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Executives

Mike Hennigan - President and CEO

Pete Gvazdauskas - Vice President, Finance

Martin Salinas - Chief Financial Officer

Mackie McCrea - Chairman

Analysts

Steve Sherowski - Goldman Sachs

Brian Zarahn - Barclays

Jason Stevens - Morningstar

Bradley Olsen - Tudor Pickering

Elvira Scotto - RBC Capital Markets

Ross Payne - Wells Fargo

Cathleen King - Bank of America Merrill Lynch

John Edwards - Credit Suisse

Eric McCarthy - Balyasny

Sunoco Logistics Partners L.P. (SXL) Q4 2012 Results Earnings Call February 21, 2013 8:30 AM ET

Operator

Welcome to Sunoco Logistics Q4 2012 Earnings Conference Call. All lines have been placed in a listen-only mode until the question-and-answer session. Today’s call is being recorded. If anyone has any objections you may disconnect at this time.

I would now like to turn the call over to Mike Hennigan, President and CEO. Sir, you may begin.

Mike Hennigan

Thank you, Tim. Good morning, everyone. Welcome to Sunoco Logistics Partners conference call to discuss our fourth quarter 2012 results. I’m Mike Hennigan, President and Chief Executive Officer for the General Partner. Joining me today is Pete Gvazdauskas, Vice President of Finance; and also on the call are Martin Salinas; and Mackie McCrea.

In the course of our remarks and in the subsequent Q&A session, we’ll be referring to slides that have been posted on our website entitled Fourth Quarter 2012 Earnings Conference Call and we may be making some forward looking statements. In that regard for the purpose of facilitating the discussion, I refer you to slide two.

With regard to our results, I’m pleased to report that we are in $219 million of EBITDA, a new quarterly record and full year earnings of $810 million, which is also a new record. Our 2012 earnings represent a 41% increase over our 2011 results and resulted in $604 million of distributable cash flow.

As indicated in the accompanying slides, we changed our definition of adjusted EBITDA and distributable cash flow to confront to our General Partners presentation. The changes better align EBITDA with cash generated from operations and only have a minimal net impact on distributable cash flow.

We have restated our historical results for comparison and reconciliations are provided in the slides on our website. Pete will be available after this call to walk you through the mechanics in detail.

Our strategy over the last several years of moving the company more into the crude and NGL areas has been very probable for us, and we continue to see strong results in these areas.

Our crude oil pipeline business is leading our earnings and is the heart of our company’s result with $275 million of EBITDA in 2012, as we strive to be the best crude oil service provider in the industry.

Our Crude Oil Acquisition and Marketing business has also been delivering excellent results. Market conditions continue to be favorable for our business with the wide WTI LLS spread and our asset portfolio enables us to get producers the best possible net back for their production.

Our terminals business is also contributing strong results with $225 million of EBITDA in 2012 as we grow our services in our terminals. And next let me give you a summary of our major organic growth projects.

In 2012, we announced six successful open season -- seasons which are starting to be implemented. We have three successful open seasons related to the expansion of our West Texas crude system, totaling 110,000 barrels per day.

These projects are on track to meet the market needs delivering Permian Basin crude to various markets utilizing existing pipeline. We expect to be fully operational in the April, May timeframe with construction being completed towards the end of the first quarter.

Our Permian Express Phase I project, which provides crude oil transportation service originating in Wichita Falls, Texas, culminating in the nearly Nederland Beaumont, Port Arthur and Lake Charles markets is on track to be operational by the second quarter of 2013 with an initial capacity of 90,000 barrels per day. Full capacity of 150,000 barrels per day is expected by late 2013 or early 2014.

We continue to develop Permian Express Phase II which would increase the takeaway capacity at Colorado City by an additional 200,000 barrels per day and provide further market access to the Gulf Coast. We had considerable market interest in this project and hope to be able to give you more details in the near future.

The NGL area, our Mariner West project which will deliver ethane to the Sarnia marketplace is on schedule for mid-2013 startup with a capacity approximately 50,000 barrels per day and the ability to scale higher.

Engineering is underway for our Mariner East project. This project will deliver ethane and propane from the Marcellus to Marcus Hook, Pennsylvania where it will be processed, stored and distributed to the local, regional and international markets.

Total capacity is approximately 70,000 barrels a day with the ability to scale higher. We expect to be able to deliver propane by the second half of 2014, and both ethane and propane in the first half of 2015.

As you are aware propane is already being exported from the terminal today as the Northeast as long and we’ll continue to go longer NGLs as Marcellus and Utica develop further. Marcus Hook link the Mariner East project as repurpose and further develop this key waterborne industrial site.

Based upon the significant interest during our Mariner East open season, we are developing a Phase II. As production in the Marcellus and Utica continues to grow, additional NGL takeaway capacity will be needed by producers.

We believe a Northeast hub of that Marcus Hook to supply local and regional demand, as well as providing access to the export market will be very attractive to producers and industrial customers.

On the refined products pipeline side of our business, we announced the successful open season for a project called Allegheny Access. This project addresses the surplus of Midwest refined products that need to be moved into the Eastern Ohio and Western Pennsylvania markets. This project is designed for 85,000 barrels per day expandable to 110,000 barrels per day and we expect it to start-up in the first half of 2014.

From a capital standpoint, we finished 2012 spending $324 million on our growth plans, compared to $171 million of organic capital in 2011. We are forecasting approximately $700 million of organic capital in 2013 as we continue to implement our growth strategy.

All of our open season projects will provide fee-based income under long-term commitments. The ratable cash flow from these projects will allow us to continue to grow our overall EBITDA even though we expect our margin-related earnings to decline as crude differentials eventually contract. These significant accomplishments have continued to allow us to reward our unitholders.

On our distribution we’ve announced an increase to $2.18 per common unit on an annualized basis which represents a 5% increase quarter-over-quarter. This also represents a 30% year-over-year increase compared to the fourth quarter of 2011.

We also expect to continue approximately 5% quarter-over-quarter increases in 2013 and expect to give our investors over 20% growth again this year as we continue to implement our growth strategy.

We continue to grow our blue bar earnings and remained committed to distributing these earnings as our projects materialize. As we’ve discussed in the past, our business model of 80% blue bar and 20% red bar would generate an approximate 1.25 times coverage ratio. To the extent our red bar coverage is a higher percentage that will enjoy cash flexibility as a source of equity for funding future growth.

The quarterly distribution of $0.545 per common unit was paid on February 14th to unitholders of record as of February 8th. This represents our 31st consecutive quarterly distribution increase.

We also continue to have tremendous balance sheet capacity to fund our ongoing expansion capital program. Our debt-to-EBITDA on December 31st was two times. If we include our recent $700 million debt offering with no increase in EBITDA, our debt-to-EBITDA would still be only 2.7 times.

As we continue to implement our plan we remain committed to sustainable competitive distribution growth. We are confident our strategy is on track and we are committed to growing our cash flows over the near and long-term.

We also have been part of the energy transfer family for several months and couldn’t be more excited. Our integration has been seamless and we are excited to get after synergies that our partnerships can develop together.

In that regard, we are actively pursuing a joint project to export NGLs from the Gulf Coast. The project would originate at the Lone Star fractionation facility in Mont Belvieu and connect with Sunoco Logistics line that runs to our Nederland Terminal.

Similar to our Mariner East project, we are exporting NGLs from the East Coast. This project, which we are calling Mariner South would have an NGL export capability from the Gulf Coast.

We expect to launch an open season for the project very shortly to determine customer interest. In addition, we need to work through some project details at the state local level to ensure a viable project.

Our goal will be to have the project to be online by early 2015. This will be the first example where we believe our growth opportunities can only be enhanced by working together and we look forward to an exciting future as part of the energy transfer family.

In closing, over the last several years, we’ve been repositioning the company towards an increased emphasis on crude oil and natural gas liquids. This strategic movement was predicated on aligning our growth plans with the emerging growth related to the increased production from the shale plays.

Sunoco Logistics assets are particularly well positioned to benefit from the growth in these shale areas. Our recent growth project successes reflect our execution in these areas and we’ll continue to evaluate and develop additional opportunities.

Wit that, I’ll ask the moderator to open the lines for any questions that you may have.

Question-and-Answer Session

Operator

(Operator Instructions) The first question comes from Steve Sherowski with Goldman Sachs. Sir, your line is now open.

Steve Sherowski - Goldman Sachs

Hi. Good morning. Regarding the Mariner South project, what do you see the potential the capacity on that being?

Mike Hennigan

Yeah. We haven’t fully determined that at this point, Steve. We need to get a gauge on the customer interest and we’re planning to launch that open season very, very shortly. So we’ll have a lot more details once we get through the open season.

Steve Sherowski - Goldman Sachs

Okay. And regarding your marketing business, do you see margins more sensitive to a particular crude spread or -- such as like WTI Midland, WTI LLS or how do you -- what do you think is the primary driver of those margins?

Mike Hennigan

Yeah. Steve, all the above. Obviously, the Midland, WTI differential was a big change in the last couple of months. Obviously, WTI LLS impacts our business and we stated all along that wider that differential is, the more opportunity across the portfolio there is for us.

We think we have a unique advantage in the marketplace that we have considerable assets from a pipeline and trucking standpoint to get producers the highest net back possible. But obviously, the wider that spread is, more our earnings are available to us.

Steve Sherowski - Goldman Sachs

Okay. That’s it for me. Thank you.

Mike Hennigan

You’re welcome Steve. Thank you

Operator

Thank you. The next question comes from Brian Zarahn with Barclays. Sir, your line is now open.

Brian Zarahn - Barclays

Good morning.

Mike Hennigan

Hi Brian.

Brian Zarahn - Barclays

On -- just on Mariner South, do you expect -- I think you said that’s going be looking to export NGLs from Nederland. Does that require additional tankage or do you have some tankage utilities for that?

Mike Hennigan

No, we would have to be building tankage in Nederland. I mean, it’s an NGL export project. So the goal will be for us to build some tankage in the Nederland to support the exporting. So we’re working on it. Very similar as I have been saying similar to our Mariner East project, which will have storage in Marcus Hook to feed the export market. This will be very similar.

We would have a storage in Nederland. We would pipe it over from the Lone Star facility. So the nice thing about the synergy and being part of the family partnerships that we are now is, it’s a great synergy where the Lone Star facility is the origin. The NGLs will come over to our terminal and they will export from there. And clearly, I think everybody knows the Gulf Coast market needs more NGL export capability.

Brian Zarahn - Barclays

And would you envision somewhat of to Mariner East, a mix of both ethane and propane. Do you think this be more propane oriented?

Mike Hennigan

Right now, expectation is more propane and heavier but we’ll see as we get into more of the details but for right now our thinking is that propane, butane, that type of product.

Brian Zarahn - Barclays

Okay. And then on trunk line, given the announcement, can you give us maybe a little more color as to the likelihood that becomes a Sunoco Logistics project in terms of -- it seems like some cost estimates. We’ve seen some different cost estimates from what was stated previously to what was announced just recently?

Mike Hennigan

Yeah. On that one, Brian, it’s again little early to discuss those types of details. I mean we’re very pleased that our general partner could reach an agreement, commercial agreement with Enbridge. And at this point, we’re just looking forward to see the outcome of the open season to decide where we go from there.

Brian Zarahn - Barclays

Okay. And last one from me, on the crude oil marketing business, obviously margins were very strong in the quarter. Volumes were down year-over-year and quarter-over-quarter. Can you elaborate on the volume situation?

Mike Hennigan

Yeah. In this quarter, we were a little lower in our bulk business compared to our lease gathering business. Our lease gathering business has been very strong and firm but our bulk tends to fluctuate up and down and numbers were down just a little bit.

Martin Salinas

Correct. And Brian year-over-year on lease gathering business, we’re actually up 65,000 barrels a day. So we went from 224,000 barrels a day in 2011 to 289,000 barrels a day in 2012. But as Mike pointed out overall, bulk purchases are bit lower.

Brian Zarahn - Barclays

Okay. But the gathering volumes have obviously better margins?

Martin Salinas

Correct.

Brian Zarahn - Barclays

Okay. I appreciate the color guys. Thank you.

Mike Hennigan

You’re welcome, Brian.

Operator

Thank you. The next question comes from Ross Payne with Wells Fargo. Sir, your line is now open. Mr. Payne has dropped off. The next call is Jason Stevens from Morningstar. Sir, your line is now open.

Jason Stevens - Morningstar

Hi guys. I was wondering if you could talk a little bit about the terminal dynamics. Nederland is clearly well positioned. Can you give us a little bit more color on where you see refined products terminals in terms of volumes heading?

Mike Hennigan

Yeah. We’ve been saying for quite sometime, Jason, that we know that the refined products business in the U.S. is a declining business. Gasoline demand has been off. I mean the numbers are out there showing how it’s going to be -- it’s been a gradual decline.

So our emphasis in the terminal has been trying to add other services. We’ve been putting our butane business in the terminal areas. We’ve been adding ethanol, biodiesel, all these all those types of services to try to increase the profitability. If you look at our earnings numbers, we’re very happy with the terminal segment. But we don’t count on any growth from gasoline or traditional diesel.

We just look to reposition them more towards where the growth is going to be. And as you mentioned, our Nederland terminal continues to be a terrific asset for us. It’s over 20 million barrel crude terminal in the Gulf Coast with the tremendous connectivity. So we’re looking forward to that asset continuing to be an important part of the Gulf Coast distribution.

Jason Stevens - Morningstar

Absolutely. And then if I could come to distribution strategies, I have heard you guys talk red bar, blue bar. Your numbers are solid as you step out and the future continue to support very rapid growth in terms of distribution, LP distribution growth. What -- is there a maximum you would let your coverage go before really ramping up your distribution?

Mike Hennigan

Jason, the way we think about it is, we use the term blue bar and red bar. So our philosophy is blue bar earnings are there in any market condition and it’s the basis for the way we think about our distribution coverage. Red bar are earnings that we think are great to have but are not there for the long term.

So we don’t count on them for long-term distribution philosophy. And then from a business model standpoint, we’ve normally said we’re targeting an 80-20 business model, which if we do the math would end up with about 1.25 coverage ratio.

So that’s in our thinking as we look at distribution. We’ve been fortunate enough to have market conditions that have given us more red bar. We’re more like a 60-40 blend in 2012. So we end up getting excess cash which is great for flexibility.

But also our philosophy is when we see red bar conditions, we look to see, is there a way to turn that market condition into a blue bar project for us. And I think that’s what you’ve seen throughout the last couple of years as we’ve been seeing these market opportunities, we really try and generate blue bar earnings for long-term ratable fee-based cash flows for us.

Jason Stevens - Morningstar

Great job. Keep it up.

Mike Hennigan

Thank you.

Operator

Thank you. The next question comes from Bradley Olsen with Tudor Pickering. Sir, your line is now open.

Bradley Olsen - Tudor Pickering

Hi. Good morning, guys.

Mike Hennigan

Good morning, Brad.

Bradley Olsen - Tudor Pickering

Couple of quick ones from me. First, on the Mariner South project, do you view the Mariner South project announcement as impacting in anyway the prospects for a Mariner East expansion?

Mike Hennigan

They are pretty much separate projects. The Gulf Coast is really long NGLs and in our view, it will continue to go longer and longer. We’ve been looking for an opportunity to get Nederland into the NGL business and we’ve been studying that phenomenon for a while, and it’s this great situation that we’ve ended up being part of the family, partnerships with Energy Transfer that have accelerated our project there.

So, as we came together, Lone Star obviously has great facilities, fractionation facilities and they’re looking to export, and then we have a terminal that we can do that and within the family it’s just a great synergy and it’s our hope that you are going to see more and more of these come out of our family.

Bradley Olsen - Tudor Pickering

Great. And on the Mariner South project, are you looking at 50-50 JV economics between SXL and Energy Transfer?

Mike Hennigan

Yeah. Way too early to discuss that at this point, Brad. Like I said, our emphasis is do let the market know about it, get this open season launched as early as we can. So, I think you are going to see that very, very shortly and then, we’ll see what type of interest we have and where we take the project.

Bradley Olsen - Tudor Pickering

Great. And one last question for me. It looks as though with all of the NGL processing and fractionation infrastructures you’ve got coming online throughout 2013 and early 2014, that there’s a real risk that the Northeast becomes long NGLs within the next 12 to 18 months.

And as you guys are well aware, there’s a lot less infrastructure flexibility in the Northeast for NGLs in terms of export capacity and different pipelines to move volumes around than there is on, say, the Gulf Coast. Given that dynamic, have you seen accelerating interest or accelerated demand for an expansion of Mariner East, or are there any things that we can look out as market observers to kind of evaluate whether or not the demand is going to be there for a second phase of Mariner East?

Mike Hennigan

Yeah. It’s a great question, Brad. I mean, we are really actively pursuing Mariner East Phase II at this point. We were very pleased, Mariner East Phase I at 70,000 barrels got oversubscribed, which we were happy that the interest was there but we had a limited to the capacity of the existing 8-inch pipeline that we have there.

And as you mentioned, the area is already long. We are exporting propane today from the Marcus Hook terminal. We are bringing trucks and rail in until the pipe is available to us and we are trying to get the existing pipe available as soon as we can. But clearly, I think everybody realizes that it is the growth in those shale areas continues it’s going to be longer and longer.

And it’s our view that it doesn’t make any sense to bring those barrels down to the Gulf Coast whereas you mentioned there is already going to be continuing growth in NGL activity down into the Gulf. So we are still very bullish to Mariner East. We are working it at this point. We believe the market needs it. We are very bullish to hold Marcellus, Utica growth pattern and I know you can talk in various companies to see what that looks like. But we are already in a situation where propane is exporting butanes right behind it. I think it’s just a great opportunity for us to expand than what we’ve already gotten with Mariner East I.

Bradley Olsen - Tudor Pickering

That’s great color. Thanks a lot, Mike.

Mike Hennigan

You are welcome, Brad.

Operator

Thank you. The next question comes from Elvira Scotto with RBC Capital Markets. Your line is now open.

Elvira Scotto - RBC Capital Markets

Hi. Good morning.

Mike Hennigan

Hi, Elvira.

Elvira Scotto - RBC Capital Markets

Just a couple of quick ones. On the growth CapEx of $700 million, just want to confirm that that’s just really includes all the major projects that you’ve announced and it doesn’t include any potential Permian Phase II or Mariner East Phase II.

Mike Hennigan

That’s correct, Elvira. Our capital, we talked about in the past is all the projects that I just mentioned earlier on the call are mariners, the West Texas expansion, Allegheny and Permian I. So, all of the other projects that we are working on and hope to get to the finish line are not included in that number.

Elvira Scotto - RBC Capital Markets

Okay. Great. And then a follow-up question on the Mariner South. So, I think you said that project would require building additional tankage and a pipeline to Nederland, or is there a pipeline already there?

Mike Hennigan

Yeah. There is the existing pipeline already there. We would just have a small connection to get into the Mont Belvieu facilities and into the Nederland facilities. So there is a small amount of new pipe, but the majority of it is existing pipe that Sunoco Logistics has. The main build for our end of the joint project is the storage because Nederland is currently a crude terminal with little bit of naphtha but there is no NGLs at Nederland.

So this will bring Nederland into the NGL market, so we will be building whatever appropriate storage we need. Our point or where we are in the project is we want to get out, have the open season, find out whether there is interest that we think there is and then figure out what the sizing is going to be for all of these.

Elvira Scotto - RBC Capital Markets

And then from an SXL’s standpoint, this project would be just a peer fee-based type project?

Mike Hennigan

Yeah. We are always, as you know, Elvira, we are always looking to generate fee-based long-term projects, so this will be in that regard as well. It would be a joint project where at the end of the day, our family is going to be doing the front end of it and we are going to be doing the back end of it and it will be a long-term fee-based approach that we’ve had with our other projects. So, I mean you’ll see very shortly, we will have the open season out very, very shortly. We’ll see what the customer interest is and then we will be able to give you more color and more details.

Elvira Scotto - RBC Capital Markets

Great. Thank you.

Mike Hennigan

You’re welcome.

Operator

Thank you. The next question comes from Ross Payne with Wells Fargo. Sir, your line is now open.

Ross Payne - Wells Fargo

Hey, guys.

Mike Hennigan

Hey, Ross.

Ross Payne - Wells Fargo

Your balance sheet is pretty under levered at 2.1 times. What is your comfort zone now, how high do you think you could get, what are your expectations given your growth prospects?

Mike Hennigan

Yeah. Ross, we’ve always said that our targeted comforted levels are around 3.5. I mean, we know that the general space is typically in that 3.5 to 4 range. We are very comfortable in that area. The anomaly of why you see us down in the twos is we’ve just enjoyed a tremendous amount of coverage from market related earnings. So, I use the term, it’s a good problem to have. I mean, we are fortunate to have a strong balance sheet. We have opportunities in front of us and our goal internally is to just keep pushing to get those projects across the finish line and use our balance sheet to fund it.

Ross Payne - Wells Fargo

Okay. Great. Thanks, Mike.

Mike Hennigan

You’re welcome, Ross.

Operator

Thank you. The next question comes from Gab Moreen with Bank of America Merrill Lynch. Your line is now open.

Cathleen King - Bank of America Merrill Lynch

Thanks. It’s actually Cathleen King. I just have a question for Mike. Just thinking about your appetite for M&A, obviously you’ve got a good flavor organic growth projects but if you talk about that and also in particular, I know that there is some heavy assets in the market, if you can comment on that as well?

Mike Hennigan

Yeah. Good morning, Cathleen. We are very, very active in the M&A market. We try and look at every asset that’s out there and we put it through a screening process to see whether it meets our strategic objectives. So we are active in it. Our view has been that the acquisition market has been very frothy. The numbers that I get and paid in the multiples that it translates to, in our opinion have had us not really that active recently.

We will continue to look, like you said the assets that will be coming out, we will obviously look at those assets and see if they fit us. But mainly, where we’ve been recently is our organic plate is very lucrative for us and we are going to do our best to execute $700 million of capital.

And then as I said earlier, we hope to get to a point where we can announced Mariner South as a done deal and Permian Express II and Mariner East II. So we still think we’ve got a lot of great organic stuff in front of us, but we’ll stay active and if something makes sense for us at the right number then, we will try and participate in the acquisition market as well.

Cathleen King - Bank of America Merrill Lynch

Sounds good. Thanks a lot and congrats on another great quarter.

Mike Hennigan

Thank you, Cathleen.

Operator

Thank you. The next question comes from John Edwards with Credit Suisse. Your line is now open.

John Edwards - Credit Suisse

Yeah. Good morning, everybody. Just a great quarter. Mike, you had mentioned, with Mariner East, as things expand, you should be able to export some ethane volumes and I’m just curious, what would you be expecting in that regard?

Mike Hennigan

Yeah. We mentioned earlier, John that the Mariner East project starts out at around 70,000 a capacity and about two thirds of that is ethane and about a third of it is propane. And it’s been out there in the public space that there has been an arrangement between range and NEOs to take that ethane to Europe.

We think that there is a whole marketplace of availability. Once the European market sees that they can get access to U.S. ethane and the producers have another outlet instead of the U.S. Gulf Coast, we think it’s a great marriage and Mariner East in our opinion was the first capability for that to occur.

So about two thirds ethane, about one third propane, we really think the propane volumes are going to continue to ramp up as the shale area develops. And then, we think butane and natural gasoline are right behind it. We just think all of the NGLs up in that area are going to continue to go along as the production grows.

John Edwards - Credit Suisse

Okay. And then are you expecting -- well, I guess it is too early to tell about the open season, but I guess you are expecting some element of ethane exports from Mariner South?

Mike Hennigan

It’s too earlier to tell. I mean, we will see what the interest is but right now the interest that we’ve seen is more on the propane and butane side of the equation. I mean, what happens in all these projects just like Mariner East is we try and get a feel from the market to see if there is interest. We try and get a feel for what the producers and consumers are looking for. And then we set up the open season, such that we can find out more definitively.

We did that with Mariner East. We did know prior to it, that it would come out to two-thirds, one third. Like I say, we were happy that we were over subscribed for it, happy and disappointed at the same time. We wished we had a little more capacity but that tell us there is obviously still market interest beyond the capabilities and that’s why we quickly went into Mariner East space too.

So we’re working that now trying to understand the interest level just like we did on Mariner East. Same thing on Mariner South is we’re anxious to get out and have the open season and find out for sure where the interest is. And our hope is that we’ll come back to you shortly and say there is interest in Mariner South. And this is what it look likes and it’s a go project. But for right now, we’re just -- we just at a point where we got it well to check the market.

John Edwards - Credit Suisse

Okay. Great. Thanks. That’s helpful.

Mike Hennigan

Hey you welcome John, thank you.

Operator

Thank you. The next question comes from Eric McCarthy with Balyasny. Sir, your line is now open.

Eric McCarthy - Balyasny

Hey guys. Good morning.

Mike Hennigan

Good morning, Eric.

Eric McCarthy - Balyasny

I was curious and apologies if this has already been discussed. But I was curious if there had been any dialogue between yourselves and ETP with regards to the Trunkline conversion and the new partnership with Enbridge. If that was something that you were considering pursuing, if there had been any dialogue about taking the project over from the ETP side, if they got the commitments they were looking for?

Mike Hennigan

Yeah. We did discuss that little earlier in the call. Eric, I mean, what I said is it’s just real too early in the project development for us to discuss any of those types of details. From where we stand is we’re really excited about our family hooking up with Enbridge.

We think it’s a great project. Then again just like Mariner South in next phase of it is to go to open season and find out what the customer interest is so. Little more earlier on the details but we are happy for our general partner.

Eric McCarthy - Balyasny

Okay. Great. Thank you.

Operator

At this time, we have no further questions.

Mike Hennigan

Okay. I want to thank everybody for their interest in the company and for joining us this morning. Pete will be available for follow-up questions. Thank you.

Operator

That concludes today’s conference call. Thank you all for participating and you may now disconnect.

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