Access Midstream Partners' CEO Presents at Barclays CEO Energy Conference (Transcript)

Sep.13.13 | About: Access Midstream (ACMP)

Access Midstream Partners, LP (NYSE:ACMP)

Barclays CEO Energy Conference Call

September 13, 2013 08:25 ET

Executives

Mike Stice - Chief Executive Officer

Dave Shiels - Chief Financial Officer

Analysts

Richard Gross - Barclays Capital

Richard Gross - Barclays Capital

Good morning. Next on the agenda is Access Midstream. When you look at MLPs, one of the first questions you ask is who is the general partner, and general partners are important for a variety of reasons, and what you are looking for is strength, support and square one you can check the box here with the general partners these folks have. You then look to the risk in the business model and this is the company that has and you will see contractually and otherwise an extremely low-risk business model.

The other thing you look for and I have used this expression, so if you sat in the room when I have said it before, is that when they asked Willie Sutton why do you rob banks, and he says that’s where the money is. Look at the geographical footprint, you have got very, very attractive wet plays, Utica, Marcellus, Niobrara, you have got latent we will call them gas plays. We export gas. You are going to see a big revival in the Haynesville, the Barnett, many of these Mid-Continent routes in the Gulf Coast, again, extremely well-positioned.

Finally, what kind of balance sheet do they have? Again, very strong. What kind of coverage do they have? Given their business model, I think the way we describe it is excessive. We will see how CEO, Mike Stice and CFO, Dave Shiels react to that last comment. Gentlemen?

Mike Stice

Thanks Rick. Appreciate it. Good morning everybody. For those of you who may not have just participated in the previous presentation, I just want to make the brief comment Norm Szydlowski who - Chairman and CEO of Rose Rock and our friends there at SemGroup, of course, has announced his retirement. And I just wanted to comment that he has been both a close friend, staunch competitor, and I can also tell him he was a kind of partner as well and it’s been a really great industry participant. And so I just wanted to comment publicly on what a great contribution he made to the industry and he will definitely be missed.

So I guess, I would start off this morning with just some general overview comments, and then I will try to get to my questions pretty quickly. Actually, Rick did such a nice job, I feel like I would do straight to questions, but because he hit our key points which have been there from the very beginning, but I was just doing some – had some analyst work done on kind of the MLP sector in general and more specifically how we are performing relative to the Dow, I think everybody in this room studies these numbers pretty well, but I’d always like to share it with you, if you go back and look at the MLP performance over a longer term like 10 years, outperforming the Dow, outperforming S&P 500, outperforming utilities not by a little bit, but by over 50%. And then you go and look at the more recent data which is applicable to Access Midstream being relatively recent IPO three-year kind of time period. In that sector, you also see MLPs outperforming all of the other major investment alternatives, but at that point not by a little bit, but by quite a bit when you consider ACMP doubled the performance of any of those other metrics, Dow, S&P. So that total investment return would be around 36.5% for ACMP in that three-year period and the Dow would be at 17%. And so that’s an interesting statistic to think about.

If you get more close to more recent year-to-date, where the Dow might be around 8% and then MLPs at 16%, and then of course ACMP at 42%. So you kind of asked yourself why are we having that kind of performance. And Rick alluded to a lot of that. So let me get into some of the details that make that story so true and so evident. I think everybody here knows our business model is very focused. We are not all things all people, we tend to have a strategy that lies between the wellhead where the producer ultimately takes care of ultimate multi-phase pipeline business, it takes care of all of its own central delivery points. And then you redeliver through a [inaudible] natural gas into the wellhead gathering business which we believe has been our primary focus.

What we are very good at is and we are made good at it because of our roots, our roots chasing the drill bit or the fastest driller in the country, taught us things that no one else has really had the opportunity to learn. When people say, well how do you create a strong business, you create a strong business by having strong customers even unreasonable customers at times, because it makes you better. Okay, and so we believe that our roots coming from Chesapeake have really actually made us better. And I will get into some of the detail slides. But we do gathering, we also do the processing, we do the treating. If the gas needs [aiming] [ph], treating, because there is sour components like CO2 and H2S, we will do that. We will do the NGL transportation. And the key element here is you will notice that everything that we do is non-jurisdictional. So you are going to find other MLPs and other peers who have to have large groups of lawyers and spend quite a bit of time in Washington with FERC, you won’t see that in our model.

Our value chain end at the transportation sector going downstream, but we turn it over to other players because who ultimately deal with that inter-state regulatory environment. Okay and what I mean is commercial regulatory environment. Obviously from a safety standpoint the DOT is heavily involved in the unregulated aspect of the business as well. But this is very important, we stayed very focused on what we believe to be an element of the value chain where we can excel and we can profit accordingly. I think all the other details on the slide everybody knows is just a historical perspective and an example of the producer customers that we serve. I think our structure is interesting because that same benefit that we got from being Chesapeake service provider also provided us two additional benefits.

If you look at the bottom of this slide you will see that we are in every unconventional basin in the North America with the exception of the Bakken. There are few midstream players that can count the ability to be in all those basins. And with that diversity comes an enormous amount of strength not only in the access to growth capital which we will talk about in more detail but also in access of geographic diversity as well as liquid rich driven economics versus dry gas economics. We basically have it all, we have the opportunity to excel when gas prices come back and we have an opportunity to continue to excel while oil price differentials or frac spreads are high as they are today. So we are enjoying the benefit of this diverse access to all these basins.

Rick had already commented to our strong general partners we benefit by both GIP and Williams. And I would tell you that this goes well beyond the optics of the strength of their balance sheets or the strength of their capital infusion when we need it. It is really about what they do with us day to day. Both sides of these sponsors are in our business helping us. When I think about this was not planned, I will be the first to admit, but when I think about how it played out it couldn’t have played out better. Initially in the acreage capturing phase our partners were GIP and Chesapeake, the producer. Now in the development phase our partners are continuing with GIP, but now we have Williams a true midstream professional with enormous bench strength, 100 plus years of existence with all of the kinds of capabilities we can tap into to make us better given that we are just a young 3-year-old company. So I think it’s a – it turned out to be a great combination and we are extracting quite a bit of benefit from it.

On this slide the story that Rick alluded to and that is unmatched in anywhere else in the industry is that we had this unique business model which I will describe is that low-risk business model. And then we have this unparalleled access to growth. And I am going to describe an element of our growth today that most people haven’t understood and that we call it our contractual growth. Everyone talks about growth through drop downs, growth through acquisitions, growth through organic and no doubt we have had a long history of benefiting from all of those factors. But it’s nobody really has the access to contractual growth that ACMP has and so I am going to spend some time on that. But when you go, when you look at the combination of this very rigorous, very risk - limited risk business model with growth and unique access to growth, it doesn’t get any better than this. That’s what’s allowed us to be so predictable on our cash flow. That’s what’s allowed us to give you three-year guidance on what we think we can do on distribution growth. That’s what’s contributing as Rick said to he calls an excess coverage, okay. We will talk about that here in just a minute.

It’s the first time I have ever had anybody to describe excess coverage as a negative, but it is - I understand where he’s coming from.

So let’s talk about the low-risk business model. And I think it’s important to recognize some had determined that, okay, so Mike, these contracts were so unique that the only way you could have gotten these done is through a parent like Chesapeake. Well, let me just first say categorically, it is not true. We have these exact same contracts with TOTAL. We have the exact same contracts with Anadarko. One of our competitors, Western, has very similar contracts like this. People need to understand, these contract structures are a choice. There are trade-offs. The trade-off that we make with the producer/customer to get this kind of risk mitigated contract structure is that we ask for protection on the downside, but we give up the upside.

We basically say to the producer we are interested in a mid-teens return. We are not trying to get greedy here. I am not informing my Board that we are going to knock it out of the park in that 30% IRR, I am just saying that we are going to have a mid-teens return. And so these contracts allow us to protect the downside and yet we traded off some of the upside. Why is that important? Because in reality, when you take a good solid mid-teens return that has both capital and volume protection, and then you have the access to being able to grow it at the pace we are growing it through contractual and organic opportunities then you get the benefit of both the growth in EBITDA and the certainty of that EBITDA. And that was a defined strategy from the get-go and it works well for any producers.

Now, to be fair as basins mature the ability to do these contracts becomes less and less. If these contracts fit well between you and the producer when you are at the very beginning of the development where there isn’t an understanding of what the capital requirement is going to be or frankly what the volume is going to be. So at that point, the risk is best worn by the producer. As competitors come in and multiple midstream service providers come in, you will see a shift and the shift goes from these kinds of risk mitigating contracts to fee-based contracts where the capital risk gets shifted, but you will still see volume commitments and other contract features that will help you with the volume risk because the volume risk can continue to be of something that producer’s better at wearing.

Finally, as the basin matures, you will even see the volume risk shift to the Midstream service provider, but we are excited about the fact that our portfolio combination of capital protection to volume protection to our long-term contracts, our 100% fixed-fee, that’s where our strength of our business model comes from. I mentioned earlier about our asset base and how it’s expanding. We have over $7.2 billion invested to-date. People don’t appreciate that in our business, the footprint is really what it matters. It’s like real state, location, location, location. We have over 8.7 million acres dedicated to us across all the basins like I said all the unconventional basins with the exception of the Bakken. There is no one that has that kind of diversity of basins. We have got over 6,400 miles of pipe installed. The net production, the net meaning our net working interest is 3.6 Bcf a day.

My weekly morning report, the volume that actually flows from our pipe is 5.3 Bcf a day. And this is an enormous amount of volume when you consider it’s like 8% of the whole North American supply, okay. So this is a very significant role that this young company (is planning). I oftentimes talk about the employees, but it’s interesting I started with this organization when the Midstream Group of Chesapeake with 200 employees. Now, that was in 2008, November of 2008. Now, we are at 1,357 employees. Now, we are ending the year at 1,500 employees. We are having to grow significantly to keep up with the enormous capital infusion that’s needing to make to keep that for the drill bit as our producer customers need. So this is a great story.

This slide actually came to a surprise to me is it has produced couple of years back, because we have got there quickly. When you think about average daily throughput even on a net basis, not the 5.3 Bcf a day that physically flow through our pipes, but on a net basis at 3.5 Bcf a day, we are the largest gas gathering in the MLP sector and the G&P sector. Hard to believe that a company had come from such meager beginning three years ago and get to this point so quickly. It’s been because we were the service producer uniquely for the largest and biggest producer in the country. So we are not ashamed of those roots, we are actually benefiting from that relationship. So here is what I would like to talk a little bit about this growth platform in a little bit more detail. I am going to go into this first got a little more on the next slide with regard to contractual growth, because I don’t think it’s been as well understood. We get a lot of conversations in the MLP sector, because people say well we have a dropdown model, we did, we don’t anymore required it all, we put it inside the business. And so the organic growth model is what we have today. We do not have a planned parent dropdown from either Williams or GIP is we put it all in the business effectively in December of 2012 when we brought the Chesapeake Midstream operating business.

So the CapEx that we allude to I mean $3.5 billion over the next three years is what we have guided to. $1.6 billion to $1.7 billion this year is right on target just been in that capital. We have guided to another $1 billion to $1.1 billion next year, another $800 million the following year. I mean, the numbers are staggering and it’s because of this diverse basin that we have access to. But our organic growth performance is although very important in previously norm talked about his organic growth being the high multiple growth, there is no doubt. If you can grow organically and have this kind of opportunity, you are much better spending your money here than you are in this hot acquisition market. Okay. There is no question about it we have been blessed with a number of opportunities to spend capital dollars in a way that gives us the best return for our investors.

Now, that doesn’t mean that we are not out looking at other things that acquisitions etcetera, but it does mean that we have the benefit of being highly disciplined. We have the benefit to buy right. We have the benefit of doing only the things that make the most sense. And that’s why we talk about our acquisition strategy, our business development growth being focused on bolt-ons, bolt-ons meaning what are those producer-owned gathering systems that are incremental to our existing footprint that can be leveraged here through cost savings or connections etcetera, and so we love that. But I wanted to talk more detail about this contractual growth, because not everybody can appreciate, we have two types of contracts that have this unique kind of contractual growth. Unique in that, we have a large percentage of our business under these contracts, but not unique in the industry, these exist in other as I mentioned earlier with other producers as well.

So keep in mind, 15-year, 20-year fee-based contracts, but a way a cost of service contract typically works is it has embedded growth in it. We had a number of conversations for analysts where we had to explain this. So I would like to clear the slide. If you can imagine in the bottom of this graph, you can see that any development is front-end loaded on the CapEx. So the red bars kind of highlight how that CapEx is spinning the front end. And then there is always an incremental CapEx as you see full scale development. Okay, the goal of a cost of service contract is this dotted line, achieve a levelized fee. So the producer kind of knows directionally what is this fee going to be? The objective however is to allow the right party to wear the risk. And on the early stages of development, the capital risk, in other words, what is it you need to build producer and the volume risk what physically are you going to need me to move is best won by the producer himself, okay. If I take on that risk I am going to either discount what I am going to pay for that dedication or I am on inherent risk and I will need to charge more to effectively wear that risk.

So the cost of service mechanism basically here shown is calculated from a volume forecast. The producer tells us this blue line we are going to be ramping up our volumes and it’s going from just starting on the left hand side of the curve to something extraordinary in the right hand side of the curve. And then that projects an EBITDA generation. That EBITDA that’s projected is a growing EBITDA. So if the capital in that being higher, okay, than what was originally contemplated in this model, the fee is going to go up to give us that EBITDA growth, okay.

If the volume ends up being lower, the fee is going to go up to give us this EBITDA growth vice versa. If we spend the less money than anticipated, the fee is going to go down to give us this EBITDA growth, that’s why we talk about the predictable nature of this EBITDA growth. But the key here is that the contractual arrangement we had grows on its own. We have EBITDA growth built in. Some analysts have come to us and said well guys you - don’t you need to do deal. If you don’t – if you’re not spending money in doing a deal you are not going to have this growth. Our contracts give us contractual growth embedded into the deal itself. Combined that with the organic growth that’s uniquely ours because of the diversity of basins and we have an unparallel and very unique position with regard to access to the growing EBITDA. This is why we can guide to our 15% distribution growth.

We talked about how to use time effectively in this presentation and we have been spending quite a bit time in conferences. We’ve recently just came back from the Citi’s conferences in Vegas and everybody wants to talk about the Utica. Okay, so I have added a few slides here to specifically take a little deeper dive uniquely into the Utica. And I think the one word explanation of the Utica in general is well. Okay, what an enormous play, what an attractive opportunity, what a unique blessing we have to provide services to Chesapeake and TOTAL and EnerVest in this very liquid-rich part of the Utica. There has been mixed signals coming out of a variety of different the DNR in the state of Ohio put out a report where they expressed some concerns. First you need to understand that that data was a year old. And the second you need to understand is they were looking to oil side of the deal and there is really three plays in the Utica.

There is the oil window which I think people would say there is some skepticism on whether or not the producers have cracked the code or whether they will crack the code in a while. We don’t have any acreage dedication or we are not pursuing any midstream opportunities in the oil window today. There is the liquid-rich window shown here by the Cardinal dedication in the green, the darker green. And that part of the acreage dedication has been wildly successful. It’s interesting because Utica Shale is relatively thin to the North – I am sorry to the – thin to the South and thicker to the North. And ironically people immediately said, well the Utica is going to be more prolific being the thicker shales to the North, interesting if its turned out to be the opposite the actual stimulation technologies have done very well in the South.

What we like about our footprint is that we have the middle. Okay, and so our acreage dedication is huge where we have some of the south, we are in the heart of the middle with our facility at Harrison and Kensington. And then we have the acreage dedications in North. All are going to be good. The wet gas window is highly prolific and so were really excited about what’s going on and you are going to see some pictures here in a minutes where we are spending enormous amount of capital building out that infrastructure. Dave and I just came back from our Board meeting, it’s so exciting that we elected to have our Board meeting in Ohio and our Board took a tour of these world class facilities.

Now, what people hadn’t been appreciated is that although the wet gas window development is current they are hearing now. Though dry gas window is equally exciting, the wells that are being drilled in the dry gas window shown here in the blue as UGS is also dedicated to us from Chesapeake. And at the 100% owned the Cardinal Access Midstream owned 66% with our partners Total and EnerVest. Total 25 and EnerVest 9, the UGS is 100% ACMP and every penetration, every horizontal well inside the dry gas win of the Utica has been very successful. However, they are delaying the drilling of dry gas for all of the right reasons, dry gas prices being down, the Marcellus being in its big ramp up phase unbelievable success in the Marcellus North. We just celebrated over 2 Bcf a day from two counties in the Marcellus, Susquehanna and Bradford counties.

Access Midstream, okay, has 2.2 Bcf a day flow into rich gathering system in those two counties alone. It’s an amazing story in the Marcellus. But that’s pushing out the gas that could potentially get to market from the Utica today. And we are seeing some sluggish demand response over this past summer. This winter may make a difference, but there has to be some additional pipeline infrastructure put in place in order for this Utica dry gas system to come on, so it’s probably a story for tomorrow not for today.

We have a partner and we did a very nice job of picking a partner, Momentum, Frank Tsuru, good friend of mine has effectively taken on the gathering and fractionation, I am sorry the processing and fractionation part of it under a partnership we call UEO, Utica East Ohio. Access Midstream owns 49%, Momentum owns 30% and EnerVest owns the remaining interest. The important part of that is we knew that our organizational capabilities needed to be enhanced, if we were going to deliver on the timelines necessary. And for those of you aren’t familiar, the timelines and the capital expenditures in Ohio have been very challenging and very difficult, okay.

We are so proud to tell you that in concert with our partners, we not only met our timeline, we got all of this infrastructure, the first phase of 200 million a day is already up and running. We have another phase of 400 million a day. We have another phase of 600 million a day, another phase of 800 million a day that are all in different phases of construction. Every one of our projects are on time and on budget. The reason is we recognize that the organizational capability that Access Midstream had alone wasn’t going to be enough to deliver this on time and on budget. So we partnered with somebody that we knew could help us to do that. We think that’s important part of our culture having the ability to know that hey, you may need some help to make your producer customer happy. I was really excited when I got to meet with Doug Lawler, the new Chesapeake CEO who is doing a fantastic job by the way and I was able to say to him our project was on time and on budget, okay. And he was comparing it to other Midstream service providers, who have been woefully late in the same basis. So it’s a very proud moment to be able to say that we are delivering on the service that you expect from us.

So I am really excited about that. I think it’s important to kind of look at the Utica assets in general, you can see the footprint here. The pipeline shows the yellow. This has an incredible amount of pipe that’s going on the ground in a hurry. You can see that we are going to have the whole heart of the Utica wet gas play. And we have already done some things in the dry gas play as you can see. And so this is really coming along very nicely.

Kensington plant, so this is where we are going to build the first 400 million a day of our processing could stand at 600 million a day already got footprint for all three, but we are busily working on the second trend. Like I mentioned earlier, the first trend came up and running in July. And this is where the processing takes place, but we make a Y grade product, ethane, propane, butane, and condensate. And then it gets into an NGL pipeline and make its way south, but there is photograph you can’t tell this is actually a little dated, but this is a facility that is world-class. When I was building gas plants, they were like 35 million a day plant we are really proud of, okay. This is three 200 million a day plants. I remember when we built the San Juan gas plant at Conoco, at the time it was 500 million a day gas plant and it was the biggest facility ever built for gas processing in North America, okay.

And here we are today doing things like this all over the place. And we are not the only one. If you want to talk about the prolific nature of this basin, there is 6 to 8 Bcf a day of rich processable gas in the Utica, okay. It’s going to take us our friends at MarkWest sometimes friends. Our friends at Bluegrass, Blue Racer, this is an industry phenomenon. It’s going to take an enormous amount of development in order to bring this resource to market.

Now that liquids gets transported to another world class facility called the Harrison Hub. You all will start hearing about the Harrison Hub. Just like you speak second nature about Mont Belvieu and Conway, you will be talking about the Harrison Hub. This kind of facility is going to have that kind of industry impact. This will be a hub for liquid pricing. It will have the opportunity for pipeline interconnects, to variety of different places including the Gulf Coast to whatever potential this chemical plant could be built to the other Midstream service providers. It’s got an enormous rail facility as you can see here with the ability to deliver rail of almost any product, propane, butane, we just don’t have the ethane capability condensate natural gasoline. It’s just an amazing facility. You can see often to the right, we have got some refrigerated propane going on. We have got some floating tank storage for our natural gasoline stabilized compensate just an enormous facility and I would encourage all of you if you want to see something that’s really impressive, get a hold of this move, we are glad to give you a tour. So when you think about all of that excitement that’s going on from engineer, it’s all about the bottom line right how we are performing.

This is a slide of our adjusted EBITDA that was back to fourth quarter 2010 over 52% annual growth rate. You can see our enterprise value going from $2 billion to $12.5 billion. Our distribution unit growth, that’s steady, flat 15% boring whatever you want to call it unit growth, is dialed in with our contract. That’s why we are able to guide to that. So you can see that and that was intentional, okay. When you go, when you look at this distribution coverage ratio, the point Rick want to talk about we kind of thought about 1.1, 1.15 that’s what we told the rating agencies, that’s what we said guys, that’s kind of what we are going to work our business to. But our business is performing so well that, that’s increased to 1.56, okay. That gives us some opportunity, some opportunity to do something different. It could result and you can give additional distributions, you can use it a currency to buy out the opportunities that make a lot of sense. In my view, this is a good news story about the business. This is an opportunity for us, okay. And so we look at it as a very positive. And when you compare it to our competitors, you might find that there just recent coverage being a little tight. We think this as a positive.

We reaffirm our guidance here today. We are right on target to spend the $1.6 million to $1.7 million in growth capital this year. We are right on target to achieve our EBITDA guidance between $800 million and $850 million. We have always been really good about our maintenance capital using our conservative measures as to what that is at $110 million a year. But you can also see that the EBITDA growth is growing to $1 billion and $1.2 billion and it’s because of those unique attributes that I have already commented to. So our financial outlook is very strong, and this is why we are so confident that we can deliver the 15% continued distribution growth.

I always like closing my conversations with you and any audience about our commitment to safety and we are having an outstanding year this year. Although, our goal is zero and we didn’t make zero, we have three recordable incidents that all three were very minor. And so I view our year, this year as being truly outstanding from a safety standpoint. We are best-in-class within our safety organization. And in the environment we have done a lot of things this year rolling out new programs, so that we can steward the environment in a more constructive way. We have had one what we would call reportable skill that we are considering insult to the environment, and that was where we did on the horizontal directional drill and the actual mud, which is a benign substance made its way to a creek, but we were able to retain it, fix it, and take care of it in a very quick way. And you have to think how many of these we do. It’s been an extraordinary accomplishment to have only one incident in the entire year so far. So we are very proud of our environmental performance. We are very proud of our safety performance. And we continue to believe that the best performance comes from an ability to learn. And so our commitment is to a learning culture and to constantly get better and then ultimately achieve triple zeros.

So with that, I’d like to answer any questions. I have got Dave Shiels here, my CFO. So when you ask really tough questions, I will defer to him, but obviously I’d like to have the opportunity to address what else on your mind? Go right up here in the front.

Question-and-Answer Session

Unidentified Analyst

Thank you. The Kensington plant, help me understand when you are processing the gas, the product, is that purity products that you distribute locally or is it Y grade that goes to a pipe and if so to which of the pipeline projects that it’s going to send Y grade south?

Mike Stice

Right. So everyone has a little bit of different business model. Our business model is to process at a spoke and hub, wherever the processing plants are, and have a demethanizer. And demethanizer is simply - now we have got a demethanizer on steroids, we have actually put [side reborders] [ph] on them to where they can make a very close cut on ethane. If ethane prices do not allow for economic terms and conditions, we can put that ethane back into the residue stream to the extent the [BT] [ph] blendings are available. So we have a very strong – we have a demethanizer that can behave like a deethanizer, it is my point.

But under normal circumstances where frac spreads are positive, the ethane will go into a raw make we will call Y grade. So it’s a mixed product and we have our own NGL pipeline that takes it from these plant sites, and we are going have two, Kensington is the one being built now. We have another one to the south called Leesville. And both Y grades will then make their way to the Harrison Hub. Where this Y grade will then be fractioned and at the Harrison hub we have a deethanizer, and at the Harrison Hub we would be connected to the Gulf Coast ATEX Pipeline, where purity ethane can make its way to the Gulf Coast. We would also to the extent that there is a local petrochemical market developed, we would look to create connections to that as well.

Most of the Y grade opportunities in my view – our view that the local market can’t take all of this product. When you could do the math and you get 6 Bcf to 8 Bcf a day and 600,000 barrels a day, you quickly come to the conclusion, it can’t all go, okay, into the local market. Regardless of whether or not you had the fractionation, okay, regardless of whether or not you had a petrochemical plant, so (a) Y grade alternative to the Gulf Coast must be built, my opinion.

Now is it one or is it two, there are really three out there competing, okay. My general partner is very excited about their Bluegrass opportunity, and I believe that’s a very good project, they partnered with Boardwalk. They have got the benefit of the synergies and we think that’s a very good idea, because we are at lands which is in Louisiana rather than Belvieu. There is access to fractionation infrastructure etcetera, so we can get to somewhere rather than just in somewhere where we can’t go anywhere. Okay, so I like that project. But there are others and from my standpoint from ACMP, we really don’t care as long as the producer has an outlet, that’s what we care about, and producer needs my opinion access to the Gulf Coast in order to make that happen.

Unidentified Analyst

This is a delicate question, but does Williams as a GP influenced your decision over commitments to…?

Mike Stice

Not at all. And in fact what we end up doing is and I think we actually have governance documents that do that, in the areas in which Williams have interest in other entities we [rethink] [ph] that and those conversations are not discussed. So we actually have governance put in place so that we cooperate and collaborate in areas where we obviously should and we compete in areas where we shouldn’t.

Unidentified Analyst

One last question, you had a distribution coverage chart, at 1.56 you are well above the average, what’s the timetable or thinking around paying out more of the distributable cash flow?

Mike Stice

Well, let me just comment real quick to that, I think it addresses Rick’s point in a nutshell, we can talk more in the breakout. In a nutshell we have had to fund $2.2 billion acquisition. In December and now a $3.5 billion organic growth plan over 3 years so that’s over $5 billion with very limited equity. So that’s really the power of our business model, so we’re able to fund all of that with very limited equity which I think is the huge advantage to us. So I know we run out of time, Rick’s got to hook out, the guy in the back’s giving me the cut sign. We’d love to answer all your questions if you’d like to come to our breakout room, which is Liberty 3, we’d love to answer your questions there. Thank you.

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