金德摩根 (KMI) 2009 Q2 法說會逐字稿

Welcome, and I'd like to thank you all for holding for the quarterly earnings conference call. Your lines are in a listen-only mode until the question-and-answer session. (Operator Instructions). Today's call is also being recorded. If you have any objections, you may disconnect at this time. I'd now like to turn the call over to Rich Kinder. Sir, you may begin.

Okay thank you, Ed, and welcome to the second quarter analyst call. As usual, we'll be making statements within the meaning of the Securities Act of 1933 and the Securities and Exchange Act of 1934. Also, as usual, I'll give an overview of the quarter's performance and strategic outlook. Park will follow with the financial details, and then we'll take any and all questions that you might have. I think if you look at the second quarter, we made real progress in overcoming some really significant headwinds that we and the rest of our industry face as a result of this prolonged recession.

As you know, we judge ourselves primarily against our own plan that we publish on the website each January, and I'm delighted to report that in the second quarter we actually exceeded our plan. We expect to distribute our target of $4.20 per unit for the full year 2009. And based on our current forecast, we're very close to generating sufficient [stable] cash flow to fully cover that distribution with this year's cash flow, considerably closer than we were at the end of the first quarter. So we seem to be improving as the year goes forward, although there's certainly a lot of moving parts. Also along those lines, we now expect all five of our business segments to exceed their 2008 results in terms of earnings before DD&A and distributable cash flow for the full year 2009 compared to the full year 2008.

Now, why are our results improving? I think it's the result of a number of factors, primarily including good performance in our products pipeline segment, particularly in our Cochin NGL system coming down from Canada, improved crude oil production of our SACROC unit in our CO2 segment, and good results from our cost reduction efforts, pretty much across the Company. Now as I said, Park is going to cover the financial numbers, but let me outline some of the most important developments in each business segment. Starting with Products Pipeline, there, refined products volumes are still lower than 2008 and still below our plan. However, we did see some improvement in the second quarter. Overall, refined products volumes were down 1.9% in the second quarter, versus 2008. This is an improvement of a negative 3.9% in the first quarter of 2009.

If you strip out Plantation, and that's probably the fairest way of doing it to really judge the throughput, we were down 2.2% in the second quarter versus being down 6.4% in the first quarter. And that 2.2% negative, by the way, compares to the E EIA preliminary numbers that we're seeing of a negative 4.4% for the nation as a whole in the second quarter. Now all those numbers I just gave you, are refined product as a group. If you delve a little deeper, gasoline volumes were actually positive in the second quarter versus the second quarter of 2008 by about 3.4%. And year-to-date, they are now actually positive by .5%. So one half of 1%. Now, I don't know how much to read into all that, and certainly these volumes are still volatile, so, again, I would let everybody be their own judge of this. But we are seeing quarter-to-quarter improvement, particularly on the gasoline side.

Jet fuel also showed an improvement compared to the first quarter. Diesel did not. So it's sort of a mixed bag, but on the general -- in general, becoming a little more positive sequentially. With regard to the NGLs in our Products Pipeline segment, they were positive to 2008 for both the second quarter and year-to-date. And in the overall Products Pipeline segment, we've overcome these volume shortfalls with good performance on our Cochin system, better tariffs in California, and with savings across the board, particularly on the power cost side. And as we said in our release, we now expect this segment to not only exceed 2008 but also to slightly exceed its plan for 2009.

In our Natural Gas Pipeline segment, there, the challenges we've faced have been weaker performance in the second quarter at our Texas Intrastates. That's mostly timing, where we've had storage revenues we have purposely postponed until later in the year to maximize economic benefits and some operational costs that also are a bit front end-loaded compared to last year. And for the whole year, we expect that segment to be only slightly below plan. But they have faced some headwinds in that sector in the Texas Intrastates market itself that we expect will continue. We've also had lower revenues from new pipelines because of delays of the in-service dates which leads to lower revenue. Now, we've offset a lot of these negatives with lower operating costs, and we've had very good performance in our Kinder Morgan Interstate Gas Transmission system coming out of the Rockies.

In our CO2 segment, our better production at SACROC and reduced costs across the board is overcoming our lower crude prices. And included in that lower crude price of course, is we're finding lower NGL-to-crude ratios for 2009 than we expected to see. But overall, again, CO2 is making a real effort there. We expect them to be better than 2008 for the entire year, and we expect them to be relatively close to their plan for 2009. In our terminal segment, we continue to experience significant lower steel volumes in our bulk business, although there are indications of some modest upturn for July. Too early to tell whether that's a trend yet. We've been able to claw back a significant percentage of the shortfall through reduced costs, particularly in fuel and utility costs and in contract labor. And I'd point out that outside of the problems on the bulk side, particularly the steel, our liquids terminals are doing very well and are at or above plan for the quarter and year-to-date.

In our Canadian operations, our fifth business segment, while we've had lower volumes to the Washington state refineries, overall the throughput on Trans Mountain has been above both 2008 and the plan for both the second quarter and year-to-date. And the volumes across the dock in Vancouver going on to ships that are going either down the coast to California, or in some cases to Asia, have been well above our plan and well above 2008. And in fact during one of the months this year, we've already set an all-time record for shipments across the dock, indicating, I think, demand from our customers to ship more out of a port on the West Coast, in this case Vancouver.

Now, I'd also like to give you an update on our major natural gas construction projects that are underway, and then on a few new projects that look promising. Let me start with the major projects update. Since we last talked to you, we've made significant progress on each of our major projects. Our Rockies Express, REX-East went into service on June 29 with service to Lebanon, Ohio hub. And on that system, we can now deliver up to 1.8 billion cubic feet a day of natural gas from the Rocky Mountains to Audrain County, Missouri, and 1.6 bcf per day to the Lebanon hub in western Ohio.

The next and final step is service to Clarington, Ohio, and we were targeting a May 15 start-up for all all five spreads. We actually beat that by a week or two. And all those spreads so far are running on or above -- on or in advance of what we targeted them to be at this point in time. We have all of our right of way and all of our permits and clearances, and frankly this is the first time we've started a REX segment with all those clearances. And I think we have some open field running on the last leg because we're building during the prime part of the construction season, from June through October.

On the other side of the equation, the train is a little more challenging on this last part of the build, more rock and hills, and that's why we divide it into it five spreads for the last 195 miles. We're projecting November 1 for in-service to Clarington. And once we're mechanically complete and have [FEMSA's] approval to operate all the REX at the [.8] design, we'll be able to deliver 1.8 bcf a day to eastern Ohio. On our Mid-Continent Express System, we went into service to Delhi, Louisiana on April 24, and we're well on our way to completing the final leg of this project to the Transco Station 85 in western Alabama with an in-service date of August 1. Our Kinder Morgan Louisiana project is now complete. It went into service on June 21. So in summary, we're now down to the last two construction legs on our major projects, with all construction to be complete by the end of the year. And after August 1, we'll really just have this one leg, the REX-East section going on to Clarington.

With regard to costs, compared to what we told you a quarter ago really not much change. REX now has gone from $6.6 billion to $6.7 billion. All these are [2008's 2008's] numbers, obviously, Kinder Morgan Louisiana, at $1 billion. Last time we said $980 million, so it's pretty much flat. And no change from the numbers we gave you last time on Mid-Continent Express and Fayetteville Express. Now let me address one final matter relative to pipeline construction. There's been a fair amount of news recently regarding pipe quality on new pipeline projects, and this was highlighted in the recent FEMSA Bulletin regarding [yielded] pipe. Let me kind of tell you what that means and doesn't mean for our projects. First, some background.

On our three major projects, REX, MEP and Kinder Morgan Louisiana, we have some pipe that we have sought or will seek approval from FEMSA to operate at a .8 design, i.e. that's at a higher pressure. On REX, we've already received FEMSA authorization to operate the western portion of the project at that .8. We're running the high-resolution tool on REX-East to Lebanon, and should have those results shortly. And then we'll run the tool to Clarington shortly after that leg goes into service. On Kinder Morgan Louisiana, which is already in service, we ran the tool in June. The results were clean. We turned the data into FEMSA, and we expect authorization to go to the .8 design shortly. On Mid-Continent Express, we're running the tool this month to Delhi, that's the part that's already in service, and we'll run the tool on the last leg over to [T85] shortly after we put it in service. We're confident that we will have few, if any, issues with these tool results.

As I mentioned, we've already been through the whole process on REX-West, and have received FEMSA authorization on that pipe. And we got a clean run on Kinder Morgan Louisiana. Further, I think all of that gives us confidence that the additional inspection and testing that we did has allowed us to avoid the problems with yielded pipe. Finally, just let me just say, with projects of this size and complexity, there are almost always start-up issues when you ramp up compression. There are sometimes repairs that need to be made. You may find dents that were done during the construction process. We have had those, expect to have them. But based on our experience and the precautions we've taken in the construction process, we don't expect to experience anything beyond minor, short-term outages or reduction in flow. So I wanted to clarify that with you because I think there's been some confusion in the trade press with regard to that particular issue. So that's sort of an update on the pipeline projects. And overall, as I said, it's not over until the fat lady signs, but we feel a lot better about our progress this quarter than we did at our conference call three months ago.

Now I would also like to mention a couple of new projects that our Board just approved today. The most significant of these is a new $180 million-plus project in our CO2 segment to further expand our pipeline network in the Permian Basin and to develop a significant new CO2 flood in the Katz Field, which we already own. We expect to produce an incremental 25 million barrels of oil at Katz, and we expect this whole project to serve as a platform for increased EOR efforts in the region by Kinder Morgan and by third parties. And certainly 25 million barrels of oil spread over 15 to 20 years is nothing to sneeze at. If you look at it, that's an average of something north of 4,000 barrels a day. We expect of course, as usual, it's a little bit front-end loaded, and will probably peak in the vicinity of 7,000 barrels a day out in the 2015 time frame. We expect the pipeline to be in service by early 2011, at which point we will commence the floods in the Katz unit..

A second project that's been approved by our Board is in our Terminals group, and there we've entered into an agreement with a major oil company to build slightly over one million barrels of new petroleum product and ethanol storage at our New York terminal at our [Carter Red] terminal in New York Harbor, at a cost of slightly over $60 million. And I think that also bodes well, and again, it's a long-term contract with a major oil company supporting that particular project. So that's an update on some of the new developments. Finally, let me just mention that we continue to be successful at, as you know, in accessing both the debt and equity markets. On the equity side, we've now sold about $750 million of equity year-to-date, and that includes $96 million from a partial quarter, partial second quarter, of our at-the-market program, which we think is very positive. And the $750 million total sold compares to our budger target for the full year of $1 billion. So we made some real progress there. And with that, I will turn it over to Park, who will take you through the financial details. Park?

Great. Thanks, Rich. I will go through the numbers, talking about second quarter performance, how we're doing year-to-date, and a little about how we expect the rest of the year, or the full year to come out. So hopefully everyone has the press release. There are a number of pages at the back of that. The first page, the first numbers page, is the face of the income statement. All I want to point out here is, towards the bottom you will see the declared distribution per unit. And [KMP] did today declare a distribution of $1.05, payable in August. That is up 6% from where we were second quarter a year ago, and the first half distribution of $2.10 is up almost 8% relative to where we were in the first half of 2008.

Now with that, if you will turn to the next page, we can talk about the cash that we're generating to support that distribution. And you'll see again towards the bottom the DCF per unit, Distributable Cash Flow per unit, we think is the most important number to focus on. It's about $0.99 for the quarter, that's down from $1.14 a year ago. About $1.95 for the first half, and that's down from about $2.26 from a year ago. Now, a lot of this was expected. I mean, one commodity prices are a lot lower in the first half of 2009 versus where they were in 2008. And that was built into our budget. And so actually, if you look at, as Rich mentioned, our second quarter results, we actually ended up above our plan, and nicely above, even though, as we talked about back in January and in the first quarter, commodity prices were not as high as our plan. And so we've continued to do a good job at finding cost savings and other opportunities to claw back the gap that lower commodity prices have presented us. But that being said, our negative coverage for the quarter is about $17 million and is about $40 million year-to-date.

Now, as Rich mentioned, as we look forward for the full year, we believe that we are very close to covering the $4.20 budgeted distribution that we have for the year. So our forecast comes very close to to covering that, and is much closer than where we were in April when we last talked about this, and certainly closer than where we were in January. So again, we've made tremendous strides in filling in this hole and moving towards covering our distribution, and we're hoping that continued hard work in the second half of the year will get us above that distribution and closer to the excess coverage that we had in our budget. A couple of lines up from that you'll see DCF Before Certain Items. This is total dollar amount, down about $19 million, $274 million versus the $294 million a year ago. And for the first half, down about $40 million. But I want to point out again, that that number, $274 million for the quarter, is about $30 million ahead of our budget. So for the quarter, in terms of total DCF, we're actually ahead of our budget. So again, we feel like things went very well in the quarter.

Above that, Sustaining Capital Expenditures, about $41 million compared to $47 million a year ago. About $71 million for the first half compared to about $77 million a year ago. For the full year, we still expect that we'll be at about $183 million of Sustaining CapEx, and that's essentially where we said that we thought we would be in the first quarter. So that is actually down, slightly down, from the $202 million that's our full-year budget. But again, our current expectations are consistent with where we thought we'd be in the first quarter. The Express contribution, it will be for the year a little bit ahead of budget, but fairly consistent with where we thought it would be. The Book Cash Tax Differences, you can see cash taxes were less that book taxes by about $5 million in the quarter. That was better than last year and better than the budget. And cash taxes have been less than book taxes by about $13.5 million year-to-date. Above that, you have DD&A. DD&A is up considerably, largely driven by CO2, and you can see that up in the DD&A section, which is kind of the second section from the top.

CO2 DD&A in the quarter is up $30 million. Total DD&A is up $37.5 million. On this line down here we actually add in the [harsh] share of the Rockies Express DD&A and the MEP DD&A, although it's not significant yet. And there you have a change year-over-year of $41 million. But again, three quarters of it is coming from increased DD&A at CO2. And then you have the Limited Partners' net income, the General Partner Share and the Total Net Income. And really, all I want to point out there, distributable cash flow is a more meaningful measure and where we think you should focus. But we're actually ahead of budget on those fronts as well.

With that, let me jump up to the top of this page and talk about the segments. And Rich already hit on a lot of this, but you can see Products Pipeline up over $21 million from 2008 for the quarter, up over $26 million for the first half, above budget by over $12 million for the quarter. And so very nice performance in the Products Pipeline segment, even in the face of volumes that are lower than what we expected when we did the budget. Cochin bounced back very nicely in the second quarter. You may recall that Cochin was a weak spot in the first quarter. But in the second quarter, it has essentially come back to its budget. We also had nice performance out at Pacific West Coast terminals and the Central Florida pipeline, both those versus budget and versus 2008. If you look at product pipelines for the year, we expect it to come in just a little bit ahead of its budget and nicely ahead of where it was a year ago. Natural gas pipelines, down about about $18 million for the second quarter, down about $4 million for the first half.

Now, some of this was anticipated. We expected, and actually budgeted for the second quarter to be below second quarter 2008. Now, we've actually come in even below that budget, and the reason is, in part, timing. Rich mentioned the effect of Intrastates. And that timing there is related to when storage revenues are recognized and also some operational expenditures, although our sales margins on the Texas Intrastates are being impacted by the current natural gas dynamics as well. That being said, over the course of the year, we expect that Texas Intrastates will fall a little bit below their budget, but significantly less than where they are or where they performed in the second quarter. In other words, we're going to make up a fair amount of that relative to 2008 and the budget in the second half of the year. Then the other weakness in the natural gas pipelines comes from primarily the delays in getting the project in service and a little bit from the revenues that we're recognizing during interim service. What that means for the Natural Gas Pipeline segment overall, is we do expect it to be below budget, although we expect it to be below budget by less than 3%.

On the CO2 side, it is below last year by about $14 million, the segment is. And for the first half, it is below last year by about $46 million. That's largely driven by lower commodity prices, and in truth, we've done a very good job of making up for lower commodity prices through increased volumes at SACROC and cost reductions. What that means, is as we look through the entire year, while we actually expect a pretty significant reduction in CO2 cash flow due to the lower commodity prices, both versus 2008 and our budget for 2009, we actually think that we're now within 3% to 4% of meeting our budget for 2009.. So given current commodity prices, both current crude prices and NGL prices, we do think we'll come in under our budget. Now that could change as commodity prices change. But we have made up a huge amount of that gap, again through additional volumes and cost savings.

On the Terminal side, as Rich mentioned, we continue to be impacted by volumes, especially on the steel side. We are up about $2 million from where we were in 2008 for the quarter. We're up about $11 million year-to-date. Now, we are down a bit from our budget, and we expect the Terminals will come in below its budget for the year, although that should be a little less than 5% relative to its budget. On the Kinder Morgan Canada side, we're up nicely from a year ago, largely due to nice volumes on the system and the expansion that we completed on Trans Mountain a year ago. We are impacted, as we discussed in the first quarter, by a book tax accrual that due to to an accounting change, we now to have reflect at Trans Mountain or at Kinder Morgan Canada. We didn't have that incorporated into our budget. This was something that changed in the first quarter, and so it's a variance both to last year and to budget. But if you ignore that book tax accrual -- and it does not impact our cash taxes. If you ignore that book tax accrual and the impact of foreign currency fluctuations, we expect that Kinder Morgan Canada will be on budget or slightly above budget for the year.

Now, where that gets us in terms of segment earnings before DD&A? About flat for the quarter compared to last year. And then for the six months, also about flat. For the quarter we're actually ahead of our budget. Now we were below budget in terms of segment earnings before DD&A in the first quarter, but for the second quarter we're actually ahead of our budget in terms of segment earnings before DD&A. But as we look out for the year, we do think that we'll fall a little bit below budget in terms of segment earnings before DD&A. I kind of walked you through this. Products a little bit above. Natural Gas pipeline, CO2, and Terminals all a little bit below. And in Kinder Morgan Canada, we expect to be a little bit above. That being said, we still expect significant growth in our segment earnings before DD&A relative to last year. And so, again, still getting very nice growth out of these segments, even if it's not quite up to budget.

Now the other thing I want to point out, is in a macro environment with respect to demand for a number of these products and commodity prices, that's pretty ugly. Now our segments are still performing fairly well. We have a budget that has very nice growth in it relative to 2008, and most of our segments are going to be very close to that budget. And even the ones that missed are only going to miss by maybe a few percentage points. And I think that shows a couple things. One, it shows what we've been talking about for years, the stability of the assets that we own. The stability of the assets in our portfolio, and their ability to generate cash in even poor macro economic conditions. I think the other thing that it demonstrates, is the resourcefulness of the people that we have managing these assets. Our people in our business units, operations people, commercial people, recognize that these were tought times and have done a phenomenal job at offsetting the deficits that we faced. They've done a tremendous job of find cost saving opportunities, a tremendous job of finding additional opportunities to take advantage of our assets. So again, in conditions that are very poor, our assets are still performing relatively well.

With that I will drop down to G&A. It's about 10, 12 lines down. You will see about $74 million for the quarter, actually down from about $76 million for the quarter a year ago. Year-to-date, we're up about $11 million. But what you're seeing here is some of the impact of some of the cost saving initiatives that we implemented in the first quarter, again in an effort to improve our results relative to our budget targets. We enacted a number of cost-saving mechanisms. Those are bearing fruit. We do expect that overall, our G&A expense will come in under our budget for the year. Interest is right below that. You will see it is up about $1.6 million from where it was a year ago. It is up almost $9 million, a little less than $9 million, for the first half. But for the quarter, it is significantly under budget., and we expect for the year that it will come in significantly under budget. And that's essentially favorable floating interest rates. Our floating rates are a little bit lower than what we had in the budget, and we're realizing the benefit of that.

Below that, you have the Certain Items. For the quarter they really are not overly meaningful, and for the most part, not new. Many of them are the same things that have shown up previously. The first one that's a positive is again related to the Kinder Morgan Canada book taxes. And prior periods, we actually are putting down here Uncertain Items. I mentioned the fact that some of these book taxes show up up in the segment. That's the current effect of this accounting change. The prior period effect shows up down here in Certain Items. It was a positive for this quarter. So again, take the Certain Items down, you get down to the net income numbers that we had discussed previously. And with that I will go to the third page, but really it's the fourth page.

The volumes are on the next page. A lot of that is covered in the press release, and Rich went through that. And so I'll skip to the last page of the earnings release, which is the balance sheet. And running through that quickly, Other Current Assets is down, largely a function of accounts receivable. PP&E change is a function of expansion capital offset by depreciation. I'll give you a little bit more detail on expansion capital in a minute. Investments is up tremendously, $776 million. That's a function of our investments in Rockies Express, which was north of $400 million, Mid-Continent Express, which was north of $300 million and [FEC]. And so again, contributions to the joint ventures that occurred since the beginning of the year, are reflected there. Deferred charges and other assets are down. That's a result of the change in value of our hedges. So total assets, about $18.5 billion.

On the liability side, I'm going to discuss notes payable when I talk about debt. Other Current Liabilities is down primarily as a function of Accounts Payable. Long-term debt I will talk about in a minute. Value of interest rate swaps is down. That's a function of the forward curve [for] interest rates. And Other Liabilities is up, and that's a function of the change in value of our hedges. Now on the Partners Capital side, again, you have a change in Accumulated Other Comprehensive Loss. That's a function of the change in value of the hedges. Other Partners Capital is up, largely as a function of the equity that we issued in the first half of the year. And so that takes you, again, down to Total Liabilities and Partners Capital of about $18.5 billion.

Our net debt at the end of the quarter was about $9.3 billion. That's up almost $800 million from where we were at the beginning of the year. It's also up about $620 million from where we were at the end of the first quarter. And I'll walk you through a reconciliation there is just a second. But quick, a look at debt to EBITDA. we're at 3.7 times compared to 3.4 times at the beginning of the year and 3.5 times at the end of the first quarter, but consistent with where we expected to be at this point in the year. And so the change in debt for the quarter is about $620 million, year-to-date, a little less than $800 million. Expansion capital for the quarter is over $300 million, and year-to-date has been about $625 million. And on top of that, we've had significant contributions to our joint venture pipeline project. For the quarter, almost $630 million, and for the year, a little over $800 million. So again, significant investment activities going on in the first half of the year, consistent with our expectations.

We have had one small acquisition for the quarter and for the year. The cash that went out on that was about $18 million. So those were uses of cash. Sources of cash from equity issuance we've generated, raised about $382 million for the quarter, about $670 million year-to-date. Two things I want to note about those numbers. One, those are net and so they're net of underwriting discounts et cetera. And the second is the exercise of the shoe from our June offering actually occurred in July, and so it's not reflected in these numbers. But we have already received the cash from that. It was included in the $750 million that's mentioned in the press release. Again, that has already happened. It just didn't happen in June, if happened after the end of the quarter. From a new deal that we have with a customer, we generated about $12 million in the quarter, about $110 million year-to-date. We also generated about $144 million through a swap unwind back in the first quarter. That was in January.

There are a few other ins and outs. And then we have a Use of Cash for Working Capital Purposes of about $37 million in the quarter, and it's almost $200 million year-to-date. Now that is Accounts Receivable and Accounts Payable, with a use of cash of about $60 million in the quarter, almost $100 million year-to-date. Our Other Current Assets and Inventory, was a use of cash of almost $80 million for the quarter and year-to-date. Other Accrued Liabilities, such as accrued taxes and accrued interest, was actually a source of cash during the quarter of about $127 million. And then we had some cash that was paid out for rate cases and for various other items. The total up again to the working capital uses of cash for the quarter, about $37 million, year-to-date about $200 million.

Now, as we go forward throughout the year, we actually expect a fair amount of that working capital to reverse itself . And so hopefully in the second half of the year, we see a source of cash from working capital. Again, those things coming back to us. A little bit more detail on the expansion CapEx. You may recall, I said Total Expansion CapEx was a little over $300 million for the quarter, about $625 million year-to-date. On the product side, it is about $40 million for the quarter, about $67 million year-to-date, a lot that is being spent at [Southeast] Terminal, and then our expansion at our Carson facility out in California. On the natural gas side, it's about $128 million for the quarter, about $232 million for the first half. And the vast majority of that, almost all of it is the Louisiana pipeline.

Then we have some smaller storage expansions going on. On the CO2 side, we've spent about $71 million in the quarter, about $188 million year-to-date. As is typical, most of that is spent at SACROC, a little bit at Yates. From the terminal side, we spent about $67 million in the quarter, about $137 million year-to-date. Our expansion in Vancouver [Wards] is the biggest piece of that. Then you have assorted smaller projects, and a large number of smaller projects. And then as I mentioned, we've made significant contributions to our joint ventures throughout the first half of this year, and that will continue in the second half of this year. And those are the financials. I will hand it back to

Okay. Ed, if you will come back on, we will take any questions you all might have.

Thank you, sir. (Operator Instructions). And one moment, please. Our first question comes from Gabe Moreen. Your line is open. State your company name, please.

Banc of America-Merrill Lynch.

Hi Gabe, how are you doing?

Hi Rich, doing well. Yourself?

Fine.

Good. Question on the Katz development here. The $180 million, does that cover the cost of the pipeline or does that also cover some of the capital costs of starting up the field itself as well?

That covers both. That's 91 miles of 10-inch pipeline and the cost of developing the flood at Katz, all in.

Okay. And then two follow-ups, if I could on Katz. One is, I guess do you envision any of the capacity on that line going to third parties? It seemed like you alluded to third parties maybe using some of that capacity --

Yes, initially -- go ahead.

I'm sorry -- just also in terms of how you think about hedging that commodity risk as you ramp up production?

Okay, let me answer those two questions. From the capacity standpoint, we most assuredly do think there will be other users. We have baked into this project, in the $180 million-plus for the project, the full costs of the line coming from SACROC over to Katz. We certainly -- the line -- we certainly expect to have other customers in that line, third party customers, and we think that will give us upside to the present case. But that's not in the numbers that we're talking about now. And we think, in fact, not to overstate it, but actually, Tim's here. That pipeline is expandable with very little cost, up to $200 million a day, Tim is that -- so we can move $200 million across there. There are several adjacent fields to Katz, where we have been in discussions with third parties already about servicing them, but obviously we can't do that until we have a base load for the pipeline. Katz now is the base load for that pipeline. And then we think beyond the Katz field, which we already own, there may be opportunities to acquire other fields in that general area, that where we might use some of the additional capacity on that pipeline. So it's a pretty significant project and one I think that fits very well under our long-term goals for our CO2 segment. With the hedge -- from a hedge question standpoint, Gabe, we expect to hedge that under our program just as we do SACROC and Yates volumes on a going forward basis.

Okay. Two other questions, if I could. One is on the $100 million you have budgeted for terminal acquisitions. You got a little done in the second quarter. Do you still feel pretty good about hitting that $100 million for the year?

We do. And, in fact, I had hoped to be able to make a couple more announcements today. We certainly expect them in the very near future. We just haven't quite crossed the T's and dotted the I's. And again, I don't want to over-exaggerate here. They're not blow-your-socks-away acquisitions, but certainly we expect to meet that $100 million. Yes.

Great. And last question is just, other than the fact that you continue not to spend any money on brand consultants, is there anything to read into the name change at your GP?

Good question, Gabe. No, there's really not. We think it will eliminate some confusion, because nobody knows who Knight is and most people know who Kinder Morgan is. This was something that at the time of the privatization, the rating agencies preferred that we do to separate the two. We did that. Since then, at Kinder Morgan, Inc. , we've paid down the great majority of the debt, of course, and so we no longer need that same degree of separation. So everybody was agreeable to us going back to the original name Kinder Morgan,

Thanks, Rich.

Yes.

Our next question comes from Stephen Maresca,. Your line is open. State your affiliation please.

Morgan Stanley. Good evening everybody.

Hi.

Couple quick questions here. On growth CapEx costs, you mentioned a little tick-up on REX, and I know it includes some expansions. But as it relates to the Fayetteville expansion, I guess how confident are you in the budget for that, and is it possible, if costs have come down, that it comes in under budget?

I'll let Steve Kean answer that question.

We feel pretty good about the costs. And a big part of that is that the project is being built in a little bit of a different economic environment when it comes to procuring services, construction services in particular. Contractors don't have as much to do as they did a few years ago, so we think we're going to be able to not only get some pretty good prices on the construction, but hopefull, also get a better [allocation] of the risk of the construction processes [meaning] the projects and the contractors. None of that is all done yet, and that's why we're not changing the forecast. I think we'd be hopeful, as we'd always be, that we'd be better than the number. But I think we have some pretty good comfort around the number that we are projecting right now.

Plus, that's being laid right down pipeline alley where there's been a prior pipeline constructed in the recent past. So it's, in a lot of respects, it's just a lot more straightforward, easier project than some of the others we've had.

Okay, What, if any, is there plans or thoughts on extending REX further beyond Clarington?

Steve?

It's something that we continue to look at. We have conversations with the LPCs over on the East Coast. We've recently been talking to [Marcellas] Producers. There's nothing really imminent there at all. It's just something that we want to keep as a potential growth option available for us, and so we keep -- kind of keep the discussions going. But there's certainly nothing imminent there. We do feel like eventually gas needs to continue moving on, and we're not that far from strengthening the Marcellas production that is under development right now. So it's just something that we want to continue to keep our eyes on and see what opportunities might be presented, but there's nothing really on the -- or nothing really imminent right now.

Okay. And then my final question I guess is more for you, Rich. We've seen some distressed assets come for sale and we've certainly seen now a couple MLP mergers in the space. In the past, you've been an acquisitive Company, and now you've switched to a lot of organic growth. Maybe, what are you seeing in terms of the acquisition market? Are you looking out there? And just sort of your thoughts on that.

Well, we're always looking at all opportunities, including acquisitions, and we've had talks from time to time about acquisitions, and we'll just have to see how it pans out. Again, we want to be -- whatever we acquire, we want to be very selective. We want to be very careful. These are certainly challenging times in the sense of knowing what the forward cash flow of an asset really is. It's a lot more difficult to predict today. So we certainly wouldn't rule it out. We've looked at some things, but we're going to be very careful, and we'll only do it if it's positive from an accretion standpoint for our present unit holders.

Okay. Thanks lot.

Okay.

Next question comes from Darren Horowitz. Your line is open. State your affiliation please.

Raymond James. Good afternoon, Rich.

Hi Darren, how are you doing?

Pretty good, thanks. First question on the Texas Intrastates business, if you could elaborate a little bit more, outside of the timing of recognizing those storage revenues like you alluded to. Can you give us a little bit more insight into the potential for the sustained impact of lower natural gas prices on volumes in the back half of this year? And more specifically, what you're hearing from producers?

Well, I think certainly, lower prices are having impact on the margins or the spreads we can get on gas we haul from South Texas, or East Texas to the Houston ship channel and over to Beaumont. So I think that's certainly a negative. We've been able to offset some of that by just being, I think, good buyers and sellers of gas and preserving the margin. We do a lot of back-to-back [mainly] contracts. But certainly it's had impact on us. The other impact has been that some of our contracts are tied to a percentage, and at prices lower, that percentage shrinks also. Let me say, I'm kind of a contrarian. In the long run, I think that lower gas prices are actually going to be very much a positive for Kinder Morgan and the other midstream energy players, because I think what we're demonstrating is that we have a tremendous supply of natural gas, 100 years-plus probably, with all the shale [price] in the Lower 48. And that makes gas a lot more marketable from the standpoint of using it for future electric generation. And if you really look at the situation, the only real way, in my opinion, to make a real credible impact on CO2 emissions, in terms of reducing it, is to have massive new electric generating capacity that -- where natural gas replaces coal. And that's not to say that coal is going to be phased out, but I just think that natural gas, given its abundance and given the relatively cheap prices now, I think that's going to be a very positive in the long run for the overall usage of natural gas. And if you do that, that's going to vastly increase the need for infrastructure, which is of course, our sweet spot. But it is going to have -- has had a negative impact. I think it's going to continue to have somewhat of a negative impact on the Texas Intrastates for the rest of the year. Steve --.

In talking with producers, have you gotten a feel for any sort of pricing sensitivity that might give you the ability to be a bit more constructive on your Intrastates volumes in the back half of the year? I mean is it [$5 or $5.50] or possibly even lower than that where you could see a volume uptick sequentially?

Steve?

You mean in terms of when people start drilling again?

Yes, just trying to get a feel for possibly you guys coming in a bit closer to where you were budgeted this year.

Well I guess the first thing I'd say is when Park was talking about expectations through the end of the year, [in some] already taking into account some of the things that Rich was just talking about on the supply side [of getting at that]. I think what we're looking to in terms of how we might see the gap narrow or do even better, I would tend to place that less on the idea that there's going to be some kind of dramatic supply recovery in the field in South Texas. We might do a little better on process and treating. We might do a little better on our cost side. The storage values continue to be pretty strong. Those would be he places I would look to narrow the gap rather than a supply turnaround.

And the other thing we should point out, and maybe I didn't make this clear, I mean the Texas Intrastates are like;y to come in below their budget. But it is by a tiny amount. I mean they are very close to hitting their budget. There's not a very big gap to fill there.

Right. Rich, just one final question if I could. On the terminal side so we can get a better feel. Can you quantify the uptick that you mentioned in steel volumes in July? And then incrementally, how much do you think you can claw back from cost reductions?

Well, first of all, we've been able already to claw back a lot from cost reduction. If you look at the total impact from a revenue basis of this downturn, steel alone, it's been a lot greater than the total downturn in the whole EBITDA and earnings before DD&A of the Terminals unit. So we've clawed a lot back. And I guess the one thing about having shortfalls and handling bulk materials, is that you do have some fairly substantial expenses that go away. You have less fuel because you're not using your big earth moving or your [DENI] as much as you were, and you have a lot of contract labor that you can lay off on a short-term basis. So we've been able to do that. So we've been able to claw back a significant portion of it. As far as the uptick in numbers, it looks pretty impressive when you compare the second quarter with what we expect to see in July. But the July numbers are still well below where we were a year ago at this time. So I think what we're seeing on the part of our customers is I think they have, most of them on the steel side, have pretty much gone through their inventory now, and so it's a kill-to-eat type of thing. Whatever new contracts -- they're not going to build inventory again, but whatever new contracts they can sign is what they will produce in the out months of the year. And so we're seeing a nice impact, favorable, in July. But whether that lasts, we'll just have to see, and it's still well below last year.

Sure. I appreciate the color. Thanks, guys.

Thanks.

Next question will come from Michael Blum. Your line is open. State your affiliation.

Wells Fargo Securities.

Hi Michael, how are you doing?

I'm good, how are you? Couple questions. One, I guess more of a conceptual question, on the Katz announcement with the CO2. I guess, can you just talk conceptually about your decision to expand your activities in the CO2, particularly in the production side? And then I guess related to that, what's your comfort level for how big as a percentage of your total cash flows would you be comfortable having that CO2 component become?

First of all, we would it not do this unless it were a very positive project. Read that as well north of 20% on unleverred IRR with very conservative -- what we think is very conservative oil pricing, well below where the forward curve today is, in the -- at the time of maximum production from Katz. So that's -- it's like we've said a million times. We're going to look for good projects any place within the area of our sweet spot where we do business. And, of course, when he look at what percentage of -- are we comfortable with, remember that over a period of time, of course, these things don't last forever, and we're going to have a decline in production at SACROC in the out years, as we've said all along. Now Yates is very little decline there. It's a very different field, much longer lived. But this will certainly fit in and replace, we think, declines that we will see from our other production. And then the other thing I want to emphasize, this is not just a play about producing crude oil. We really think this pipeline has the ability to be expanded and extended to cover what looked like some pretty good plays up there in that whole area. And so in essence what we're doing, we're just moving our whole CO2 supply infrastructure, which really begins all the way out in southwest Colorado. We're moving that 90 miles to the east into a pretty prolific part of the Permian that thus far has not had any CO2 supply to it. And it's much easier to do it the way we're doing it, which is to be able to base load it with our own very high-return project. But then, where we think there will really be some upside is moving additional CO2 to third parties in that general area.

Great. That's helpful. Thank you. My second question is just on the Cochin Pipeline, the NGL volumes were up pretty dramatically quarter over quarter. Can you just talk a little bit about what's driving that increase?

That's a good question. What we have is customers who are, for their own marketing reasons, moving a lot of NGLs further east, more NGLs than we expected from Canada down to the US, and moving it further east than we had expected. And I don't know what their reasons are. They're building inventory further east, or what their game plan is. But we've had very nice volumes the last several -- the last few months.

Any indications -- has that continued into the third quarter? Do you have any indications from your customers if that sort of -- they're still planning to do that sort of going forward into the year?

Well, it's a month-to-month nomination process, so July looks pretty good. But we don't know beyond that, and we just to have wait and see what they do.

Okay. Thank you very much.

Our next question comes from Noah Lerner. Your line is open, sir. State your affiliation.

Thank you. Hartz Capital. Just a couple of real quick questions. On the Kinder Morgan Louisiana Pipeline, I take it that that's basically bringing in a lot of the gas that will be coming off of the Cheniere's LNG facility there for Chevron and the other party, Totale. My understanding is shipments will be somewhat sporadic coming in. It's not going to be every day. I just was wondering if there is any way to leverage the pipeline to pick up additional revenue when those two entities and organizations are not filling the pipeline with their shipments.

Well, you're quite right on that, that we expect they will be sporadic, and, of course, as we've said before, the value to the shippers is the optionality it gives them. When they land LNG at Cheniere, they now have the ability to access, I think we cross 13 different pipelines across what we call pipeline alley in Louisiana. So it's optionality. It will be sporadic, I'm sure. And Steve, you want to comment on the other uses of the pipeline?

Yes. While their usage may be sporadic, their demand charges are not. So they will pay whether they use it or not for the shipments. Now, there is a lot of inter-connectivity on the [pipe]. And so there should be some options. We are working with our shippers, because they have capacity rights on the line, obviously. But working with our shippers to find the right ways to capture that in what we would call low pressure operation. That would be the operation of pipe when there is a big LNG offload coming through. So we're still working on that. I think there should be some value there, and we'd expect there to be some value there. So we're working on that. The longer term would be is there an opportunity, and we don't know that there is, but certainly we'd want to evaluate whether that pipe, which currently does not have any compression on it, whether it would make sense to install some or otherwise make a pipe able to do more than it currently can. That would obviously require capital. And that's something that we'll continue to look it as well. But the connectivity gives us some hope that there's some value there, and we'll work with our shippers on how best to capture that.

Okay, great. I guess my other question is, if you could just -- if someone could add a little bit of color about exactly what will transpire, what you guys expect to transpire in the back end of the year, that's going to make up for the cash flow shortfall compared to budgets in the first half in the year. What is it that you are going to be over -- exceed the budget on that's going to create that additional cash to get to you that 1.0 coverage ratio? Park?

Yes, now I mean clearly I said that we're about $40 million behind through the first half of the year, and so it's not that big a hurdle to make up when you're talking about an entity that generates almost $3 billion of segment earnings before DD&A. But that being said, I mean what's going to happen is, first and foremost, we have a number of major natural gas pipelines that are coming into service, a number that have already come into service, weren't in service for the entire first half of the year, will be in service for the entire second half of the year and then -- [NEP] -- and then the last piece of [breadth] that will come online during the second half, that will provide contributions that they -- that weren't provided in the first half of the year. We have other expansion projects going on as well. Don't have as large of an impact as that. We had the timing issues that we discussed on the Texas Intrastates. And so there are a variety of factors. And in truth, if you look at it, our expectation is that we probably fall short of covering the $1.05 again in the third quarter, but in the fourth quarter we expect to have significant excess coverage.

Okay. Was these pipelines coming online in the second half not budgeted, or is it that they're going to come online sooner in the second half than budgeted, which will create the additional cash flow?

No, if you go back to what we talked about in January when we went through the budget we actually expected -- I can't remember exactly where we were in the first quarter, but I think we were a little bit below coverage in the first quarter. We expected not to have coverage in the second and the third quarters, and we expected to have significant coverage in the fourth quarter that would make up for that. So really, the way it's playing out is not that different than the way we budgeted it.

Okay, great. Thanks for your time. Appreciate it.

Sure.

Next question will come from Brian Zarahn. Your line is open. State your company please.

Barclays Capital.

Brian.

Good afternoon, guys. On the Products Pipeline business, revenues were flat but earnings were up around 15%. So obviously cost savings were a big driver, and you expect to meet your budget in that business. Will it be mostly by cost savings or cost savings in the tariff [bump]?

I think it's a combination of both. We have had significant cost savings, and it's not just what you'd expect, cost savings in cutting O&M overhead. We've also had significant savings in our utility costs as our throughput is a little less than what we had projected. And also, as one of the benefits of lower natural gas costs, of course, some of the utilities supplied to our products lines actually come from natural gas generation. And therefore we've had a lowering of those utility rates on a kilowatt hour basis. So it's a combination of all those things. We have had, of course, the inflationary escalator on July 1 that went into effect, which was in excess of 7% on our [intrastate] lines. And then we've had -- have been able to have some tariff increases, particularly the state of California, that have also added to the bottom line. So it's a combination of a lot of things, and I think this Management Team is pretty good at taking costs out, and I also think it's pretty good at sensing opportunities and taking advantage of them. And certainly in our West Coast terminals, as Park pointed out, that's a positive. Our southeast terminals are doing well. These are all unregulated assets that we're just able to take the material that's in -- the steel that's in the ground and maximize revenues from them. So it's a combination of a lot of things, and I think it's going to be a great accomplishment for them to meet, slightly exceed their budget for the year in the face of the downturn in throughput.

And, Rich, just two things that I will add to that. One is, the revenue number that you're looking at that's in the press release, it's just refined product, and it's just pipeline. And so that's not the entire segment. Now, when we publish the [queue], you will see the entire segment revenues, and I think you will see that they're up a little bit from what's represented there. And then second thing is, while no question, it's true that we will get a benefit in the second half from the FERC increase in tariff as well as just a budget, that's essentially no impact because that was incorporated into the budget.

That's helpful. I guess looking a little more at the segment, the gasoline volumes were pretty decent, well above sort of the IA numbers. And ethanol was a little bit of a help, but is this a sustainable level you think for the rest of the year, for gasoline?

Well, I think that the level -- as I said at the start, it's volatile. Who knows for sure. I think the level where we are now, if you take into account all the products, I think it's pretty representative of what we'll see the rest of the year. There's no guarantees on that. Some people would say we'll see more uptick, but I think right now what we're seeing is -- I don't know if these numbers are anything to crow about in terms of throughput, but a little better than the first quarter. We'll just see how the rest of the year develops. You shouldn't hone in on one product. Gasoline, as I said, is positive, even year-to-date, by just a smidgen. But jet fuel is still down, although it seems to be coming back. Second quarter is better than the first quarter. And the distillates, the diesel, is definitely down, and did it not turn around in the second quarter. So I don't think that we had an aberration to the positive in the second quarter, and we'll just see how the last two quarters go.

Just one last question on Trans Mountain. You saw some heavy ship traffic in Vancouver. Do you see Vancouver as a continued growth area for some of your growth projects?

Yes, I really do. What we're finding is, I think, a good bit of interest in our customers who are the producers, in finding other outlets for their crude oil, other than moving it through the pipelines to the east into Pad 2 in the Midwest. And there's a lot of reasons for that. A lot of moving parts as there are in all parts of our business. But they seem to be particularly desirous of going over the dock. Most of that is going to the United States and some [specific] coasts of Californian. Some is going to Asia. But it gives them a real option. They can move it down the line. We have some storage both at the start of the Trans Mountain line and adjacent to the dock there in Vancouver. We can get sizable ships in to move it out, and it's a pipeline that's already in place that doesn't require vast amounts of new commitment on the part of the shippers. So I believe that we're going to continue to see additional Canadian crude go out across the water. And I think at least for the next several years, it will go out primarily through Vancouver.

Thank you.

Yes.

Our next question comes from John Edwards. Your line is open. State your affiliation.

Yes, it's Morgan Keegan. Good afternoon, everybody.

Hey, John. How are you doing?

Doing well, thank you. I wanted to follow up a couple questions here. On your Kinder Morgan Louisiana line, that's -- you've got the capacity sold. Is there going to be any opportunity to do some kind of interruptible shipments along the line should it not be utilized by Totale and Chevron?

Yes, again, we are looking at the opportunity to put the pipeline in what's called low-pressure operation, which would be operations without a ship offloading. And we think there may be some incremental revenue opportunities given the connectivity of the pipeline. And so we're working with our shippers who, again, have substantial rights to that capacity on the line, to figure out a way to do that and how best to move from low to high pressure operations. But there should be some revenue opportunities there. We are looking for the best way to get out.

Okay, great. And then I was curious on the Katz development. How do you expect the cash flow there to split between what you get from the pipeline -- CO2 pipeline and oil?

Well, initially, when we're just moving the CO2 to our own Katz Field, the great majority of it will be -- of the cash flow -- will be coming from the production of crude oil in the field. This production of 25 million barrels over 15 to 20 years. Eventually, I think, if we can, and we have high hopes that we will be able to sign up third parties for capacity, then I think you will see the pipeline become a much bigger contributor to the cash flow of the overall project. And that's what really makes it intriguing.

Okay. Thanks for the clarification on that. And then on the CapEx that you had -- that was to the joint ventures this quarter, could you repeat that? I missed the numbers.

Park?

Yes, and really, the numbers I gave you were for the full year. Those were the change, again, in that investments line on the Balance Sheet from December to June. On Rockies Express, it was north of $400 million, on Mid-Continent Express, it was north of 300 million. And then FEP was actually $30 million.

Okay, great. And let's see. On SACROC, on the volumes you mentioned, those were above budget. Can you talk a little bit about -- I mean do you expect those to continue to be sustained above budget for the rest of the year?

I'll let Tim Bradley comment on that.

The second quarter, we averaged around 31,000 barrels a day at SACROC, and so far month-to-date in July due to heat impacts on our compression equipment, we're a little bit below that. So setting that issue aside, we are forecasting oil production to remain above target for the rest of the year. Our current forecast is averaging around 30,500 barrels a day average for the year. Again, July might come in a little bit below that as we battle heat issues, but we do expect to remain above budget for the remainder of the year.

Okay. Great. And then I'm just curious. From time to time, you talk about this, Rich. With the general partner, you're very deep in the splits. It is -- it does raise your cost of capital. Are there any thoughts in the long term to doing something there, or not?

No, I don't think so. John. As we've said he so many times, both Park and I have said this, that we're certainly not having problems making investments or finding acquisition opportunities that are well above -- that produce returns well above our cost of capital. And as long as we can do that, we would have no intention to change the splits.

Okay, great, thanks very much. Appreciate it.

Okay. Thanks, John.

Next question will come from Alex Myers. Your line is open. State your affiliation, please.

Zimmer Lucas. Good afternoon, guys

Hey, Alex.

Just wanted to look forward a little bit to 2010 and see what you guys thought about SACROC and Yates production for that period of time.

Well, we haven't even started on our budget yet. Again, Yates is a very predictable field in the sense that it's a gravity drain, it's -- has a very slow decline rate. We are continuing to drill some horizontal wells there. We're doing a little step-out drilling in a couple of places. And SACROC, of course, has more of a decline curve. That said, we are still in some very sweet spots, this area called the platform that we'll be drilling up in 2009 and on into 20 10. But beyond that, we're really not to the stage yet where we can opine on what the volumes are going to be, but I expect both of them to remain strong in 2010.

And just in terms of services costs, can you talk a little bit about kind of how they would trend going forward? And a lot of the savings you guys are starting to recognize this year, how sticky is that? And where does that savings kind of go away?

In oil field services savings and that kind of thing?

Yes.

That's probably a mixed bag. Some of it will stick beyond this. Some of it won't. Tim, do you want to comment more specifically? Because a big bundle of the savings are in your shop.

The single largest component of cost savings that we've been able to secure so far this year is in our well work expense, particularly rig activities. And they seem to track oil prices fairly closely. And if gas prices continue to remain at their current levels that may drive -- it creates more negative pressure in that arena. We've been able to secure some other cost savings that are a smaller order of magnitude in the various miscellaneous goods and services associated with maintaining and operating our equipment and our assets. Another significant savings is power -- is significantly lower than what we had budgeted. That's largely driven by lower gas prices. But to a certain extent we've been able to operate more efficiently and consume a little bit less power. So that's the breakdown of the major components. Beyond that ,it's pretty small pieces.

Great. Thanks, guys.

Our next question comes from Yves Siegel. Your line is open. State your affiliation.

Thank you. Credit Suisse.

Hey, Yves, how are you doing?

I'm great, thank you. Just two quick ones for you. One is, Rich, from time to time you guys look at the potential backlog of projects. Could you describe how large that potential could be and what the outlook could be there? And then the second and last question would be, I sort of lost track of rate cases. Any update or prospects of final settlement?

Let me start with the second question first. On the rate cases, as you may have noticed, we have settled bits and pieces of it with various shippers. We continue to negotiate with shippers to settle other parts of it. As I've said so many times, it takes two to tango there. We'll just have to see how all that comes out. I think on a going forward basis, we're very comfortable with the rates we have now, reflecting the real world. So it's not like we're building up future issues, but it's a question of settling differences of opinion on the past, primarily. But no news other than that. On the backlog of projects, of course, I think the right way to think of this is that we're pretty opportunistic, and we look at a lot of different projects, both grassroots projects and acquisitions. As long as they fit within our areas of expertise. And I think we're going to find a number of those. Our specific backlog of projects right now is not nearly as great. When we finish all these pipeline projects by the end of this year, the only major pipeline project left will be the Fayetteville Express, which is, on a [eight and eight] basis, a $1.2 billion project. We still have some sizable terminals work to go. We have the new Katz project. We have some other smaller projects. The Travis Air Force Base project on the product side. You add all that up, and it's a few hundred million dollars of additional projects that are in the back long. And then we we'll just see what else comes down the pike. We're looking at some other things that are pretty interesting right now, but obviously we're not going to announce or say anything about them until we actually have the horses in the corral.

Thank you.

Yes.

At this time I show we have no further questions, sir.

Okay. Well, we appreciate the patience of everybody. We've been on for awhile. Thank you very much, and have a good evening. As usual, if you have any tough questions, call Kim Dang or David Kinder. They'll answer them for you. Thank you

At this time, that will conclude today's conference. You may disconnect, and thank you for your attendance.