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Executives

Petra Tabor - Manager of Investor Relations

Rolf A. Gafvert - President, Chief Executive Officer, Director of Boardwalk GP, LLC

Jamie L. Buskill - Chief Financial Officer, Senior Vice President, Treasurer of Boardwalk GP, LLC

Analysts

Gabe Moreen - Merrill Lynch

Darren Horowitz - Raymond James

[Ross Bain] - Wachovia Capital Markets LLC

Sharon Lui - Wachovia Capital Markets LLC

John Edwards - Morgan Keegan & Company

Ross Haberman - Haberman Funds

[Robert Schweis - Burnham]

Paul Sankey - Deutsche Bank Securities

[Jeremy Helmond - Avenue T Fund]

Dennis Coleman - Bank of America

[Eve Siegel - Orio Capital]

Boardwalk Pipeline Partners, LP (BWP) Q3 2008 Earnings Call October 27, 2008 9:00 AM ET

Operator

Welcome to the Q3 2008 Boardwalk Pipeline Partners, LP earnings conference call. My name is Sandy and I’ll be your coordinator for today. At this time all participants are in a listen-only mode. We will be facilitating a question and answer session towards the end of this conference. (Operator Instructions)

I would now like to turn the presentation over to your host for today’s call Ms. Petra Tabor, Manager of Investor Relations.

Petra Tabor

Welcome to the third quarter 2008 earnings call for Boardwalk Pipeline Partners, LP. I’m Petra Tabor from Investor Relations and I’m pleased to be joined today by Mr. Rolf Gafvert, CEO, and Mr. Jamie Buskill, Chief Financial Officer. If you would like a copy of the earnings release associated with this call, please download it from our website at www.bwpmlp.com. Following our prepared remarks this morning we will turn the call over for your questions.

We would like to remind you that this conference call will include the use of statements that are forward-looking in nature. Statements in this earnings call related to matters that are not historical facts are forward-looking statements. These statements are based on management’s beliefs and assumptions using currently available information and expectations. Actual results achieved by the company may differ materially from those projected in any forward-looking statements. The company expressly disclaims any obligation to update or revise any forward-looking statements made during this call.

I’d also like to remind you that during this call today we may discuss certain non-GAAP financial measures such as EBITDA. With regard to such financial measures, please refer to our earnings release for reconciliation to the most comparable GAAP measures.

Now I’d like to turn the call over to Mr. Rolf Gafvert.

Rolf A. Gafvert

I hope all of you have had the chance to review the press release we issued this morning. The third quarter was a very good quarter both in terms of financial results and the progress on our expansion projects. We are pleased to announce that the Board approved a third quarter distribution of $0.475 per unit. Jamie Buskill will describe our financial performance in greater detail.

Third quarter brought two hurricanes to the Gulf Coast. These hurricanes did not adversely impact our operations; however they did cause minor construction delays on our expansion projects. But the delays have not affected our announced in-service dates and we expect to remain within our announced construction budgets.

Regarding the Southeast expansion, the pipeline and two of the compressor stations have been placed into service. Once the remaining compression is placed into service during the first quarter of 2009 we will be providing all of the operational capacity on this project which involves meeting total daily commitments of between 1.8 and 1.9 bcf per day. The contracts associated with the Southeast expansion have a weighted average term of 9.2 years. As of September 30 we have invested $636 million in this project out of an expected total investment of $775 million.

Construction is progressing as anticipated on our Gulf Crossing project. We expect the pipeline to be in service during the first quarter 2009 including compression necessary to flow 1.4 bcf per day. Customers have contracted at fixed rates for all the operational capacity and these contracts associated with this project have a weighted average term of approximately 9.5 years. We will increase operational capacity from 1.4 bcf per day to 1.7 bcf per day with the construction of additional compression which is expected to be in service in 2010. As of September 30 we have invested $1 billion in this project out of an expected total investment of $1.8 billion.

Turning now to our Fayetteville Greenville project, we encountered significant rock during the construction phase of the 66-mile header on the Fayetteville lateral which slowed construction somewhat. We expect this header to be in service late in the fourth quarter of this year. We continue to expect the remainder of the pipeline portion of the Fayetteville Greenville laterals to be in service during the first quarter of 2009.

In the third quarter we made filings with the FERC regarding the addition of compression required to increase peak day transmission capacity to 1.3 bcf per day on the Fayetteville lateral and 1 bcf per day on the Greenville lateral in order to meet customer demand. We expect compression to be in service in 2010.

The contracts associated with this project are at fixed rates with a weighted average term of 9.9 years. As of September 30 we have invested $450 million in this project out of an expected total investment of $1.3 billion.

Now I’d like to give a quick update on our Midland Phase III storage project. The construction phase of this project is proceeding as planned and we anticipate the first 5.4 bcf of storage capacity to be in service during the fourth quarter of 2008. As of September 30 we have invested $41 million in this project. During the third quarter we announced an open season to transport Haynesville shale gas on our gulf south system.

Although we did not receive sufficient bids to justify the announced project we will continue to have discussions with interested shippers and evaluate their needs for additional takeaway capacity from east Texas and the Haynesville shale area. As everyone is well aware the last few weeks have definitely been challenging not only for Boardwalk but for all MLPs and the capital markets.

As Jamie will explain in a moment we are confident that we have full funding for our capital program and Boardwalk remains committed to its expansion projects, its employees and its unit holders. We believe we have a premier pipeline system that is being enhanced by our expansion projects. By the end of the first quarter 2009 our projects will be in service with additional compression coming online in 2010.

Boardwalk has long term firm commitments in place to transport natural gas from the prolific shale plays and other unconventional plays in the Gulf Coast and the midcontinent producing areas. As these projects are placed in to service, we anticipate our average daily throughput to increase significantly. Although we are in challenging times, we are optimistic about our future as we continue to build a premier pipeline and storage system.

That concludes my overview for Boardwalk. Now, I’d like to turn the call over to Jamie Buskill, our CFO who will share with you the financial results for the quarter and will also provide further detail on our financing plans.

Jamie L. Buskill

Operating revenues for the third quarter of 2008 were $191.6 million which is an increase of $56.8 million or 42% from $134.8 million for the comparable period in 2007. The increase was driven by $37.7 million increase in gas transportation revenues excluding fuel driven primarily by our east Texas to Mississippi and southeast expansion projects.

For the quarter overall system throughput was 432 bcf versus 322 bcf for the comparable period 2007. A $19.5 million increase in fuel revenues which are included in gas transportation on the income statement due to higher throughput as a result of our expansion projects and higher natural gas prices and three coal reserves that have been acquired by Texas Gas in the 1970s for $16.5 million all of which was recorded as a gain.

Year-to-date our operating revenues were at $579.2 million which is an increase of $105.8 million or 22% from $473.4 million for the comparable period in 2007. The increase was driven by an $83.0 million increase in gas transportation revenues excluding fuel driven primarily by our expansion projects and higher firm transportation rates on our existing assets, a $38.6 million increase in fuel revenues due to the expansion projects and higher natural gas prices, and a $9.5 million increase in gas storage revenues related to an increase in storage capacity associated with our Western Kentucky storage expansion project. These increases were partially offset by a $25.3 million of lower parking land revenues.

Turning now to operating expenses year-to-date, operating expenses were $307.9 million which is an increase of $19.7 million or 7% from $288.2 million for the comparable period in 2007. The increase was driven by a $43.1 million increase in depreciation in property taxes driven primarily by our expansion projects and a $41.5 million increase in fuel related costs due to higher usage primarily driven by our expansion projects and higher natural gas prices.

These increases were offset by $30.8 million from gains recognized on the sales storage gas related to our Western Kentucky storage expansion, a $16.5 million gain from the disposition of coal reserves and an $11.2 million gain from the settlement of a contract claim. In addition, the 2007 period was unfavorably impacted by a $14.7 million impairment related to our Magnolia storage facility.

As Rolf said, we have completed our East Texas to Mississippi expansion project and the pipeline and two compressor stations for our Southeast expansion project, the remainder of which are expected to be completed in the first quarter of 2009.

We have also made substantial progress on our two remaining pipeline projects, Gulf Crossing pipeline and the Fayetteville and Greenville laterals. We expect both of these projects to be placed in service during the first quarter of 2009 with additional compression coming on line in 2010, and we have not changed our total cost estimate. Although we have encountered some rockier than expected terrain and the difficult river crossing, we still expect the initial 66-mile header on the Fayetteville Greenville project to come on line during the fourth quarter of this year.

Of course there’s always an element of uncertainty in the timing and cost of any construction project. To understand the risks and uncertainties surrounding our expansion projects you should read our 10K and 10Q reports which are on file with the SEC.

We have financed our expansion projects to date with a combination of equity and debt issuances, loans under our $1 billion revolving credit facility and cash from operations. In October we drew down all of the undrawn commitments under our revolver. Our total current borrowings under that facility of $958 million reflect the failure of a Lehman Brothers affiliate to fund its portion of the recent draws.

To complete our announced projects, we anticipate we will need to issue as much as $1 billion in equity and we anticipate raising these funds by issuing limited partnership units. As you know, the capital markets are currently severely stressed. Fortunately our largest unit holder, Loews Corporation, has advised us that it is willing to purchase the entire equity investment we need to the extent the public markets remain unavailable.

We are flexible as to the timing of any new equity raised and anticipate that we will issue some equity this year and the balance next year. We have not committed to any transaction at this time though we are confident that the terms which are subject to review and approval by our independent conflicts committee will be fair and reasonable.

I’ll now turn the call back over to Rolf.

Rolf A. Gafvert

As we have consistently said, when our announced expansion projects are completed Boardwalk will own an integrated group of natural gas pipeline and storage assets that are connected to the major Gulf Coast and Mid-Continent producing areas including shale and other unconventional plays and have access either directly or via our numerous pipeline interconnects to markets in the Midwest, Northeast, and Southeast including Florida. We anticipate that approximately 10% of our nation’s natural gas throughput will move through our pipes.

As Jamie discussed, we are confident that our cash position together with support from our parent Loews Corporation provides us with adequate capital to complete our projects. We are looking forward to completing these projects, putting the construction and financing risks behind us and realizing the recurring earnings stream that they will provide which is supported by long-term fixed contracts.

Regarding future growth plans, it is very difficult to make predictions especially given the current condition of the capital markets and the overall economy. We do not have any major expansion projects committed beyond those that we have already announced. However we do believe that long-term need for natural gas infrastructure is clear and we look forward to exploring those opportunities as they arise. We also believe there could be attractive acquisition opportunities for strong industry players in the coming months or years and we will consider those opportunities as well should they arise.

So to recap, Boardwalk had another solid quarter, our construction projects are continuing on pace and nearing completion, and we are very positive of Boardwalk’s future.

Jamie L. Buskill

We’ll now turn the call over to the operator for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Gabe Moreen - Merrill Lynch.

Gabe Moreen - Merrill Lynch

Are there any more of these coal reserves that are possible monetizations coming up in the next couple quarters?

Jamie L. Buskill

No, that’s all the coal reserves we had.

Gabe Moreen - Merrill Lynch

Jamie, if I could ask in terms of at quarter end at September 30 what your cash balance was and how much was undrawn on your revolver at that point?

Jamie L. Buskill

At the end of the quarter we had approximately $22 million cash and at that time we had $256 million drawn on the revolver. As we said on the announcement, in October we drew down to the $958 million and presently we have about $500 million in cash.

Gabe Moreen - Merrill Lynch

In terms of your O&M is there any sort of metric we can use in terms of your fuel costs to think about how sensitive you might be to natural gas prices in terms of your fuel costs going down in the current natural gas pricing environment?

Jamie L. Buskill

If you look at the impact fuel had, they basically offset. The increase in revenues offset with the increase in expense. This year really it’s going to be a little difficult to get the read on that because as we bring these systems up, they’re not running at the most efficient setup because as you heard us say we’ve been bringing the pipeline portion up. We’re kind of using the compression that’s out there on our existing system, and as we bring on the compression that’s designed for those facilities, we should see a little bit of improvement on the fuel costs.

Operator

Our next question comes from Darren Horowitz - Raymond James.

Darren Horowitz - Raymond James

Rolf, I wanted to go back to a comment that you just made when you talked about considering external opportunities for some of your assets. Can you identify exactly what you’re looking at and give us a little bit more context about synergistically what might make most sense and when?

Rolf A. Gafvert

I made that point just kind of based on where the capital markets are and opportunities may arise. We don’t have anything currently nor would we comment on it, but certainly we think there’ll be opportunities out there and we would look for things that we could integrate well with our systems. But at this point I really can’t comment on any specific thing we’re looking at.

Darren Horowitz - Raymond James

Let me switch gears then and go back to liquidity. When you look at incremental debt availability or maybe upsizing the revolver or accessing a new one, if you were to go to the markets today, how does that market look for you?

Jamie L. Buskill

Obviously the last couple months the markets have been difficult. I think the important thing here is that with the commitment we’ve received from Loews we basically do not have a requirement to enter the capital markets now until 2012. So really to the extent if there’s any other expansion opportunities or acquisitions that may be out there, we’ll just have to deal with those as they come up.

Darren Horowitz - Raymond James

Just to kind of look a little bit more near term when you look at matching liquidity with your cap ex, obviously a lot of your remaining program really hinges around the next six months. Can you give us an idea for how lumpy it’s going to be? Is it going to be more back end of the year loaded?

Jamie L. Buskill

We’re anticipating for the fourth quarter we’ll invest another $900 million on the expansion projects and the remaining $900 million will be invested in 2009 and 2010.

Operator

Our next question comes from [Ross Bain] - Wachovia Capital Markets LLC.

[Ross Bain] - Wachovia Capital Markets LLC

In the press release you talk about a derivative gain for the quarter related to expansion programs. I was wondering if you could just expand on that a little bit so we understand what that is.

Jamie L. Buskill

If you look down on our income statement, there’s miscellaneous other deductions and income. We basically had some derivatives related to [lime pack] for our expansion projects and if you look for the year, it actually nets out to zero. We didn’t declare it a hedge for accounting purposes so the impact’s running through our income statement. We’ve since converted that to physical and will be taking possession of the gas related to those expansions.

[Ross Bain] - Wachovia Capital Markets LLC

What was the total debt for the quarter?

Jamie L. Buskill

We had $2.1 billion of fixed rate debt and then we had approximately $250 million on our revolver.

Operator

Our next question comes from Sharon Lui - Wachovia Capital Markets LLC.

Sharon Lui - Wachovia Capital Markets LLC

KMP Energy Transfer actually recently announced a Fayetteville pipeline project. I was wondering if that project may have an impact on the economics of your Fayetteville line?

Rolf A. Gafvert

We’re not going to comment on any of our competitor’s projects.

Jamie L. Buskill

It’s worth pointing out that again our projects are sold out under long-term agreements, and as you know we recently this year announced an upsize of that from 800 million to 1.3 billion.

Sharon Lui - Wachovia Capital Markets LLC

The 1.3 is totally committed at this point?

Jamie L. Buskill

Yes.

Sharon Lui - Wachovia Capital Markets LLC

Looking at interest expense for the quarter, I noticed that it was a sequential decrease.

Jamie L. Buskill

It has to do with the capitalized interest. We capitalized about $22 million of interest for the quarter so our actual cash expense was around $31 million.

Operator

Our next question comes from John Edwards - Morgan Keegan & Company.

John Edwards - Morgan Keegan & Company

You had commented on an earlier question Jamie that you’re expecting to spend $900 million in 2009 and 2010. About how much in each year on that extra $900 million?

Jamie L. Buskill

If you recall, we said we’ll be about $4.5 billion of the original project cost invested by the end of the first quarter. The other $300 million related to the bolt-on projects will be in the latter half of ’09 and first part of 2010.

John Edwards - Morgan Keegan & Company

So roughly $300 million would be remaining in 2010?

Jamie L. Buskill

No. We’ll spend some of that in the latter half of 2009; probably about half of it.

John Edwards - Morgan Keegan & Company

I think Rolf you made a comment about the Gulf South, you had an open season for Haynesville but didn’t really see a whole lot of response to that. I was wondering if you could give a little more detail on why you think that happened. Is it a pull back from Chesapeake and so on? If you could just give any insider color on it, that would be great.

Rolf A. Gafvert

There are other projects out there, some of which may have a timing advantage. We think over time the Haynesville as it gets drilled out will provide opportunities for us as well. I think for us at this time the project and the timing that we had just didn’t fit with what the market wanted right now.

John Edwards - Morgan Keegan & Company

Jamie, you were going over the gain and I think the pieces that you broke out, at least as I understood them, it didn’t quite add up. Maybe I missed it but I thought you said $15 or so million on the storage gain, about $16.5 million on the undeveloped coal reserves, and $11 million on the contract settlement. Then on the release it showed $36.1 million. What am I missing?

Jamie L. Buskill

Part of that contract settlement’s not on the net gain on disposal of operating assets and related contracts. I think that’s probably the disconnect you’re having in looking at that number. If you want, afterwards give me a call and we can walk through the pieces.

Operator

Our next question comes from Ross Haberman - Haberman Funds.

Ross Haberman - Haberman Funds

The remaining capital expenditures for the three or four projects, I think you said the total is $3.9 billion and you have about a little less than $2 billion left. Is that correct?

Jamie L. Buskill

You’re right. We have about $3.9 billion total expenditures for the three remaining projects of which $2.1 billion has been invested as of the end of the third quarter.

Ross Haberman - Haberman Funds

If I understood it right, you’re going to try to get the rest of the financing via debt and then if you can’t, you have a commitment from Loews basically to put it in as equity capital?

Jamie L. Buskill

We’re not going to try on the debt. We actually have that in hand now. We drew down the revolver in October so that cash is in hand. The only remaining piece out there has to do with potential equity and again, Loews has said that they’ll backstop that, and it would be up to $1 billion.

Ross Haberman - Haberman Funds

Along the same terms as the last deal or that’ll be determined then?

Jamie L. Buskill

It’ll be determined at the time of the transaction.

Ross Haberman - Haberman Funds

I saw you raised your dividend that dropped the last quarter. Have you come out and said again any sort of rough parameters of what kind of returns you hope to get on the $3 billion or $4 billion you’re spending?

Jamie L. Buskill

No, but to that point, one thing that’s important to note on these projects is that they generate a lot of cash. In fact if you look at our earnings release, depreciation expense was up about $13 million for the three months and about $31 million for the nine months. As we’ve stated before, the maintenance capital on these new projects is very minimal. In fact right now maintenance capital on our legacy systems runs around $50 million to $55 million and we stated that once all the projects are on maintenance capital will probably be in the mid-60s range. You’re only looking at about $10 million to $15 million of additional maintenance capital. These projects will tend to generate more cash than they do earnings.

Ross Haberman - Haberman Funds

You’ve never thrown out in any prior calls that you expect to make 15% of return on your money or 20% or anything like that?

Jamie L. Buskill

No. Just as a matter of policy we do not provide guidance when it comes to earnings or cash generated.

Operator

Our next question comes from [Robert Schweis - Burnham].

[Robert Schweis - Burnham]

I missed the first two minutes of the call. One question alluded to it, but did you make any specific comment on the open season Gulf South situation?

Rolf A. Gafvert

Yes. We had an open season and we did not get enough interest in that open season to move forward with a project. Again we are continuing to talk to all of the potential shippers in the Haynesville Shale area as well as the East Texas Carthage area and we hope to have a project at some point in time but it just wasn’t timely for us right now. We’ll just continue to work on it.

[Robert Schweis - Burnham]

You see this as a real good long-term opportunity for the company?

Rolf A. Gafvert

Absolutely. The Haynesville Shale could be one of the biggest shale plays of all and all of our systems essentially sit in the Haynesville Shale area which gives us opportunities to enhance capacity on our pipes to move that gas to the Perryville market or farther east if there’s interest in doing that. We are well positioned for the Haynesville play.

[Robert Schweis - Burnham]

Could we come back for a minute to the total capital spending? I understand everything you’ve said on this call. I’d like to go back to in history. What does it look like this total capital program from the beginning of your expansions and how does that compare with your last estimate on that total figure?

Jamie L. Buskill

The estimate’s unchanged. If you go back, $4.5 billion was the baseline projects. If you recall, we’ve upsized because of demand for Gulf Crossing and Fayetteville. We increased the size of those projects by adding compression and that was approximately $300 million. So total investments are going to be about $4.8 billion. Again, that’s unchanged from what we previously announced.

[Robert Schweis - Burnham]

Is there any chance that that figure could come in less as you complete the capital spending over the next year or so?

Jamie L. Buskill

Yes. There is a chance that could come in less but right now our best estimate is the numbers we’ve provided.

[Robert Schweis - Burnham]

Do you anticipate that the equity financing is likely to be done in more than one step?

Jamie L. Buskill

We expect that we’ll do some equity in the fourth quarter and we’ll do some equity next year, so it would be multiple steps.

Operator

Our next question comes from Paul Sankey - Deutsche Bank Securities.

Paul Sankey - Deutsche Bank Securities

Just to confirm that Loews owns 70% of you guys and any comments you can make on their liquidity, their financial strength would be helpful.

Jamie L. Buskill

Loews does own approximately 70% o the company. As far as Loews financial strength, you’ll have to ask Loews.

Operator

Our next question comes from Gabe Moreen - Merrill Lynch.

Gabe Moreen - Merrill Lynch

Any benefit to the decline in steel prices we’ve seen here? I know you’ve probably locked in most if not all of your materials at this point.

Rolf A. Gafvert

Yes. We have everything locked in so if there’s a steel price decline, that could certainly improve the economics on future projects. We are locked in on all of our steel.

Operator

Our next question comes from [Jeremy Helmond - Avenue T Fund].

[Jeremy Helmond - Avenue T Fund]

On the equity raise potential, do you guys have a shelf registration for that yet or not?

Rolf A. Gafvert

Yes. We have a shelf registration for that.

Operator

Our next question comes from Dennis Coleman - Bank of America.

Dennis Coleman - Bank of America

I wonder if you can just talk a little bit about your decision to draw the bank line down in whole versus drawing it down on an as-needed basis?

Jamie L. Buskill

Our reasoning for drawing that down is we’re in the heart of our construction right now. As I mentioned, we plan to spend $900 million in the fourth quarter so we’re spending cash at a pretty rapid rate and we decided to draw it all down in October for those reasons.

Dennis Coleman - Bank of America

You mentioned that you wouldn’t have any financing needs until 2012 which I think is when the bank line rolls. Should we think about ultimately debt financing in the term markets when and if that market opens up again?

Jamie L. Buskill

That’s obviously a possibility. That’s something we’ll have to look at. If the market makes sense, that is something we may consider to start terming out that revolver.

Operator

Our next question comes from [Eve Siegel - Orio Capital].

[Eve Siegel - Orio Capital]

On the contracts back in the pipeline projects, could you say roughly how much of the contracts are demand versus commodity based?

Jamie L. Buskill

I don’t have that percentage in front of me. If you look at the last 12 months which factors in the East Texas project and some of the Southeast, we’re running around 70% on the demand charges and about 15% to 20% on the commodity-related charges on those firm agreements.

[Eve Siegel - Orio Capital]

Given the current environment and how you’ve sort of budgeted going forward, how quickly do you think the pipelines ramp up in terms of throughput?

Rolf A. Gafvert

We would expect them to be at a very high load factor as soon as they become available.

Jamie L. Buskill

In fact if you look at our East Texas, that’s a 1.4 project and we’ve been running 1.4 to 1.5 actually on that system.

[Eve Siegel - Orio Capital]

Any thoughts perhaps of looking for a partner to help finance these projects?

Jamie L. Buskill

We had talked about that before. That’s always an option and as we said before, all the options are still on the table. That doesn’t mean we will or won’t do that but clearly all options are still on the table.

[Eve Siegel - Orio Capital]

As it relates to the macro environment, have you tightened any of your credit requirements for your customers because of the current environment, i.e. requiring more companies to post letters of credit?

Jamie L. Buskill

We do monitor that pretty closely, and with everything going on in the market place right now, we’re paying special attention to it. I feel like we have pretty stringent credit requirements and if required, we may ask for parent guarantees or letters of credit.

[Eve Siegel - Orio Capital]

Is it fair to say that you haven’t seen a significant deterioration in credit quality?

Jamie L. Buskill

I won’t say we’ve seen a significant deterioration, no.

Operator

Our next question comes from John Edwards - Morgan Keegan & Company.

John Edwards - Morgan Keegan & Company

Jamie, on the maintenance cap ex, what are you expecting there for the rest of 2008?

Jamie L. Buskill

2008 I think we’ll be in the $50 million to $55 million range and by next year with all the expansion projects pretty much on I think we’ll be more in the low to mid $60 million range.

John Edwards - Morgan Keegan & Company

So effectively you’ll have some catch up because I think your press release said you had about $24 million or something?

Jamie L. Buskill

We will definitely have some catch up. We have some engine overhauls that we’re working on that tend to be fairly sizable dollars.

John Edwards - Morgan Keegan & Company

As far as customer credit quality, just to confirm you’re not seeing any significant deterioration at this time?

Jamie L. Buskill

We’re not going to comment about individual customers. We are monitoring those and again if it makes sense that we ask either for parent guarantees or letters of credit, we will.

I think the important thing to note on credit is that a good lion’s share of our revenues still come from the local distributions and from other pipelines which tend to be very highly rated credit and on the production side with producers most of those remain fairly strong. If you look at the production side, if there’s deterioration in the price, a lot of times you’ll see the majors step in and buy some of those reserves. In fact I think [Bridge] Petroleum’s been doing some of that. So someone at the end of the day will own that production and generally we see that’s what happens when it comes on the producer side.

Rolf A. Gafvert

And obviously the gas will flow through the pipes.

Operator

Our next question comes from [Ross Bain] - Wachovia Capital Markets LLC.

[Ross Bain] - Wachovia Capital Markets LLC

It looks like in your press release you had $1.9 billion in expansion cap ex year-to-date. I assume that has no maintenance in it? And that gets me to about $850 million in expansion for the third quarter and then we’ve got $900 million coming in the fourth quarter. Is that correct?

Jamie L. Buskill

That’s correct.

Operator

I’m not showing any further questions at this time. I’ll turn the call back over to Petra Tabor for any closing remarks.

Petra Tabor

Once again I’d like to thank everyone for joining us this morning. We appreciate your continued interest in Boardwalk Pipeline Partners, LP. As a reminder, an online replay of this call is available on our website at www.bwpmlp.com. This concludes today’s conference call. Thank you and have a great day.

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