威廉斯 (WMB) 2012 Q2 法說會逐字稿

Good day, everyone, and welcome to The Williams Companies second-quarter 2012 earnings release conference call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Mr. John Porter, head of Investor Relations. Please go ahead, Sir.

Thank you. Good morning and welcome. As always, we thank you for your interest in Williams. As you know, yesterday afternoon we released our financial results and posted several important items on our website, Williams.com. These items include -- the press release of our results, with related schedules and our analyst package; a presentation on our results and growth opportunities, with related audio commentary from our President and CEO, Alan Armstrong; and an update to our quarterly data book, which contains detailed information regarding various aspects of our business.

This morning, Alan will make a few brief comments and then we will open the discussion for Q&A. Rory Miller is here from our Midstream business, Randy Barnard is here from our Gas Pipeline business, and our CFO, Don Chappel, is also available to respond to any questions. In yesterday's presentation, and also in the quarterly data book, you'll find an important disclaimer related to forward-looking statements. This disclaimer is important and integral to all of our remarks, and you should review it. Also included in our presentation materials are various non-GAAP measures that have been reconciled back to generally accepted accounting principles. Those reconciliation schedules appear at the back of the presentation materials. So, with that, I will turn it over to Alan.

Thanks, John, and good morning. Thanks for joining us. I know it's a busy time right now, so we appreciate you being able to take the time out for us. Certainly, despite a very disappointing financial performance in the second quarter and significantly lower margin forecast for the balance of '12 and '13, we are very pleased that, despite that, we're able to continue to remain confident in our very well supported dividend growth, which is still at 55% here in 2012 and 20% both in '13 and '14. So, a lot of our confidence on that continues to come from the degree of coverage that we have had built into our model, as well as the extraordinary maintenance costs -- or maintenance capital that we have built into TZ right now, and as well, a lot of continued strong growth coming from our fee-based business.

Our second-quarter performance was certainly impacted by a rapid decline in NGL prices, but a few things as well hit us. One thing, I think, that doesn't always -- isn't always obvious in the way we report is that we also have a pretty significant amount of product that is in transit, that is held in pipelines. Of course, that gets re-marked each quarter based on the pricing decline. So, in fact, in this period we had about a $22 million impact on that, over and above what you would see in your typical pricing model. So, whenever we see prices move down, that gets somewhat accelerated, and when we see it move back the other way it comes back to us.

But there certainly were other factors, as well, beyond pricing. Some growing pains, the Boreal pipeline line fill, the high startup O&M costs associated with the Caiman pipeline -- or sorry, the Caiman acquisition that we now refer to as Ohio Valley. And as well, quite a bit of depreciation expense going on with that, as well. But, we also had higher maintenance costs, which we accelerated some of our work out in a lot of our Western plants, as we had a third-party fractionator being out during the second quarter that required us to take some of our plants down. So, we took some advantage of that and accelerated things like a lot of turbine overhauls and vessel maintenance during the period.

The good news for the quarter, a 19% increase in our fee-based business within our midstream portion of WPZ and we had certainly had great progress on our major project execution going on during the quarter, as well. So, we remain very confident in the way our model is growing, particularly on the fee-based business side. Just commenting quickly on prices. Certainly the second quarter drop that we had from first to second quarter was over 20% on our NGL margins. The balance of the year is forecasted to be approximately 30% lower than what we recognized in first quarter of '12. So, we certainly have -- in this model, we have taken it down to what we are seeing. And certainly, we expect for prices, particularly on the light-end products, ethane and propane, to be very choppy as we see a lot of new infrastructure and supply coming on, on the NGL side, but a bit ahead of a lot of the petrochemical build-out and some of the export build-out on the propane side.

The NGL crude ratios are really what drove this. A lot of folks have thought about this from a crude standpoint, but really the crude price had very little to do with this. We've got in our forecast, we've got NGL to crude ratios running at about 40% here through the balance of the year versus historical average of 60% and the 50% -- almost 57% that we realized in 2011. So, certainly that disconnect that we saw on the ethane and propane side is what really damaged the second quarter from a pricing standpoint and we expect that to continue, as the market needs to re-balance on supply side on both ethane and propane.

The good news, of course, for Williams is with the Geismar facility. As we are expanding that, we move away from a lot of the risk on the ethane choppiness. We are not at all bearish long term on NGLs, as much as we are realizing that there's going to be a lot of infrastructure changes going on as this market tries to build out and we think there will be quite a bit of volatility associated with that.

On the project news, a lot of great efforts going on around the Company right now in terms of building out our $9 billion that is in our guidance for CapEx through 2014. The Boreal pipeline we brought on, this, certainly, in the second quarter and that was brought on below budget -- below our planned budget, excuse me, and, as well, brought in a little ahead of schedule. Our ethane extraction project in Canada is also going very well. That project is being very well executed. So, this will really be the third project -- the ethane extraction project -- that we have managed up there, the first being the BB splitter, the Boreal pipeline, and now the ethane extraction project. And our Canadian team continues to do a great job of executing on those projects.

Likewise, in the deepwater Gulf of Mexico, our Gulfstar project is going ahead very nicely. The Keathley Canyon project is doing very well. And I will tell you, we remain very bullish on the deepwater Gulf of Mexico as an oil provence and we really think that we are very well positioned to provide a lot of the service as the deepwater comes back. The Caiman -- or Ohio Valley efforts, a lot of effort going on in the build-out. People from, really, all over our systems up there trying to assist with getting that business built out and a tremendous amount of activity going on. A lot of promise and we are very excited about the way things are going, so far, on that acquisition.

The Laurel Mountain Midstream build-out, we are getting to the point where we are almost can say that we are not constraining production there with the infrastructure. We have, for some time, a lot of that volumes have been limited by our infrastructure up there, as Chevron continues to drill out that acreage. We are about to get to the point where we'll be out in front of them a little bit with expansion. We are excited about that. And then, of course, the Geismar expansion continues to go very well and is well contracted at this point. In the gas pipeline space, the Northeast Supply Link project continues ahead and as well our Rockaway lateral. We are hopeful that we can get a positive response that is waiting on a bill in front of Congress. We are looking forward to that.

In addition, we also have a lot of new projects that have been recently announced. The Canadian propane dehydrogenation project, which would be there at our Redwater facility, we think we are extremely well positioned for that project. It's a very nice compliment to our propylene production that we have there today in Canada already. And then the Utica JV that we announced, we are excited about the promise of that. A little early to comment too much on that today, but that JV is completed and we are excited about the promises there. You will see in our capital guidance, you will see that we've added in capital for that JV in terms of our expectation for that.

And then the just announced Leidy expansion, really excited about the way that's gone. That project winds up being a very nice project for us, in terms of being able to expand along our Leidy system. And we think that will be a, both a lower risk project for us in the immediate term, but also provides, we think, a great value to producers and/or markets and giving them great access to those supplies up there. So, very excited about that. We certainly haven't shut the door in any way, shape, or form on the Atlantic access, but we're not about to go ahead with a very risky build like that without very strong support from the producer community in terms of contracts that make sense for the kind of return that's allowed in the pipeline space.

Finally, the [adult] and lateral Mobile-based South are also projects that are gaining steam here in the second quarter and into the third quarter. So, our backlog continues to mount, as does our confidence in our strategy, in our growth, in our dividend. With that, I'll turn it over for questions.

(Operator Instructions) Kevin Smith, Raymond James.

Can you all speak on the Boreal pipeline. How much that lowered your NGL volumes by this quarter when you started up into fill it?

Rory, you want to take that?

Yes, that was about a $9 million hit to us with the cost to fill.

No reason that any of that should impact 3Q, right, it is all behind?

I'm sorry, I didn't catch that? Could you repeat that second question?

Yes, if it would affect third quarter at all.

I don't think so. The line is full now. So, we will carrying that, but there shouldn't be any additional had after that.

And then my second question on the Geismar plant, can you talk a little bit about how much EBITDA and cash flow that's generating right now and, I guess, where you are in your CapEx plans for it?

We typically haven't released individual numbers for Geismar. The second part of your question, on the CapEx plans. We have got a couple of capital projects going on, there, right now. We are upgrading some of our furnaces and I think we've got that project's partially completed, but is ongoing. And then, of course, we've got our major expansions planned to be in service in third quarter '13. Those are the main CapEx plans for Geismar at this point.

Thank you very much.

Bradley Olsen, Tudor Pickering.

A couple questions on the Atlantic access and Leidy announcement. I assume it's safe to say that given that Leidy is kind of running along the existing lateral, that's going to be a higher return project than building out the new laterals Butler and Natrium would have been.

Alan, is that something you'd like me to take?

Yes, Frank, please.

I think as Alan said, the fact that we have the existing Leidy line already there, that the execution risk associated with the new build would be less than a greenfield project.

The economics of each of the pieces are going to be a function of the kind of shipper commitments that you get. And so, as Allen also said, we are going to continue to monitor the interest along that new Greenfield build.

We will proceed with that when we get enough interest from producers to support an economic project. We are just not there for an in-service date of 2015. But, based on the projections that we have seen of production in the area, we think at some time that will make economic sense.

And as far as the Natrium lateral that was canceled, so, that was kind of designed to move gas out of Southwest PA and Northern West Virginia. Should we view the cancellation or at least the delay of Natrium as having any read throughs for your production forecasts in the part of the Marcellus where the Ohio Valley assets is also operating?

Yes. I'll take that. No, that is not in any way, shape, or form the case. We are very confident in the volumes there and the drilling activity that continues there. I think the producers are fairly confident in the area and are happy to take the prices that they can get on some of the systems that are further to the east over there.

So, time will tell if that will hold up in terms of those net backs, but today, I think they are confident that there is adequate takeaway there today. Again, that becomes crowded. Once it becomes crowded, the price will decline. But, I think today, as evidenced by the interest, they are pretty comfortable with the current gas markets coming out of that space today.

Another one on Transco operations. Looking at and I understand that most Transco revenue is firm, but there is a veritable component that can move around quarter to quarter. I know that this is a seasonally weaker quarter historically for Transco.

But, it looks as though there is -- that revenue or EBITDA per Mcf on Transco this quarter was kind of lower than it had been on a year-over-year and a quarter over quarter basis.

Is that just because the nature of the volumes are just increasingly short-haul and so on a kind of per unit basis you are seeing revenues decline? Or was there something operationally with Transco this quarter that made the results a little bit softer there.

This is Frank Ferazzi. As you indicated, we do have some cost allocated interruptible transportation and we tend to -- that that can be impacted by changes in seasons. Obviously, we are going to do better in the winter there than we are going to do in the summer. There really were no operational issues that occurred in the second quarter that would've resulted in lower earnings.

And then just one last one. I guess from an accounting perspective why was it that the accelerated maintenance that you talked about in the Rockies, why did that show up in higher midstream OpEx, as opposed to capital? And as a result of that accelerated maintenance, would it be reasonable to expect that maybe the run rate OpEx for the remainder of 2012 would be lower in the midstream segment?

Yes, that wasn't maintenance capital. It was just O&M that was accelerated. Mainly, we were moving forward from what would otherwise be spent in third and fourth quarters. We should see some moderation forward-looking for the rest of the year based on the work that we get.

Great. That's all for me. Thank you.

Craig Shearer, Tuohy Brothers.

A couple of questions. First a follow on to Kevin's Boreal question. Was that $9 million hit all expected just for packing the new line or was that inclusive of some impact from the Suncor plant being down?

No. That was just from the line pack.

What was the impact from the Suncor plant?

Hang on just a second, let me pull that up.

While that is being looked for, on the prepared comments, the recorded comments, I was a little unclear on what the time frame was, the duration for the underwater F-Link supply contracts that kind of halved margins, the Geismar versus what the market opportunities really were in the first half?

Yes, those basically timeout pretty will the end of this year. A little bit of run into '13, but by the end of '13 there's not any residual impact from that. Mostly, Craig, mostly by the end of '12 most of those contracts run out.

And then if we are still looking up that boreal question from Suncor, I had one last follow-up here.

Craig, I do have that, if you want me to interject that here.

Sure. Go ahead.

It looks like it was a little lower $4 million to Q2 that was related to that Suncor outage.

So, the $9 million was naturally expected, because you knew you had to finish the pipeline and fill it, but the $4 million is the unexpected hit. Is that a fair statement?

Yes, that is. And part of that lapped into Q1 and then part into Q2.

Are you talking with the line packing?

I'm talking about the Suncor outage. They had one unit down for about 15 days and then another unit was operating about 75% load. So, the $4 million is related just strictly to the Q2 outage. And than the $9 million is isolated to just the effect of the boreal line pack.

And the last question. Alan, how do you avoid the issues regarding non-qualified income at PZ with a potential drop-down of Geismar? That seemed to be the illogical thing all along, somehow to either contract or drop-down to make a true internal operating hedge, rather than just a consolidated accounting hedge? But there's always this question of non-qualified income at the MLP. Did you find a way around that?

Well, I would just say we took it head on. I would say that we are very confident in how we are handling that. Time will tell in terms of what gets exposed there about what supports that confidence.

As far as details on any drop-down, how immanence do think that could be?

Craig, I think -- this is Don. I think we'd be working through the process with the WPZ conflicts committee and their advisors. Probably expect a closing in the fourth quarter.

Great. Thank you very much.

Carl Kirst, BMO.

This is actually just a follow-on to Craig's about the qualifying income and recognizing was only limited. Maybe you can say, but, I guess regardless of how this is approached, just since this is somewhat of a precedent, will there be some type of private letter ruling or some clarification from the IRS that sets it in stone?

Again, I would just say we are very confident in how that's going to be treated and that's really all we want to say about it at this point.

Don. I would just add that again we think that it's some information that provides us a competitive advantage for us. So, that's the reason that we are not more clear in terms of the basis for our confidence.

No, that latter statement is very helpful. I appreciate that. And then, maybe just a couple of follow-ups. One going back to the accelerated maintenance that was done on the Midstream side. Did that actually, the third party fractionator outage, did that have an impact on the equity sales volumes for the quarter? And if so, by how much?

Yes, it did. We had total production related, kind of, directly to the bushed and frac outage was about 25 million gallons. Of that, about 15 was related to our own equity account.

One other question, just on Geismar and this just goes to the utilization. The 74% utilization, kind of on par with second quarter last year, but down sequentially. Was that just normal maintenance for this time of year or was something else going on there?

We did in Q2 have a turban issue there that had us down, I believe it was seven days. One of those days was actually in Q1 and then the remaining six days was in Q2. I think that was related to about 28 million pounds total being down about $24 an (Inaudible).

And then the last question and this really is just Caiman and Ohio Valley, I guess, just trying to set the baseline for where we are today. Is it possible to breakout what the volumes were for the second quarter?

Let me see I've got right hand man looking that up right now. But. I will say in general, Alan mentioned a little bit about what is going on there from a producer interest standpoint. In general, I would say the volume situation has been very positive. We have got producers waiting on pipeline, waiting on infrastructure and results are looking very favorable.

I think all of the movement that we have heard of volumes from producers has been to the upside, if anything. The area and the quality of the reserves look fantastic. Let's see, for second quarter we are at right around 182 bbtu and about 20 million gallons of NGL production.

I apologize. Can you repeat those numbers?

182 bbtu per day.

You said 20 million gallons?

20 million gallons, yes. Thanks, guys.

And that's just two months of production.

Thank you, Alan.

Steve Maresca Morgan Stanley.

Just some follow-ups on the Geismar proposed drop-down you mentioned in the release of taking units back. Is the idea that this would potentially be solely WPZ units going up to WMB to fund this?

Steve, this is Don. Yes and that's really tax driven. If we take cash we will pay taxes. The tax basis is fairly modest. So, we are inclined to take units to be tax efficient and have as little value lost to taxes as possible.

Appreciating that you haven't released individual numbers on Geismar cash generating ability. But, you do put a chart in there that shows ethylene produced and the margin. Is there something else to it other than that arithmetic for us to figure out?

Well, I would say that the bulk of it. You also have propylene production and butadiene production as well. So, that and the operating costs are the other elements you would have to get to to see a EBITDA there.

Final thing on the Geismar. Is there a thought as to what -- right now you are forecasting 1.03 coverage next year at WPZ. Is there an idea of what this would take PZ's coverage to or where you would like to see after this?

Steve, I don't think we want to put any numbers out. We are in discussions with the conflicts committee at this point. I think, as we reach that agreement with the conflicts committee, we will announce the transaction and provide updated guidance for both WPZ and Williams at that time.

I would say, obviously, we recognize that that business is not a fee-based business. So, our coverage needs to be higher, certainly higher than normal, in terms of how that would impact.

And then you talked about, I think, an ethylene margin rebound as part of the '14 earnings going up. Can you talk just a little bit about what the thoughts are behind the drivers for that?

We certainly feel like that the US continues to be the advantage and North America, in general, I would say, continues to be the advantage place to produce ethylene. We see the demand continuing to come up on a global basis through the period.

So, pretty confident in the general fundamentals around ethylene and if you thing about somebody trying to build ethylene capacity somewhere else in the face of this very low-cost natural gas, I think that drives our confidence. Certainly, we have a pretty good picture of what's going on in the ethylene capacity here in the US

Very fortunate to have Geismar on the front-end of any of these capacity expansions, but there's really not very much other coming on in the near-term through 2014. So, you have great promise coming on. A lot of NGL supplies coming on. But, it just takes a while to build that cracking capacity to meet that increased demand that is coming on. That builds our confidence.

And then finally, on the proposed PDH facility a couple of things. You talked about, I guess, transporting, I think, the propylene to the US gulf coast, how would that happen? Then, is that going to be funded with -- is there enough cash on hand, NB, to fund all that?

Yes. That would be rails, is the plan. I think our belief is that with our current international funds offshore accounts and the cash flow from the existing business that is growing, along with our ethylene project that that should be fairly will self-contained.

We do rail, today, a tremendous amount of propylene out of Redwater already today. This would be just additive, which is, again, a nice feature that a lot of the infrastructure in terms of storage of propylene and railing and loading of propylene, we've already got all that in place. So, this is just additive. I think that's why we feel very confident about us being right builder of that PDH facility in Canada.

We've also got the BB splitter up there, which is going to help us with co-products. We've also got a very unique situation with our sale to nova of a ethane/ethylene mix. Those are advantages that we think we uniquely hold. So, it appears to be a kind of advantaged opportunity for us.

Okay. Thanks everybody.

Ted Durbin, Goldman Sachs.

Sticking with the PDH unit here. Have you given any thought to actually contracting out some of the propylene volumes, or do you want to keep that price risk on the propylene side as well?

We are looking at kind of all of our options right now. I would say, right now our main focus is on scoping, getting some of the initial engineering work done, and we're looking at all the options. Certainly, disposition of propylene is one of the big decisions that we will be making before we sanction the project. But, that's an ongoing exercise.

Then, I appreciate the slides on the ethylene crack. It looks like your forecasting in 2014 that you won't quite get to the industry benchmark? I'm just wondering what would cause you to be short of that plus or minus to hit it or try to be short of it?

When you say industry benchmark, are you talking about the spot, we've got crack spread?

Yes. That ethylene spread that your show 2014, it looks like your realized margin might be short of that. I'm just wondering is that -- is there something with Geismar that you wouldn't hit the industry margin or is there just a difference in the definition there.

There are a couple of things at work there. One is that, even though I think we flagged earlier that in early '13 we will have an opportunity to re-contract almost our entire portfolio. We'll still have a legacy contract out there that won't be fully exposed to the spot market. That's one piece of the story.

I think the other piece of the story is just a little bit of conservatism that is built into how we are able to execute in terms of putting those spot contracts into place. At times, there is some give-and-take between a true spot market deal and a term deal that is tied to the spot market.

But, your intention is to pretty much be spot. In other words, to not do term deals with Geismar?

Yes.

And then, just come back a little bit to the questions on the ethylene margin. Do you care to share what your actual ethane price forecasts are that gets you to that ethylene margin in 2014?

$0.55 a gallon.

$0.55 a gallon ethane? That's great. I think everything else has been hit for me, thanks, guys.

Holly Stewart, Howard Weil.

Lots of questions on Geismar this morning. Just maybe trying to tie the bow there. In the slides, you point out the shift in mix to spot pricing. Previously, we had talked about a half based on fee, half based on exposure to the spread. I'm assuming, addressing Craig's question earlier, by the end of 2012 we will be all based on the spread? Is that how to think about it?

Yes. I think that's accurate. Of course, a lot can happen between now and then. Certainly, our goal there will be to be balanced against our ethane exposure.

And then you kind of give the chart here. Can you just tell us what your margin was that you realized on the spread in Q2?

Stand by, Holly. Got $0.20.

Say that again, sorry?

$0.20 a pound.

$0.20 a pound.

And that was down, Holly, from $0.40 in the first quarter of '12.

$0.40 in 1Q. That's perfect.

Thinking about the portfolio mix, I think Alan was referencing the crack spread out there as opposed to our realized margin. Q1 was $0.18. 2Q was $0.20.

Yes. Thanks.

Okay.

The $0.40, which was first half '12, that's really what the broad market crack spread was. So, that's basically what we've got built into our 2014 pricing is at that $0.40 level.

And then, last quarter you gave some nice commentary on kind of the different re-counts that you were seeing across each of your areas. Is anything on the rig count side changed since last call that might impact things here moving throughout the year?

This is Rory. I think, in general, that step down in activity out West that we flagged for you is is still pretty consistent. I don't think there are any material changes to that level of activity.

Then finally, just one kind of follow-up on the macro side of things. You are hearing commentary that most of those ethylene plants that were down for maintenance in the first half of the year are back up and running. Is there anything else that's still weighing on that?

Right now, if you think about ethane supply, and that's always a challenge to measure that accurately, but about 1 million barrels a day right now on the supply side is where we think it's at. All of the crackers are up and running now. Thank goodness. That's about 1 million barrels a day of demand.

So, we see supply and demand very much in balance. I think in Q4, there are two crackers that are scheduled to go down temporarily. So, that's all we see for the remainder of the year. So, the situation should be a little more stable than what we saw in the first half.

Great. I appreciate the commentary.

Sharon Lu, Wells Fargo.

It looked like for your MC&O business the guidance refers to a coverage of 1.3 times. I guess, Geismar is dropped down to WPZ level. Do you think that type of coverage on the cash flows is still appropriate? Or, are you comfortable with something a bit lower given the natural hedge?

Sharon, I think you have to stay tuned for that. But, clearly, yes, it does sharply reduce ethane exposure or eliminates the long ethane position after the expansion at WPZ. So, we would certainly reduce that. But we will have ethylene exposure and we'll need to make sure that our coverage is sufficient to account for that.

Again, if ethylene prices are very high, you would expect it to have relatively high coverage on that part of the business. And if ethylene prices are lower, we would expect less coverage, just like with our NGLs today. If you look at slide number 83, I think we tried to indicate that somewhat. But, we will be tuning that up as we go through discussions with the conflicts committee, as well as continued look at our view of the forward markets.

And, I guess, also related to the Geismar drop-down, should we just assume that it would be structured so that WPC would not be paying taxes on that cash flow?

Yes.

Then, I guess, on the PDH potential project, can you -- do you have like a potential in-service timing of that facility? Is it a 2015 project?

Yes. I don't think we have released anything on that, yet. It is, as we noted, kind of in the scoping phase right now. That's probably something we will be able to give a little more color on in the coming quarters. But, I think right now it's a little preliminary to drive a stake in the ground.

And then, in terms of feeling comfortable to proceed with that project, would you be looking to secure minimum volume commitments or like a fixed propylene margin?

I think that kind of gets back to the earlier answer that I gave around disposition of propylene. We are looking at all the options. Of course, if you do lock something in fixed you are probably giving away some upside. Those are decisions that we will be making as the project gets fully vetted and pulled together. So, we should have a good line of sight on that by the time that project is sanctioned.

And then the last question, in terms of the Leidy announcement, has that CapEx been included in your budget yet?

Sharon, it has not. When we come forward again with guidance, we will update to include that, assuming that the open season is concluded and we've got all the contracts tied down, so we know the size of that.

Great. Thank you.

Becca Followill. US Capital Advisors.

Sorry, still one more question on Geismar. I respect your desire for the competitive advantage, but when you do the drop, since it is very significant, will you provide investors the basis for why you think that you will not pay taxes on the income?

Becca, you will have to stay tuned for that. I think we will have to see if that's something that is required or we feel as though it's something that we need to offer. Again, I think we believe that we have something that is unique at this point and we want to make sure we take full advantage of it, without necessarily offering the road map for others.

And then on the PDH facility, as I understand it, you will need about 20,000 barrels a day or 20 million barrels a day of propane. Is that correct? And you have 7000? Where will the incremental come from to source that PDH facility?

Well, as you are probably aware from previous calls, we do have other projects that we are working on out there. So, the over time we do expect our equity propane to increase. But, there are plenty of places between now and then to buy propane in Canada. So, we don't think the supply side is any particular challenge for us right now. We are very comfortable with that. Whether we are going out on the open market and buying it or whether we are just building it over time with our internal equity barrels.

Then the rail cost to get it down to the Gulf coast, what kind of Delta in propane prices do you need relative to the Gulf coast in order to make up for that $0.05 a pound rail cost?

I don't think we want to get into probably that level of detail, yet. We have got ongoing analysis on that. I just say, let's leave that for a future call. But, we do think the situation is very favorable and very supportive of that project. We have some continued analysis that is ongoing on that.

Finally on Marcellus. If my memory serves me well, you guys were expecting gathered volumes from the Susquehanna hub of about a bcf a day this year and Laurel Mountain about 250 million a day. Is that still the case?

Those are generally in the neighborhood. I think on Laurel Mountain we are probably already over that. I think we are up around 280, if I'm not mistaken, on Laurel Mountain. And I think our target on Susquehanna hub is just shy of a bcf a day by the end of the year.

Where are you guys now on Susquehanna?

Hang on just a second, Becca, let me see if we can track that down.

I can get it off-line, if you want. That is all my questions. So, I'll just follow-up off-line to get that one.

All right.

Thank you guys.

[Nathan Koppicar], Viking Global Investors.

Actually, I had similar questions about the Geismar cracker so we can move on.

There are no further questions at this time. I like to turn things back over to Mr. Armstrong for closing remarks.

Thank you again for joining us. I look forward to continuing to share our growth with you in the future. Thanks for your interest.

This does conclude our conference call for today. We'd like to thank you for your participation.