DCP Midstream Partners (DPM) Q1 2010 Earnings Call May 7, 2010 10:00 a.m. ET Executives Mike Richards - Vice President and General Counsel Mark Borer - President and Chief Executive Officer Angela Minas - Vice President and Chief Financial Officer Analysts Rebecca Followill – Tudor Pickering & Co. Andrew Gundlach – ASB Jeremy Tenney [ph]. Presentation Operator
In addition, during our discussion we will use various non-GAAP measures, including distributable cash flow, adjusted EBITDA and adjusted segment EBITDA. These measures are reconciled to the nearest GAAP measures and schedules provided on our website. We ask that you review that information as well.And finally, a note about the presentation of our earnings, in April 2009 the partnership completed the acquisition of additional 25.1% interest in DCP East Texas Holdings, LLC or East Texas, from DCP Midstream, LLC. Prior to this transaction, the partnership owned a 25% interest, which was accounted for under the equity method. Subsequent to this transaction, the partnership owns a 50.1% interest in East Texas and accounts for East Texas as a consolidated subsidiary. The results of operations presented today include the historical consolidated results of East Texas for all periods presented. For comparison purposes, we have also included our 2009 historical results as reported in 2009 when our partnership -- ownership interest in East Texas was 25%. And now, I will turn it over to Mark Borer. Mark Borer Thanks, Mike. Good morning, everyone, and thanks for joining us today for discussion of our fist quarter results. We are continue to experience improvement in the business environment and we are off to a solid start 2010. As you saw on our press release last evening, we reported first quarter results, which were inline that 2010 DCF forecast we provided on our last earnings call. On slide three, you’ll see our agenda for this morning. I will begin some highlights of the quarter and we will then provide an operational update Angela will follow with the financial overview of the quarter. We will then close with our outlook in summary. We are optimistic about emerging growth opportunities and believe we are favorably positioned as we move through 2010 and beyond.
Turning to Slide 4, let's discuss some highlights for the quarter. We generated distributable cash flow of $31.7 million for the quarter, providing a distribution coverage ratio of 1.3 times. Improvement in the business environment along with opportunities in the market has enabled us to continue to execute on our growth objectives.In January, we committed $40 million to a strategic investment for the DCP Enterprise in the Denver-Julesburg Basin or DJ Basin. This was comprised of 22 million acquisition of the Wattenberg fee-based NGL pipeline and related $18 million expansion capital project. 2010, is the integration year for both the Michigan gathering and treating system we have acquired in November 2009, as well as our January 2010 Wattenberg pipeline acquisitions. This recent acquisitions are each very complementary to our asset base, provide a 100% fee-based margins and improved our competitive positions. In summary, we are off to a good start in delivering on our 2010 business plans commitments. We will now turn to Slide 5. I will provide the brief operational updates, starting first with our natural gas service segments. As indicates again this quarter we view our diverse geographic footprint as a strong positive, as it provides us with access to multiple resource plays, contract types, and customers. Excluding the recent Michigan acquisition gas throughput volumes have been held firm [ph] and was virtually flat on a sequential quarter based. In the second quarter of 2009 gas throughput volumes have been down a modest 2%. Our rig count activity is still considerably below 2008 levels. We are beginning experience a modest recovery from the lows we experienced in the second quarter of 2009. With the exception of the weather related operating challenges that East Texas Northern Louisiana, which occurred during the quarter which I’ll discuss more in a moment. Read the rest of this transcript for free on seekingalpha.com