威廉斯 (WMB) 2014 Q4 法說會逐字稿

Good day everyone, and welcome to the Williams/Williams Partners LP year-end earnings 2014 conference call. Today's conference 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, Tanisha. Good morning and thank you for your interest in Williams and Williams Partners.

Yesterday afternoon, we released our financial results and posted several important items on our website, www.Williams.com. These items include yesterday's press releases and related investor materials including the slide deck that our President and CEO Alan Armstrong will speak to momentarily.

Our CFO Don Chappel is available to respond to questions, and we also have the five leaders of Williams' operating areas with us. Walter Bennett leads the West, John Dearborn leads NGL and Petchem Services, Rory Miller leads Atlantic Gulf, Bob Purgason leads Access Midstream and Jim Scheel leads Northeast Gathering and Processing.

In our presentation materials, you will 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 we've reconciled to generally accepted accounting principles. Those reconciliation schedules appear at the back of the presentation materials. With that, I will turn it over to Alan Armstrong.

Great. Thank you very much, John. And good morning everyone. Thank you for joining us here for our Q4 2014 earnings call today. To begin with, I would like to welcome a couple of new members of our leadership team, and they are joining us today as John just mentioned by phone.

First is Bob Purgason, who became Senior Vice President of our Access Operating area in January. And just remind you, Bob has been COO at Access since 2010, and before that, he was here at Williams for about 19 years until 2006. The organization here at Williams is very excited to have Bob back and really looking forward to a lot of the leadership he's bringing.

Additionally Walter Bennett is here with us, and Walter previously led the Western operations for Access. And in January, he began leading Williams Western operations post Allison Bridges' retirement. And of course that includes our Northwest pipeline area and all of our big gathering and processing out in the Rockies as well as we have added to that now the Niobrara area in Wyoming that ACMP had just built and our team, the Williams team, had collaborated to help bring that business up as well.

So really excited to have Walter's very strong operating background and strong technical expertise brought to our team out there in the West. Additionally, I would just tell you there are a lot of great leaders that have come in from ACMP, and they really are contributing a lot to our organization and help us lead through this tremendous growth period that we've got going on here at Williams. So really nice to see the teams coming together so nicely and so quickly.

Moving on here to slide 2. You can see a lot of the major topics listed here on the slide that we will hit on in the short presentation. But this is the place I'd like to spend a little more time discussing the drivers of our new guidance and really the significant derisking that has occurred as we have dramatically lowered our planned commodity margins, we lowered our fee-based volume assumptions, and we have gotten more conservative on our Geismar ramp-up schedule.

So here first on the commodity price deck, our new price deck is centered on a $55 WTI and a $3 Henry Hub gas price. And we tried to be conservative with the price decks that are largely below the forward curves for products like propane and natural gasoline where we are along the commodity and below the forward curve where we are short like on natural gas and ethane.

We believe this is certainly one of the most conservative decks being used amongst our peers in the industry, and overall this resulted in a 44% reduction in our planned commodity margins and commodity positions at WPZ. And this now represents only about this commodity -- only about 12% of our gross margin is now exposed directly to the commodities.

On the gathering volumes side, we have assumed reduced activity on the assets with unprotected volume exposure. So in those areas where we're directly exposed to volumes.

And in many case, we are ahead of what producers have publicly communicated to investors. In other words, we are trying to get ahead of the lowering of rig counts and making sure that we have a good handle on what we expect and in many cases where that hasn't been publicly tried to get ahead of that with our own estimations.

And then unfortunately though, I would tell you that these impacts are really limited to a handful of our assets, and in the context of the new larger enterprise, the impacts we think are certainly manageable. So for example, our Northeast volumes are currently tracking ahead of our revised plan for 2015.

On the Geismar ramp schedule, we have incorporated a much lower utilization of the facility over the first three months of the year, and this is going to allow for a safe, controlled ramp up to full production. We've spent a considerable amount of time doing it safely and ensuring a very high quality asset, and we certainly do not want to try to make any shortcuts here at the last minute on that. So very proud of the team, they're continuing to be very focused on safe and making sure that when we do get up to full capacity that we have a safe and durable asset there.

A couple of offsets to the impacts of these more conservative assumptions do exist in our plan. First of all, the early in service for Transco projects on the mainline portion of the Leidy Southeast expansion and the Virginia Southside expansion. And I will hit on more of this in just a little bit, so I won't spend any time there.

And then finally on the cost cuts, we do have some offset to some of the negative variances that as we've stepped up our focus on early rightsizing our cost structure, to match the reduced levels of activities in a few of the regions. And so while we have not specifically called out that number, I would emphasize that this can and will be a moving target depending on the ultimate levels of activities and the production around our assets. But we certainly see an opportunity to offset some slower growth and take advantage of the lower energy prices and materials in our own business because we certainly are exposed to energy and materials in our own business, and a lot of those prices have come down.

In general, we are taking advantage of this low commodity market to position ourselves for a very strong consistent performance. And with many of the potential upsides that have been taken out of our guidance now, we still see a lot of those upsides out there, but we pulled a lot of that our of our guidance. As those occur, they will result in upsides to our guidance.

But despite the significant derisking, WPZ still has one of the highest distribution growths amongst our peers, and this is driven now by approximately $4.5 billion of adjusted EBITDA in 2015 which is further driven by fee based revenues which make up about 88% of our gross margin. And then we expect our EBITDA to continue to grow to about $6 billion on the backs of over $9 billion of fee based projects as we look forward to 2017.

Moving on to slide 3. We can see here the key drivers of the fourth quarter and the comparisons to fourth quarter of 2013 along with some of the mixed results that generated headwinds for us in the fourth quarter.

So this was certainly another very busy quarter for us as we undertook the commissioning of three very large assets. These assets are now ramping up to our expectations here in the first quarter and will be big contributors to our growth for the balance of 2015 and beyond.

So first now to hit on the WMB highlights, WMB received $515 million of distributions, up from WPZ and ACMP, and this was a 16% increase up $70 million. The higher distribution was supported by a 30% increase in the fourth quarter adjusted segment profit in DD&A, which was up $216 million to now $944 million there in the fourth quarter. So this large increase was certainly driven by the additional ACMP interest that we acquired in the third quarter of 2014 and as well the associated consolidation of those interests.

WPZ had mixed results for the quarter. We had some real positives and some real challenges as well. Ongoing mature businesses continue to perform as expected. However, we did have some delays and higher expenses in bringing on Geismar and along with lower commodity prices caused the quarters to come in lower than we had planned.

So now looking into each segment, the Atlantic Gulf, strong underlying performance in Transco and the Western Gulf, but this was offset by some producer startups on the Keathley Canyon and Gulfstar facilities. These projects are now online and ramping up nicely here in the first quarter, and really pleased to be serving our customers out there at both the Anadarko's Lucius facility and the to Hess operated Tubular Bells facility out there.

On the NGL and Petchem side, Geismar being off-line versus an expected mid fourth quarter start up plus some LCM inventory adjustments that marks most of the products that we have for a line pack and operating inventories back to a much lower market. And so this is nothing new in terms of how we account for our inventories, but the severe downward move in NGLs caused a much larger than normal swing on this inventory valuation. We also saw some higher expenses for the quarter associated with commissioning and repairs to our Geismar facility.

In the Northeast, we continue to ride the wave of strong growth in the Marcellus volumes with a 26% increase on a quarter to quarter basis and a 28% increase in a full year 2013 to 2014 comparison. However, we did not hit our expected numbers in OVM due to a delay in bringing on some of the major well pads that producers were bringing on right at the end of the year. But we do continue and enjoy tremendous growth in this area, and our current production levels in the Northeast segment as I mentioned earlier are ahead of our more conservative plan now for 2015.

Out West, the West really performed largely in line with what we'd expected with the exception of the commodity prices which certainly clipped our NGL margins in the area. And this area has really held up fairly well despite the lack of drilling, and as always out Northwest pipeline asset remains really steady. And in 2015 our plan has less than 15% of the Company's gross margin -- sorry, of the gross margin in the West coming from commodity exposed contracts.

So in the past, as you know, the West has always been an area of big commodity exposure to us in some of our big processing facilities out there, and because of the continued growth in our fee based business as well as the decline, large decline in NGL margins, we now only have about 15% of the gross margin, actually a less than that out West. So a lot less volatility as we go into 2015 out West.

So overall, a noisy quarter for WPZ given several one time and discrete events, but our underlying fundamentals are very strong and they give us confidence in our 2015 plan. And certainly now on the ACMP side, ACMP produced another very impressive quarter.

Fee based revenues were up 48% to $593 million, and this was driven by a lot of new capital investments that delivered record gross gathering volumes of 6.5 BCF a day. So tremendous accomplishment by the ACMP team there in the fourth quarter as well.

Moving on to slide 4, talk about some of the milestones and the recent accomplishments here that certainly give us a lot of confidence in our plan going forward. First of all, as I mentioned Gulfstar, one, the typical startup issues I would tell you for the producers bringing on a lot of new big wells onto that platform, but it is looking like some ultimate upside to our original expected flow rates from the facility. And so we are really pleased to see the way that's going and very excited about that investment.

On the Transco side, another winner and another big increase in peak volumes on the nation's largest and fastest-growing pipeline with this year's peak day here in January beating last year's record by 8%, despite a very, very cold winter in 2014 -- January of 2014. So really just a lot of continued growth is driving that on the Transco system, and that team continues to do a great job keeping up with all that growth.

ACMP as I mentioned also hit another record of volumes, and this really was a major contributor -- a major contributor to this was the gathering volumes in the Utica. And those fed into the 49% UEO processing JV there in Eastern Ohio, and the latest train to come online was the new Leesville plant. So continued great exposure there to the growth in the Utica, and really excited to see the way those volumes continue to perform.

More recently the big addition to our discovery partnership, the Keathley Canyon connector received first production from Anadarko at their Lucius platform. And now as we move into March, we expect to begin receiving much larger gas volumes from Exxon's Hadrian field. And so again, another huge accomplishment bringing on that major facility out in over 7000 foot of water.

Our Geismar restart certainly been long-awaited, and we're excited to be where we are on that finally. And it is, we are in the process of getting that lined out, and we expect to continue to ramp up here in at the end of February.

And our plan doesn't really expect consistent full rate production until the very end of March. And so we've derisked that as well, and we are currently are working to improve the ultimate efficiency of several of the heat exchanger systems before we can reach back for full production.

But all the systems in the base plant have been activated, and we have been able to run that up to about 70% of load there on the base plant. So very confident in where we are today on that. It's really just a matter of getting those exchangers being able to operate up to their peak efficiencies.

Our combined Access and Williams operating teams came together on the new Bucking Horse plant in Wyoming right during the dead of winter. And so while we don't expect this plant to generate a significant amount of cash flow here in the near future, it was very important for our teams to get this plant online for the benefit of our new largest customer, Chesapeake.

And it also demonstrated the clear benefits of integration between both Access and Williams personnel into one new organization out there. So hats off to that team that worked through a pretty tough winter up there to get that plant started up.

Many of our recent expansions have involved along with other facilities modifications to the Transco mainline. And so this allows us to facilitate moving gas from the Marcellus and the Utica from the North to the South.

So with two projects in common here on this list, first Virginia Southside which started up in December of 2014. The mainline portion did, not yet the lateral, but the mainline portion started up much earlier than expected, and that full facility with the lateral will come on third quarter of 2015.

And then the same store on Leidy Southeast which in March of this year will bring on the mainline portion of the Leidy Southeast project, and that also beats our expectation for that project as well. And together, these projects will yield $50 million to $75 million of incremental operating profit in 2015.

These are all fully contract, and that's been approved by the [firk], so we are ready to put these into service. And of course, bringing on all this incremental operating profit that wasn't expected originally in those investments, really gives a very nice boost to our original expected returns for those projects.

And then finally our Rockaway Beach lateral is expected to start up in either late March or early April. And the team has been working hard to hold the schedule despite as a lot of you know a very wet and cold weather there in the New York area. But really excited to finally bring that project to closure and being able to serve our big customer up their national grid.

Moving on to slide 5, this slide really just provides a real quick snapshot of the different types of cash flow that make up our $6 billion of gross margin. And just to make a few points here, first it shows that now only 3% of WPZ risk remains tied to the NGL margin commodities and the spread on NGLs, and only 9% is tied to our olefins margin in both our Geismar Canadian facilities. Meaning 88% of our cash flows are now from fee based revenues here in 2015 and including nearly two thirds of those that are under contract that have demand payments, cost of service or minimum volume commitments.

So as we can see on the next slide, our future growth is even less dependent on commodities as we move to slide 6 here. And this really shows that 99% of our $9.3 billion of growth capital that's in guidance are tied to fee based projects. This slide really gets to the heart of our lower risk and growth strategy for the next few years.

And as you can see, the vast majority of this is tied to -- of even the fee based projects, the vast majority is tied to the kind of business that are either on our Gas Pipeline system, or in the ACMP area where we have a lot of protection from volume risk. And so a lot of confidence and certainty from our perspective about how we go forward.

So while certainly commodity prices are -- remain important to our business specifically here for the near-term cash flows and coverage, they really are not the driver of our growth. Our business strategy is built around natural gas volume growth and the demand for associated large-scale infrastructure that are going to be required to build out as the natural gas and natural gas products markets continue to build on the backs of a very low price commodity. And as a result, we are confident in our ability to deliver one of the highest rates of distribution growth amongst our large gap peers despite the lower expected commodity prices that are now built into our plan.

Moving onto slide 7, this slide just drills down into the known projects over this longer period. And so I'm not going to go through each of these facilities, but one of the things that I think we have not spoken very much about that's pretty impressive, is the amount of exposure that we have to the LNG export facilities. And in fact, Transco has connections that allow it to receive or deliver gas to nearly every LNG import export facility in the Gulf coast and the Eastern Seaboard other than the [Everett] facility in Boston.

Those LNG facilities include Cheniere's Sabine Pass, Exxon's Golden Pass, Trunkline's Lake Charles, Sempra's Cameron LNG, the Elba Island LNG, and the Cove Point LNG. And we have -- as you know we've talked in the past about our access to the -- our Gulf Trace project being a 1.2 BCF a day commitment to Cheniere's Sabine Pass facility that's fully contracted and start up in early 2017.

But we also recently concluded an open season in December of 2014 for the Gulf market expansion. And this is designed to provide an additional 1.4 BCF a day of firm transportation from Station 65 going back to the West to points on the mainline in Louisiana and Texas.

And great progress there, and we are in the process of negotiating the firm commitments from our shippers and that came out of the open season. And it is anticipated that this capacitor 1.4 BCF a day of capacity can be in service as early as late 2018. So just continued tremendous growth on the Transco system both on the market side and supply side.

Moving to slide 8 for the conclusion, certainly we're very pleased to have the PZ/ACMP merger closed and remain more excited than ever really. Continue to see tremendous benefits from the combined strength of this new MLP, and we think it is the MLP to be exposed to amongst the large caps if you like the prospects of overall market growth above natural gas and natural gas derivatives because clearly our strategy is very tightly focused on this opportunity.

As we look to the PZ distribution growth, all of the issues I've gone through today really drive to this. And the revised outlook for PZ and WMB result in a new guidance of 7% to 11% annual distributional growth at WPZ through the 2017 period with the midpoint of 9%.

And this really reflects the strength and the quality of our underlying assets with a growing coverage ratio of greater than 1.05 once we get through this first quarter and 2015 ramp-up periods. So not only do we think we have a good growth there, but we are continuing to build coverage through the period.

And so we're really excited that despite these much lower and a very relative to our peers a very conservative price deck, we continue to be even at the lower growth rate at the low end commodity prices, we are still at the high end of our large gap MLP peers. And so even though this is slightly below the plan that we articulated at the time of the ACMP and WPZ merger, these levels of growth and coverage are indicative of the best in class large-cap MLP.

As we look to the WMB dividend growth, we've also slightly slowed down our targeted levels of growth for WMB. And this of course is driven by the lower price environment that we forecast with a range now of 10% to 15% growth largely to match the underlying growth of cash flows coming up from the MLP.

So just to highlight the stability of this business plan, even under the low price commodity case, we can grow WPZ at the 7% we talked about and continue to move over 1.0 coverage there at the low price and at WMB at 10% with additional layers of coverage in excess of 1.0 at WMB as well. So we really like our position now with the distribution and coverage, and we certainly like the underlying fundamentals that underpin that.

So overall, we are very confident in this business plan. We think it's realistic. We think it allows us to continue to provide tremendous total shareholder return which every commodity price environment develops as we go forward. And in fact, across all the scenarios, we have the best in class growth at WPZ and the top-tier growth at WMB with growing levels of coverage across both entities.

So this continually building list of investment opportunities are very tightly aligned with our strategy. They give us great confidence in our future, and continue to give us a very high-quality long-lived cash flows that we think are some of the highest quality in the industry. And this is coming from our continually very competitively advantaged assets.

And so with that, thank you for joining us, and we will turn it over for questions that you might have. Operator?

(Operator Instructions)

Our first question will come from Carl Kirst with BMO Capital Markets. Please go ahead. Your line is open.

Thank you. Good morning everybody. Alan, could I start maybe with the growth projects, and I'm just curious in the current market as you look to Canada, one of the things we were looking at was the PDH facility.

I didn't know if the -- be it the weaker Canadian dollar and perhaps some of the activity coming out of that area might be tempering down the investment cost and perhaps keeping that potential growth project still in advanced stages. As well as in third quarter you guys were certainly opening up the possibility of Appalachian connector, and I didn't know if we could get an update on that as well.

Yes, sure. First on PDH, you are correct, Carl. The fundamentals are actually improving there as we are seeing some lower signs of lower cost coming in for equipment and vendors as we go out and are in the process of really tightening up our estimates on that.

And additionally, that project is really built around the benefits of the logistics of taking low-cost propane right there in Canada and converting it into -- eventually into polypropylene by our partner and being able to serve markets. So we are recently just cutting down on a lot of rail logistics.

And those things continue to improve, propane prices continue to be a huge spread to Mont Belvieu, propane prices up there. And we think that's going to continue for some time because there's not really any logistical answers coming out that will improve that anytime soon. And so we really like how that continues to unfold as well.

And really just a matter at this point of getting contracts finalized with our downstream partner there that pulls a lot of that risk off of our shoulders from a commodity spread standpoint. But we really do like the fundamentals, and they are certainly improving for that project.

On the Appalachian connector project, we are certainly still excited. We think the strength of our market pool and the demand of our market there along the main line is a real positive for us. There has as you know, there's been some turnover in some of the properties upstream, and certainly with the lower gas prices, people are looking for creative solutions out of that area.

And so we are certainly working with a lot of those customers, both on the market side, and the upstream side to try to bring those two together in a way that they can firmly support our project. And so feeling pretty good about that.

But it is certainly everybody's -- anybody in the energy industry right now is reeling a little bit and trying to get their forward-looking perspectives pinned down before they make any major commitments. And so I would say that's where we stand on that today.

Do you get a sense, and that's where I was going, do you get against sense that even as these continue to percolate, that they've both been pushed back to the back half of the year if they do come together, or how would you think about timing?

Well, I would say on the PDH project, it really is just -- we are going to be very, very careful. That's a big investment for us. We want to make absolutely certain that we've been -- that we know exactly what our numbers, we get as many bids and estimates and solid estimates that are well engineered in the door first.

So the PDH project is more line just of us moving along at a pace that is focused on making sure we can execute on the project effectively rather than being in a rush on it. And so that one is more driven by our own efforts then in getting the contracts finalized than it is anything in the broader macro industry at this point.

On the Appalachian connector piece, I think the answers have got to come a little quicker on that. And so I think we will be pressing in the next quarter to decide one way or the other on where we go with that.

But in any way shape or form, I think we're going to position ourselves to benefit both our assets in the area, both our wholly-owned and some of our equity investments in making sure we get good market attachment to those assets and as well making sure that we get the investments that are due us for the downstream mainline expansions for that gas as well. So pretty excited about it, but we are not going to push a rope on that. We've got plenty of great investment opportunities, and we are not going to step out and take risk on that.

I appreciate that. One final one just for Don just a very quickly, appreciate the WPZ equity as far as obviously retaining investment grade. Don, do you have any planned equity issuances in 2016 and 2017 at PZ in the case base budget?

That good morning, Carl. The PZ equity issuances in 2016, 2017 at this point are de minimis. So it's capacity to really take on some additional opportunities as we see exciting opportunities develop.

Thank you, guys.

Thank you.

And our next question comes from Ted Durbin with Goldman Sachs. Please go ahead. Your line is open.

Thanks, first one for me is just on the balance of distribution growth, dividend growth coverage. Keeping PZ flat here, looks like in 2015 I guess how are you thinking about the right level there especially given that you have a much higher mix of fee-based cash flow?

Ted, this is Don. I'd just note that we felt we wanted to go in with a fairly conservative plan here in light of what happened in the marketplace. So rather than continue to boost the dividend or distribution during the year, we set forth a plan that we would hold it steady.

And obviously if we see things develop to the upside, we could change that. But we felt that we would set a plan here that was more conservative and one that hopefully investors will agree that is conservative as well.

Great. Next one for me is just on Geismar. Can you maybe quantify a little bit more closely how many pounds of ethylene are you actually planning to sell in 2015 or some utilization rate you're looking for as we ramp up through the year?

Well, as I said, we're really -- call it up about any way you want to, but we are expecting very little here in the first quarter. And then we would be at our typical run rates on Geismar for the balance of the year. And so that would be up against the new expanded capacity and somewhere around 98% to 98.5% of that expanded capacity.

That's very helpful. Thanks. And then last one for me. It looks like you're no longer giving guidance by segment here.

I guess I'm just wondering if you can give us any sense of versus the old guidance you used to have at the different WPZ segments how much plus or minus are we against those or will we start to get some more color there in terms of how the actual operating answer performing?

This is Don. I'd say again given as much change as we've had here, we took a little different approach this quarter. I would say that as we approach our analyst day, we will look at providing some additional information.

But I will note for you that we did take volumes down fairly substantially up in the Northeast at OVM as well as, less so, but some volume reduction from our prior growth expectations that is in the West. So hopefully that helps.

That's helpful. I will leave it at that. Thank you.

Thanks.

And our next question comes from Abhi Rajendran with Credit Suisse. Please go ahead. Your line is open.

Hi, good morning, guys.

Good morning.

Just a quick question on the dividend illustration and then an outlook over the next couple years. Obviously on the cash tax rate line, you are not paying anything for the next couple of years.

Previously you talked about that. Eventually rising up to maybe the high single digits, low double-digit percentage? How should we think about that looking beyond 2017 and then what that might mean for maybe longer-term growth coverage, et cetera.

Abhi, this is Don again. We had a couple of things change here since our third quarter guidance on this matter. And cash tax rate are down substantially, a couple key points there.

One was a bonus depreciation, which again lowered our cash tax rates nicely. And then as well the fact that income was lower also extended the period of time over which some of these deductions would be realized.

I think you can see there the cash tax rate is above zero through 2017, and in our footnote on that schedule, you can see that we've disclosed 2018 to 2019. We estimated about 4% currently.

And obviously things will move around a bit, but as we continue to add projects or potentially even M&A, that will have the tendency to push cash tax rates down in 2018 and 2019 as well as perhaps periods beyond that. So again, some good news on the cash tax front.

Got it. And you mentioned M&A. What are your thoughts on the M&A environment and possibilities? Are you continuing to look or are thing put on the back burner a little bit?

You guys deferred the drop of the NGL Petchem projects from WMB to a little bit later down the line. How are you thinking about that whole dynamic?

Yes, sure. This is Alan, thanks for the question. I would just say we have a lot of acquisition opportunities that are where we have a preferential position to acquire.

And so -- and those are right down our alley and our knowledge base, so we would not be taking a lot of risk where we already know the area, know the asset, know the investments. And so I would say those are probably first on the list for our capacity in that space.

But we are going to be pretty prudent, frankly, and we like where we are positioned right now. And think that as the cash flows really start to come through and people really see the strength of these investment opportunities, we think we are going to be very well positioned to take on some of those transactions.

I would say that's first, but I think one thing you can -- we've certainly been consistent on as we stuck with our strategy very tightly on the acquisition front and have stuck to things that are very consistent with our strategy. And so you should think about that as we go forward same thing.

Got it. Thanks very much for the color.

Our next question comes from Jeremy Tonet with JPMorgan. Please go ahead, your line is open.

Hi. Good morning.

Good morning.

I know things have been changing really quick here. But I was wondering if you might be able to expand a little bit more upon conversations you're having with your producer customers as far as their drilling activities in 2015.

And if there's any way we can think about quantifying risk of throughput through the legacy WPZ GMP assets. There's a low end of guidance and volume assumptions are different than the high-end or any help there would be great.

Yes. Well, just to put that in context for you from where we were in the previous guidance period, we've pulled well over $100 million out on that -- from those fee-based volumes. And so we have dramatically reduced that.

And I would tell you the areas that are hardest hit and we think are going to be hardest hit, and I would tell you we've been more conservative than some of the input we've had from some of our producers in many areas. But the areas that have been hardest hit were areas that were enjoying a big lift from liquids.

And I think the gas market overall, particularly the demand side probably doesn't appreciate all of the nice benefit of continued supply that has come on the backs of high-priced liquids margins. And with those pulled out of the space right now, that is -- we think that's going to dramatically retard drilling.

So if you're -- as I would say conservative and maybe even bearish relative to our peers about where we think liquids prices will be for the year, then that also has you not being very bullish on people drilling for rich gas. And so I would say those are the areas that from our perspective are most effective. Not so much the dry gas, but really the richer gas areas are the ones we really pulled back our assumptions on.

That make sense. Thank you. And just one last question on Constitution if you can provide any updates there as far as how that's progressing.

Sure, Rory. You want to take that one?

Yes. This is Rory. Jeremy, we've had some pretty good news in the fourth quarter. This is probably fairly well-known, but just as a recap, on December 2 the FERC issued a certificate of public convenience and necessity authorizing the Constitution pipeline project, so that's a big milestone for the project.

And then later on that same month on December 24, the New York DEC issued a notice of complete application on the project and set out three public hearings that took place in the second week of January. And they've set a deadline of February 27, 2015, to get all of the written comments in on the action that they are considering. So we've been working very closely with the New York DEC.

That's probably the next hurdle that we need to clear, but they're asking a lot of questions. And I think they are very intent on doing their due diligence on the project, and they been very inquisitive. But we've been working very hard and very steady -- steadily to get them the answers they need and put them in a position to issue that permit hopefully within a few months after the month or two after the close of the comment period.

Great. Thanks for that.

Our next question comes from Brad Olsen from TPH. Please go ahead, your line is open.

Hey, good morning, guys.

Good morning.

I had really a financial structuring question. We've obviously seen Kinder Morgan take the step of getting rid of their MLP entirely.

And as you look out with the ACMP deal now closed and you guys have provided what I think is very conservative guidance versus what market expectations are and you are still building coverage even in this conservative $45 scenario that you've painted. And yet we still see WPZ trading a couple hundred basis points in several cases wider in terms of yield than a lot of the big cap MLP peers that it's comped against.

And so you guys have provided some interesting color in previous presentations in terms of where you expect on a yield basis WPZ to trade based on its growth rate. It seems like that discount is persisting. And I was wondering if you have thoughts on A, any further steps that you can take to close that discount, and B, if you still find that WPZ is not an effective financing vehicle or is just simply too expensive of a financing vehicle, would you consider simplifying your structure and eliminating the MLP or folding it into WMB?

I would just tell you. I think that's certainly a tool for us in the future. I think though right now we've got a great plan in front of us and we do believe that as these big projects come on and really begin to generate tremendous cash flow that they've got, that we are going to see the market reprice that, the WPZ currency.

And so we think that the -- that is yet to come, and certainly with Geismar continuing to be down and the big Gulfstar and Keathley Canyon, Rockaway lateral, all these big projects really start to pick up here for the balance of the year. We think that's going to give the market a lot of confidence.

So I would say, we certainly understand that the benefits of that as a tool for the future, but I think right now we've got to execute on what we have and let the market retune itself before we make any further decision on them.

Got it. Thanks for that color. Just one follow-up. As you look out into potentially heating up M&A market in light of the market dislocations that we've seen recently, and you think about potential opportunities in the M&A market, would you be willing to contemplate using WMB as a consolidation vehicle given the fact that you've spent a better part of last year getting WMB into a fairly streamlined general partner HoldCo? Or would you be willing to wait for WPZ's valuation to get more competitive in terms of an M&A currency before attempting to do anything?

Well I would just say I think both of them are fairly undervalued right now from our perspective. And so I think we've got to get them both in position.

But I think it certainly would depend on the transaction as we moved to that point then it would certainly depend on the transaction as to which one would be the more appropriate currency for that. It's nice to have both of them, frankly because there are times when the [CCorp] currency would be much more favored currency than the MLP currency. And so I think is important to have both of them right now, and we like having both those tools.

Great. Thanks a lot for the color, Alan.

Thank you.

Our next question comes from Shneur Gershuni with UBS. Please go ahead your line is open.

Morning, guys. Just a quick follow-up to the discussion you just had with Brad. When you are thinking about it taken or whether it's a tool in the chest further down the road, is it fair to assume that given the fact that you are effectively based on an earlier comment not a taxpayer at WMB through 2017 that it pretty much wouldn't make sense to even consider it until you actually become a taxpayer? Is that the way we should be thinking about that as the first step in terms of whether you would consider a take in at all?

This is Don. The tool is one that we would continue to look at, and yes, we are not a taxpayer for many years. However, there are other attributes to the option.

But again, I think as Alan mentioned earlier, we think execution is likely to cause WPZ to trade at a level that is appropriate given its opportunity set, the growth set. And we think the relatively low long-term risk that natural gas growth demand drives.

Again we will just put that on the shelf. It's something will continue to study, but we think that execution is job number one. And, yes, taxes are something that would not be all that valuable for quite a few years.

Great, sorry. So just moving on to some of the questions that I had. First, there's been quite a few announcements by many of the processors around the country of significant cost-saving initiatives, some headcount reductions and so forth.

I realized at the time of the merger you were very adamant about no headcount reductions. If anything you were looking hire people and so forth, but I think we're in a different commodity environment today.

Wonder if that thought process has changed at all and if you're pursuing some cost reduction strategies. I was wondering if you can comment against what you're doing versus what the rest of the industry is doing?

Great question, and we certainly are going to put a lot of pressure on cost. And we do think that we've got a lot of room to do that, and so certainly using the buying, combined buying power of the two entities, lower material costs, lower cost on things like lube oil which as you can imagine with as many spinning parts as we have in our business is a big number for us. And so we certainly are going to go after cost on that side.

On the headcount front, I would say there's certainly a lot of those opportunities coming to us as we more -- sorry, merge a lot of support functions. But I would say we still really need to continue to preserve our strength on the operating and technical side because we do have a lot of growth on that front. But it is shifting around, and we will need to shift some of those resources around to be focused on where the opportunities lie.

But I would tell you we still are looking for great talent in the technical and operating side, and we do see some opportunities on the support functions side as we continue to consolidate the organization. So we are pursuing them aggressively, I guess, is the best way to say that. And we do think there's quite a bit of opportunity around that.

Okay. And then, a question about the dividend policy. Last night you effectively tempered the growth, you said it in your prepared remarks that you're reflecting the current commodity environment.

Is it also fair to say that this is somewhat of an affirmation that there is no longer going to be an IDR waiver type strategy in terms of how you structure the PZ distribution and the Williams dividend policy? Or is it really just about the current commodity environment?

Shneur, we believe the WPZ is sufficiently strong to carry itself without requiring any IDRs. We initially designed it with very stout coverage.

Fortunately we had that stout coverage designed in, and we used it. But nonetheless, as you can see here we are building coverage back again in a way that we do not expect WPZ to need an IDR waivers as Alan pointed out with 88% being fee based gross margin with 30% of that coming from interstate pipes and another 27% coming from ACMP and its cost of service contracts and MVCs.

We have nearly 60% of our gross margin coming from either interstate pipe or cost of service MVC type revenue. So very low-risk we think on a relative basis cash flows, so we don't see a need for IDRs. We don't think the market puts enough value on those to make it worthwhile.

Okay. Fair enough. And one final question just with respect to Geismar, I was just wondering if you walk us through where you are with ethylene production today and the confidence that it will be a doubtful runway in the first quarter. What are the hiccups or challenges that you're dealing with today that you need to get complete so that you can actually be at full run rate by the first quarter?

Yes, well I'm going to have John Dearborn provide you a little more detail here. But I would say in general, as we started up the plant we hit a -- we started seeing some inefficiencies and some fouling in our heat exchangers that are critical to reaching peak efficiency in a plant like that. And so rather than continue to be dogged with that, we just chose to take those heat exchangers off-line, stop sales on ethylene out of the plant for a little while and get those heat exchangers cleaned out adequately to make sure that we could get back to absolutely full efficiency on the plant period and not continuing to try to limp through that as we pull through startups.

So that's really what's going on. That's not a big issue. It's just a matter of getting some of the residual fouling that had been sitting in those heat exchangers and getting them tuned up. But we have gotten the plant up and running.

We've had all the systems up and running. We just weren't hitting the efficiencies that we wanted to it, and so we're back getting that tuned up. And then the next step would be to bring on the larger expansion, the expansion as well, and so we think we've got that part of the plant ready to go as well.

And so that's what we will be doing for the next three weeks or so is tackling both those issues, but things are going well on that front, and we're pleased with the way it's working. John, do you have anything to add?

Obviously Alan's very well informed on this issue of how Geismar is going. You can best be sure we keep him well-informed that way.

The only thing I'd add is as we look forward, it's our intention that we bring the plant back -- mostly to the base capacity level at 1.3 billion pounds rate. And at that rate, which as you heard Alan said earlier, we've demonstrated now 70% of that rate already operating with nine furnaces, then we will line up the plant to be absolutely certain that the plant's running stably and then we will take the next steps to ramp up to the full capacity getting up into that high 90%s operating rate against the full capacity over the subsequent few weeks. So that's the way we had a planned out, and we're making very good progress at getting this heat exchanger cleaned and expect to turn the plant back over to operations next weekend in the few days after that be back in the pipeline.

Perfect, thanks a lot, guys. Really appreciate the color.

Thanks.

And our next question comes from Christine Cho with Barclays. Please go ahead. Your line is open.

Good morning. I was just curious, you guys in the press release talk about the deferral of the planned drop-down of the remaining NGL and Petchem projects. When are you thinking that's going be deferred to? Do you have a sense of -- an idea of when that's going to be?

Christine, this is Don. We didn't put a date on it, so it's not embedded in any of the guidance you see here. However, I think we will be -- I will just say we will be opportunistic about that.

We will look to do that when we think WPZ is -- has the financial capacity to do that in a real value-creating way whether it's with debt capacity or with a combination of some debt and equity when the equity is trading in a way that we think is more appropriate. Right now I will just say it will be opportunistic and we will deal with that as we see the right facts and circumstances line up.

Okay. And then my next question is a bit of an operational one. In a prior response to a question, you talk about how you stripped out $100 million of margin and tied to areas where there's lot of liquids related rich drilling.

If I am to think about the Marcellus and you've previously talked about Oak Grove coming on at the end of this year. Is there really a reason for that to come on by this year? Can we defer that? I mean, it doesn't sound like Fort Beeler's going to be fully utilized this year, so can you just migrate whatever volumes are dedicated to Oak Grove to Fort Beeler in the meantime?

Christine, actually, Oak Grove is -- TXPI -- is up and running already, and recall that that is where our de-ethanizer is. And so we have both the processing train there and the de-ethanizer there at the Oak Grove facility. So for operational reasons, it's from good for us to have that up and running.

I would tell you that again, even though we pulled the upsides and the stuff that's not fully contracted out of our guidance on our forecast, there are a couple of very sizable packages of gas out there that we are extremely well-positioned to capture because we do have that capacity available. And so I'm not going to get into specific customer names there, but I would just tell you we are extremely well-positioned to capture those because we do have that capacity available.

And so we are excited to have that Oak Grove capacity ready and available to serve those customers, and we think we are going to be able to capture that. There is quite a bit of gas that is just sitting there not flowing today because producers have had trouble bringing pads up. And so I think as those come on and as we have an opportunity to capture some of that other gas out there, we are going to be really glad we have that capacity available.

Okay. So no changes to at least the second train of Oak Grove then, the timing of that?

That's right.

Okay. And then my last question is we've always talked about potential to convert Geismar into fee-based for the customer. Given all the changes that have happened in the last couple of months, has this thinking changed or is the challenge really finding a counterparty to do it with?

No, I certainly don't think it has changed. And we're certainly looking to really think about that from a shareholder value standpoint.

Certainly if we were just looking at the PV of the cash flows, we think that having the commodity risk especially as it covers our ethane processing risk, we think that absolute PV of those cash flows is probably better just writing the commodity risk. However, given the beta and the volatility that that brings in from an investor perspective, we think there is some value to be had by lowering our risk. And so it's a matter of finding that right trade-off.

And as we've said, as I said earlier, the fact that we've got a much lower assumption and expectation right now on the commodity margin, actually gives us a little more room to go do a transaction like that. And so we certainly are very interested in that.

And I would tell you that while they seem separate, the ability to bridge between somebody's needs on Geismar II and perhaps their more current needs from available production at Geismar I starts to become the opportunity there. So we are still very interested in doing that, and we think the current margin environment gives us a little more room to do that because we wouldn't be coming out and having to lower our forward guidance so much if we were be able to convert that into fee-based.

Great. Thanks so much.

Our next question comes from Brian Lasky with Morgan Stanley. Please go ahead, your line is open.

Good morning. Just piggybacking on Christine's question a little bit, are you guys seeing any appetite among producers potentially to convert to fee-based contractors since they are looking to print more barrels and show more growth? Is that something that they are potentially open to in this type of environment for the right price level?

I would just say that a lot of our business has converted to fee-based, and so really the place that we have remaining exposure on a keypole basis as I mentioned is about a little less than 15% out west of our total gross margins out there. And so I would say there continues to be an opportunity.

But we -- structurally I would just tell you there are ways for us to keep the risk and for them to report the barrels. And so that I would say we figured -- we've done many -- we've done a lot of that in the past where the producers still report the barrels as their own equity barrels, but we don't have to really change the equity ownership of those barrels.

And so that's always a discussion that we're always interested in. I will tell you that we -- on the processing side, we have over the years tried to contract for fee-based when the margins are high and to take on the keypole when margins are really low. And so just because we certainly believe in that cyclicality of the processing margin, and so I don't know that we really changed our perspective so much on that front.

Got it. And just on the Access business, it seems like quarter over quarter a little bit more flat this quarter. Can you maybe just talk about the trajectory you see going forward there and what puts and takes you see?

Bob, can you take that one, please?

Yes. I certainly, Alan, glad you looked. I think we felt like we had a really good quarter actually and are seeing good volume growth in our Northeast areas, Utica, very strong, still strong volumes in Marcellus, Eagle Ford volume still growing as Alan noted.

Niobrara coming up although Walt's picking that up here in the process. So we feel very good about our performance coming out. No integration impacts from that, and in fact, are looking for the growth that you saw in detail as Access standalone continuing and in fact, accelerating with the Williams team.

Perfect. Thanks, Bob, that's helpful. And then finally, Don, I was wondering if you can maybe to speak to what kind of leverage capacity you think you have at the MB level in order to stay IG rated up there. And then would you guys have any appetite to potentially fund some projects up at that level?

Brian, I think at this point in time we don't have much in the way of debt capacity for Williams level. So obviously as cash flows build and perhaps margins improve, we will build some debt capacity, but today I wouldn't feel that we have debt capacity to do much of anything in the very near future.

Okay. Thank you very much, guys.

Our next question comes from Craig cheery with Tuohy Brothers. Please go ahead. Your line is open.

Good morning guys. Thanks for fitting me in.

Good morning, Craig.

Alan, in response to Brian's question about processing contracts, you expressed the long-term contrarian view where you see cyclicality continuing. On that note, in contrast to go into fee-based at Geismar, would you have appetite for increasing the commodity exposure on the midstream processing to neutralize some of your exposures on both ethane and also take advantage of that long-term cyclicality you were describing?

Yes, great question, Craig. And I would just say that we certainly are not in the olefins business for the sake of being in the olefins business.

We see it as a nice extension of our midstream business and a way to push through into those markets and keep those markets open on the tail end. And certainly we are working to try to be neutral on that ethane to ethylene spread. We're actually a little bit short ethane right now.

If we were to turn on all of our ethane recovery capacity, obviously, we are very short right now because we are not covering ethane anywhere. But if we wanted to turn on our ethane -- if we were at full ethane production against the contracts we had, we still would be a little bit short ethane.

So finding it get neutral on that, but another way of getting neutral on that would be to enter into some fee-based contracts on the ethylene side and therefore reduce our link on ethylene and reduce our -- and improve our balance between ethane and ethylene. So I would say that is more likely the way we would approach that.

Great. That's helpful. And on the commodity deck for guidance, obviously very conservative. But the one area I had a question on and I understand that you don't really have long-term ethane markets that are useful.

But if I'm not mistaken, recent ethane ethylene cracks spreads are perhaps a few cents below the full year guidance if I'm not mistaken. Can you provide some color around olefins margins expectations and market drivers you see as Geismar achieves full capacity?

Sure. First of all, just like to tell you on the ethylene side, remember that that is at a $55 oil price. And we think that ethylene price is very commensurate with a $55 oil price that we have in there. Also you obviously have to pay attention to the spread and not just the absolute price that we have in which it sounds like you're focused on, Craig.

But the other thing that we -- I think is missed sometimes in this is that we are actually looking at the netted price. And remember that we produce in the Mississippi River market.

And so while we certainly sell and exchange a lot of our product in the Mont Belvieu as well, we do have exposure to the Mississippi River market which has been extremely short. And there's a lot of derivative production that has been down in the area due to shortages.

So you have to take that into consideration when you look at our proposed ethylene spread. And so I think we feel pretty good.

As you look into the 2016 and 2017 timeframe, you can see our ethylene price coming up, but you can also see that the ethane price is coming up right along with that as well. And so really again, need to look at the spread. I would tell you, I'm pretty bullish.

The ethylene market as we look out in the next couple of years because the growth that I think we're going to see in the economies and the lack of near-term productive capacity coming up, it's pretty hard to argue that there isn't going to be quite a bit of pressure on those olefin markets to the upside. And a lot of demand coming to that.

So that's what I would have to offer for you. I think we feel pretty good about where we are positioned there. John is a great student of that space as well. And I will have John provide any additional comment he would like to.

And I only have one or two other things to add. Of course the lower prices are certainly expected to stimulate some demand, but also we have been looking at some recent reports that would say that we are seeing slowing exports and increasing local demand here in North America for ethylene and ethylene derivatives, and certainly the ethylene derivative market remains quite strong.

The second point I would add for consideration here is that if you look at ethylene inventories, they are at pretty much all time low levels. They're estimated to be about six days worth of production and inventory at this point in time.

But remember that all those six days are not available to take advantage of a production mishap, and nearly no one forecast production mishaps. So we think there are probably only about maybe three or four days worth of usable inventory there ready to make up for some production shortfalls. And certainly coming into the year, we see a couple of crackers that are down now. So we have a light turnaround season this year.

And lastly, I turn your attention a little bit further to thee Louisiana market. Today with the Evangeline pipeline shutdown and suffering from some reliability issues at the moment, the spot price premium between Texas and Louisiana is in the $0.08 to $0.10 pound range.

As we bring our facility back in operation, that will likely return to a more normal levels, but we are very well aware of some derivative capacity there on the river that is underserved because of the combined outage of both our plants and Evangeline. So I think that as Alan expressed and as I would confirm here, we're generally positive as our guidance would suggest, so thanks for the question.

Great, very helpful. Thank you.

Our next question comes from Sharon Lui with Wells Fargo. Please go ahead, your line is open.

Hi, good morning. Just a follow-up question on ACMP. Maybe if you could provide some color on the organic growth opportunities and what type of CapEx is embedded in your guidance relative to historical levels for the GMP business?

Bob, do you want to take that?

Sure Sharon, nice to hear from you. In terms of just looking at going forward, you will notice we had a good strong capital year this year, and we've given I believe a three-year look out here in the new numbers. And if you compare those to our past guidance, you will see some strength in capital over our older forecast.

Just in terms of our thinking that there is still new opportunities coming, these assets have not been worked hard, and we are seeing the backfill that we've always talked in to our capital, not just dropping off the ledge when we finish this first round build out that arguably happened this year. So we still see good capital investment opportunity, and as you know, that drives earnings given our business model.

Has there been, I guess, the shift or change in producers' willingness to commit to like a contract under cost of service under the current commodity environment?

These are not new contracts. These are continuing to build on the footprint that we have already established and continuing to build out in these core areas like Utica and the strength that we are seeing there in the Eagle Ford where, yes, drilling's softer, but there's still good strong drilling going on and really just filling out our existing portfolio.

Great. And I guess just one question with regards to liquidity at WPZ. So post the merger, does the partnership have Access to both credit facilities, or is there plans to I guess renegotiate with the bank group for one larger facility?

Sharon, we put a new larger facility in place effective as of the date of the merger as well as the supplemental liquidity facility, so we have abundant liquidity.

Okay. And have the pricing terms changed?

The pricing terms are more in line with WPZ's pricing given its historic WPZ's pricing in light of the fact that we have mid BBB investment-grade rating. So the ACMP pricing really moved to the WPZ level of pricing and got a little better than it was in our prior facility.

Great. Thank you.

Thanks.

Our next question comes from Eric Genco with Citi. Please go ahead. Your line is open.

Hi. I just wanted to follow-up a little bit on Craig's question. When we look at the spot prices for ethylene, if I look at the Bloomberg today, it looks like for Mont Belvieu you're looking at $0.3475 per pound. Is that the right number to be looking at, and what is that now for the Mississippi River market? Today roughly.

Thanks for the question. Unfortunately, there's not an awful lot of transactions happening on the Mississippi River. The few recent transactions that we saw came out to be plus between $0.08 and $0.10 to the number that you see in Mont Belvieu.

As I mentioned in my commentary just a moment ago, at least I would believe that as we bring our plant back into service here through this early part of this year, we will probably see that differential decline to more normal levels. And those more normal levels range between $0.01 and $0.03.

So if you're looking forward, I think it would be reasonable to expect those kinds of differentials. But certainly once again we feel that there's pent-up demand over on the river that's been stymied by our outage and the reliability of the pipelines getting ethylene to that market in recent past.

Okay. That's helpful The $0.3475. That's a good number for ethylene pricing for Mont Belvieu as of right now?

It's a good number whether all transaction happen at that level, they probably happen around that number. So yes, it's a good number to be looking at.

And just to remind me. I should have this somewhere but I just don't have it off the top of my head. If Geismar is running at say 95%, 98% of whatever the target is, what percentage of I guess US ethylene capacity would that be? How much more is coming back on the market?

Yes, it's just under 4%.

4%.

Right in that range. Right.

Right. And my second question just switching gears to Atlantic Gulf, and I'm sorry if you touched on this.

It looked like the other segment cost jumped pretty significantly there. I can understand there's going to be some, perhaps some start up costs associated with Gulfstar. I was hoping you can quantify that a little bit more.

And then just trying to understand if that's what it is at Gulfstar. Are there any revenues or any revenues whatsoever in the quarter from Gulfstar?

Rory, would you take that?

There were revenues in the quarter from Gulfstar. I think we had $19 million of new Gulfstar fees.

We actually collected quite a bit more than that in really the second half of 2014. So we have the cash in, but based on the revenue recognition model, that we are using, we have to dose out those collected dollars based on the forecasted throughput through the facility.

So our cash numbers actually our are far in excess of the $19 million that we took to earnings. But that will continue to grow. We are collecting a base fee or demand fee under that contract, and then there is a usage fee as well as those barrels and those NMBTs of gas total cross the facility.

So that is a fairly significant impact on revenues in the quarter. Also, our Transco transportation revenues were up -- fee based revenues were up about $15 million. And that was some higher IT volumes and some short-term firm deals and as well as some seasonal volumes that we saw pushing that number up.

Okay. But is there something that causes the -- is it really Gulfstar start up, or how much of this is one time to go from 3Q number of $133 million of other segment cash cost to say $160 million?

The quarter I would say is not really indicative of the year. So if you look at the year in total on the expense side, we were right on our target. But if you look quarter to quarter, it looks pretty extreme.

What's happened though if you remember the polar vortex we went through Q1 of 2014, it was an all hands on deck period for Transco. We're setting new records seemed like almost every day. It was a pretty severe environment, and we saw almost all of our expenditures that we could push got pushed into the second, third, and fourth quarters.

And so it was a game of catch-up all year, and we just wound up loading a lot of those expenses into the fourth quarter. If you look at the year's total, it's pretty much right on.

That's very helpful. Thank you very much.

And our last question comes from Timm Schneider with Evercore ISI. Please go ahead. Your line is open.

Hey, guys. Just real quick, and first of all, I appreciate all of the color you gave on the ethylene market so it was super helpful.

As your call was going on, [axial] filed for private letter ruling for their MLPs. You already got somebody for your fee-based Geismar ethylene I guess.

In any case I just want to switch over real quick when then to the Northeast. Can you just give us a little bit more color on what the exit rate maybe was at OVM?

And then secondly, have any of the producers up there actually pushed back to you and had some look? Can you give us a break on any of these rates that you guys are charging us in exchange for we will keep the volume going?

Jim, if you want to take that, please? Sure. As we spoke last time, we were pretty bullish about ending the year around [400], that didn't happen.

We had a couple issues associated with some pretty significant CRPs that has some operational issues associated with producers actually having a much richer liquids content. So we will expect that volume to show up later in the year as we install the equipment necessary to handle that quality issue that we faced at the end of the year.

So we ended just over [300]. We have been talking to our producers and as has already been talked about at a number of different times, we have a much different expectation for growth around OVM, but it is continued growth. It's just at a slower rate.

We have had discussions with producers about renegotiation of agreements, and that's not to go not without opportunities for us to improve on the base agreements that we had achieved with Cayman and negotiate some better terms. But at this point, those are just preliminary discussions, and we have not made any commitments to make any changes. But obviously if we can create a win-win position with our producers, we will be open to those discussions.

All right. Super helpful. Thank you guys.

Thanks.

And it appears we have no further questions at this time. I would like to turn the program back over to our speakers for any additional or closing remarks.

Okay, well thank you all very much. Very excited about our future and really like how we've repositioned ourselves here and de-risked our forecast substantially and yet still tremendous growth and distribution.

And we think best amongst our peers considering our more conservative forecast. So thank you very much for joining us and we are looking forward to talking with you in the future.

That does conclude today's program. You may disconnect at any time.