstream in 2009, Allen spent 29 years at Shell, including serving as the Regional President of Shell Chemicals for the U.S. operations. Kevin has more than 25 years of industry experience and prior to joining PL Midstream in 2009, he was the Regional Manager of Upstream Development at Shell Global Solutions.

Third, like Boardwalk's other operations, PL Midstream's contracts are long term and fee-based. In fact, approximately 66% of annual revenues are derived from contracted minimum revenues, and the average contract life is 10 years.

Let me provide a quick overview of the business. For those of you who are not yet familiar with it, Boardwalk Louisiana Midstream provides salt-dome storage, pipeline transportation, fractionation and brine supply services for producers and consumers of petrochemicals, natural gas liquids and natural gas in South Louisiana at 2 hubs, the Sulphur Hub, in Lake Charles area, and the Choctaw Hub, in the Mississippi River industrial corridor. Boardwalk Louisiana Midstream's assets represent approximately 53.5 million barrels of salt-dome storage capacity, including 11.2 billion cubic feet of working natural gas storage capacity, significant brine supply infrastructure and more than 240 miles of pipeline transportation assets, including the most extensive ethylene distribution system in Louisiana.

Now I'd like to review our organic growth projects, starting with our Southeast market expansion project. In August, we announced that we had received binding commitments for our Southeast market expansion and that we would move forward with the project, which will allow us to transport approximately an additional 450 million cubic feet a day of natural gas into the growing areas of demand in the Southeast region in the United States, including markets in Mississippi, Alabama and Florida.

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