DCP Midstream Partners, LP ( DPM)

Q3 2010 Earnings Conference Call

November 5, 2010 9:00 a.m. ET


Mike Richards – VP and General Counsel

Mark Borer – President and CEO

Angela Minas – VP and CFO


Gabe Moreen – Bank of America, Merrill Lynch

Michael Blum – Wells Fargo

Yves Siegel – Credit Suisse

Selman Akyol – Stifel Nicolaus

Chet Barriok – George Weiss Associates



Good morning and welcome to the DCP Midstream Partners third quarter 2010 earnings conference call. All participants will be in a listen-only-mode. (Operator Instructions) After today’s presentation there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded. I would now like to turn the call over to Mike Richards, Vice President and General Counsel. Please go ahead.

Mike Richards

Thank you, Amy. Good morning and welcome to the DCP Midstream Partners third quarter 2010 earnings release conference call. As always, we want to thank you for your interest in the partnership. Today, you will hear from Mark Borer, President and Chief Executive Officer and Angela Minas, Vice President and Chief Financial Officer.

Before turning it over to Mark, I will mention a couple of items. First, all of the slides we will be talking from today are available on our website at www.dcppartners.com in PDF format. You may access them by clicking on the investor page and then the website icon.

Next, I would like to remind you that our discussion today may contain forward-looking statements. Actual results may differ due to certain risk factors that affect our business. Please review the second slide in the deck that describes our use of forward-looking statements and lists some of the risk factors that may affect actual results. For a complete listing of the risk factors that may impact our business results, please review our form 10-K for the year-ended September 31, 2009 as filed with the SEC on March 11, 2010 and updated through subsequent SEC filings.

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 measure and schedules provided on our website. We ask that you review that information as well. And now, I will turn it over to Mark Borer.

Mark Borer

Thanks Mike. Morning everyone and thanks for joining us today for the discussion of our third quarter results. As you saw in our press release last evening, we reported third quarter results, which were in line with our 2010 DCF forecast. In addition to meeting our financial goals, we have continued to diligently execute on our growth strategy including the drop down from our sponsor, which we announced our earnings release last evening.

On Slide 3, you’ll see our agenda for this morning. I will begin some highlights of the quarter including an overview of the dropdown transaction followed by an operational update.

Angela will follow-up with a financial overview of the quarter. We will close with our outlook and summary. We are pleased with the progress we have made thus far this year. We are optimistic about the future and believe we are favorably positioned to continue executing our growth strategy.

Turning to Slide 4, lets discuss some highlights for the quarter. Third quarter financial results are on track to achieve our 2010 DCF forecast. We generated a distributable cash flow of $24 million for the quarter and 80.6 million year-to-date providing a distribution coverage of 1.14 times over the trailing four quarters.

Our integration efforts related to our numerous (inaudible)acquisitions are progressing according to plan. For the November 2009 Michigan gathering and treating system acquisition, January 2010 Wattenberg NGL pipeline acquisition and our most recent acquisitions during the third quarter of the Chesapeake propane terminal and the remaining 55% interest in our Black Lake NGL pipeline. Wattenberg Capital expansion project, which we expect to complete in early 2011 is also progressing on plan.

We successfully accessed the term debt market through our Inaugural Investment grade debt offering. We believe our financial positioning is a key element of our growth strategy. Angela will provide additional color on this in a few moments.

Finally, last evening we announced the $150 million acquisition of a one-third interest in the Southeast Texas joint venture from our general partner, DCP Midstream. This transaction compliments the third-party acquisitions in organic growth we have executed thus far this year and demonstrates our multifaceted growth strategy. In summary we are progressing well in terms of delivering on our 2010 business planned commitments.

Turning to Slide 5, I will provide some additional color on the dropdown transaction. The DCP Southeast Texas joint venture is a fully integrated midstream business that sits well with the MLP business model. The assets in the joint venture include 675 miles of natural gas pipelines, three natural gas processing plants totaling 350 MMcf per day of processing capacity, natural gas storage assets with 9-Bcf of high deliverability salt dome storage capacity, favorable access to interstate and intrastate gas markets, NGL market deliveries direct to Exxon Mobil and to Mont Belvieu via our Black Lake NGL pipeline.

This transaction’s a prime example of how we are co-investing and effectively partnering with our clients. In line with our strategy of utilizing the MLP as a growth vehicle for the DCP Enterprise, DCP Midstream will re-apploy the proceeds to ongoing capital projects.

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

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