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» Boardwalk Pipeline Partners, LP Q1 2010 Earnings Call Transcript
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I would also like to remind you that during this call today we may discuss certain non-GAAP financial measures, such as EBIDTA 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 Mr. Rolf Gafvert. Rolf Gafvert Thank you, Allison. Good morning, everyone, and thank you for joining us today. I hope all of you have had a chance to review both the press releases we issued earlier this morning. We are pleased to announce a quarterly distribution to unit holders of $0.51 per unit, a ½ cent increase over last quarter. Distributions to unit holders have increased each quarter since our initial public offering in 2005. I will now provide an update on our business, and then Jamie will discuss our financial performance in greater detail. I discussed in April that basis spreads between differing receipt and delivery locations on our systems had narrowed, affecting the transportation rates we were able to charge in certain markets. These trends have negatively impacted our contract renewals, and revenues from our interruptible and short-term firm transportation services, and future revenues may continue to be negatively impacted. Capacity available on a short-term basis will decrease as long-term capacity commitments on our recently-completed pipeline expansion projects increase over the next 12 to 18 months. However, our contract renewals remain subject to basis spread volatility, and some of our capacity will continue to be available for sale on a short-term or interruptible basis, and that capacity will also be dependent upon basis spreads. Turning to the progress we are making on our growth projects, our Haynesville and Clarence projects, both driven by supply growth from 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 by the FERC and is under construction with a Q4 2010 anticipated in-service date. The Clarence compression project, which remains subject to FERC approval, has an anticipated in-service date of late 2011.
The Eagle Ford shale is an emerging supply source located approximately 50 miles from our pipeline system in south Texas. As I mentioned last quarter, due to the high content of natural gas liquids that accompany the gas stream in the Eagle Ford, many producers are focused on the area. In June we announced that Southcross Energy and Boardwalk plan to leverage existing assets in south Texas in order to provide infrastructure solutions to natural gas producers in the Eagle Ford. As part of that project, we plan to modify an existing section of Gulf South’s 30” pipeline from Refugio, Texas, to Fort Bend County, Texas, so that condensate-rich Eagle Ford shale gas can be accepted into that pipeline segment.In addition, Boardwalk continues to pursue other Eagle Ford growth opportunities. We’re also pursuing opportunities to grow our transportation storage business. Today Boardwalk serves approximately 40 natural gas-fired power plants in ten states. We are currently pursuing opportunities to serve power generators who are replacing old, inefficient coal plants and simple cycle, gas-fired combustion turbines with highly efficient combined-cycle gas generation. 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 Q2. Jamie Buskill Thanks, Rolf, and good morning, everyone. Operating revenues for the Q2 of 2010 were $257 million, an increase of $56 million or 27% from $201 million from the comparable period in 2009. The increase was driven by transportation revenues from our pipeline expansion project, partially offset by lower interruptible and short-term firm transportation services due to lower basis spreads, and a ramp up of firm agreements. Read the rest of this transcript for free on seekingalpha.com