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Boardwalk Pipeline Partners, LP (NYSE:BWP)

Q4 2013 Earnings Conference Call

February 10, 2013, 09:00 AM ET

Executives

Stanley Horton - CEO, President and Director

Jamie Buskill - SVP, Chief Financial & Administrative Officer

Molly Ladd Whitaker - Director of IR and Corporate Communications

Analysts

Shneur Gershuni - UBS

Harry Mateer - Barclays Capital

Stephen Maresca - Morgan Stanley

Darren Horowitz - Raymond James & Associates, Inc.

Ross Payne - Wells Fargo Securities

Sharon Lui - Wells Fargo Securities

John Edwards - Crédit Suisse AG

Elvira Scotto - RBC Capital Markets

Operator

Good day, ladies and gentlemen. Welcome to the Q4 2013 Boardwalk Pipeline Partners, LP Earnings Conference Call. My name is Alison, and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions). As a reminder, this call is being recorded for replay purposes.

I would like to turn the call over to Molly Ladd Whitaker, Director of Investor Relations and Corporate Communications. Please proceed, ma'am.

Molly Ladd Whitaker

Thank you, Alison. Good morning, everyone. Welcome to the fourth quarter 2013 earnings call for Boardwalk Pipeline Partners, LP. I'm pleased to be joined today by Mr. Stan Horton, our President and CEO; and Mr. Jamie Buskill, our CFO.

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 adjusted EBITDA and distributable cash flow. With regard to such financial measures, please refer to our earnings release for reconciliation to the most comparable GAAP measures.

Now, I would like to turn the call over to Stan Horton.

Stanley Horton

Thank you, Molly. Good morning, everyone. I hope you've had a chance to review the press release we issued this morning. In addition to reporting earnings, we also announced a quarterly distribution of $0.10 per unit or $0.40 annualized which is a reduction to the amount of the distribution that we've paid in the past quarter.

I would like to explain the reasons behind the Board of Directors' decision to reduce the distribution. Considering that, over the past four quarters, we distributed $2.13 per common unit with approximately one-times coverage and at December 31 had a debt to EBITDA ratio of 4.6 times.

Because our transportation in storage revenues are continuing to face substantial market headwind, we do not foresee these conditions changing appreciably over the next 12 to 24 months. The Board has declared a distribution at an amount that will free up internally generated cash to help fund growth and reduce leverage.

As Jamie has stated numerous times, our target is a low 4 times debt to EBITDA ratio. The lower distribution amount announced today will help facilitate our ability to meet these financial goals given the challenging market conditions we are facing.

A subsidiary of Loews Corporation has offered to provide Boardwalk with up to $300 million and subordinated debt if required during 2014 to fund growth capital expenditures and have expressed its willingness to offer financial support for the proposed Bluegrass project should this project move forward. With this support and the lower distribution amount, the Partnership does not anticipate needing to sell additional Limited partner units in 2014.

Our practice historically has been to not provide financial guidance, however, we are deviating from that practice and are providing limited guidance related to forecasted 2014 distributable cash flow to assist investors in understanding the rationale for reducing the distribution. We are forecasting our 2014 distributable cash flow to be approximately $400 million, down from approximately $560 million in 2013.

The reduction in distributable cash flow from the 2013 levels is due to several factors. First, as we have discussed previously, new supply sources of natural gas have been identified and developed including the Marcellus and Utica shale plays. In just two years both these natural gas production has grown from 6 billion cubic feet per day to 13 billion cubic feet per day and could exceed 25 billion cubic feet per day by 2020.

New supply sources and related pipeline infrastructure has caused significant narrowing of basis differentials on our pipeline systems, reducing the transportation rates we typically can obtain on firm transportation contract renewals.

As we mentioned last quarter, we anticipate an annualized $40 million reduction in revenues from firm transportation contract renewals and explorations in 2014. We have been experiencing reduced revenues resulting from contract renewals and explorations for several years, which have had a negative cumulative effect on revenues.

Second, more recently the value of our storage and park and lending services has been adversely impacted. Increased gas production led to a compression of seasonal spread and reduced volatility and the more flattened forward natural gas pricing curve which is currently backward dated is expected to reduce parking and lending and storage revenues in 2014.

Finally, we're not forecasting any opportunity to sell storage gas in 2014 whereas storage gas sales accounted for 56 million of distributable cash flow in 2013. Since forward pricing curves are backward dated, market conditions currently do not provide opportunities to park gas. In this cycle of environment, we are actually loaning gas opportunities to sell storage gas are therefore diminished. Assuming approximately 400 million of distributable cash flow and if we keep the quarterly distribution concept for the year, our distribution coverage ratio for 2014 would be approximately 4 times. We plan to use the excess gas, as I mentioned earlier, to help fund growth and reduce leverage.

In the near term, our announced growth projects are not expected to offset cumulative revenue declines from our existing business and in that type of an environment, it is better to use a portion of the distributable cash to help fund growth rather than issue additional equity which would be dilutive to existing unitholders.

Over the long term, the same negative market conditions affecting our existing business can create new opportunities to diversify and grow as is evident in several of our announced growth projects. We remain bullish on Boardwalk's long-term prospects for growth and diversification and the actions taken today will help strengthen Boardwalk's balance sheet and its ability to act upon those prospects as they materialize.

Now let me cover our growth projects. The Bluegrass project open season for natural gas liquids transportation capacity for the Marcellus and Utica shale plays to the U.S. Gulf Coast petrochemical and export complex concluded on January 17. Working with Williams, we are continuing to evaluate all aspects of the projects and engage in ongoing discussions with certain parties regarding their interest and making commitments for the pipeline, fractionation and LPG export terminal capacity.

We also have several other growth projects underway. Our Southeast Market Expansion is proceeding as planned. This project increases Boardwalk's ability to transport natural gas supplies to growing areas of demand in the southeast region of the United States, including industrial and power generation markets in Mississippi, Alabama and Florida. This project is fully contracted with 10-year firm agreements for approximately 550,000 dekatherms a day. We received approval for this project and anticipate a fourth quarter 2014 in-service date.

We have just concluded the open season for the Ohio to Louisiana access project on our Texas Gas interstate pipeline system. This project which was approved by the Board will provide long-term firm natural gas transportation from Lebanon, Ohio for quantities sourced from Marcellus and Utica production areas to diversify delivery markets in Louisiana. Since we will primarily utilize existing pipeline facilities that could additionally flow south to north, this project will cost us approximately $150 million to turn these facilities around and flow north to south. We have executed precedent agreements for 625,000 dekatherms a day. In-service date is targeted for the first half of 2016.

In addition, we recently connected our pipeline to several new gas powered, electric powered generation facilities. In December we completed an expansion to serve the power plant in the Baton Rouge-River Corridor area where our pipeline can deliver 100,000 dekatherms a day and also completed the first phase of a project that connects our pipeline to a new power plant in North Texas where our pipeline will have the ability to deliver 125,000 dekatherms a day.

In conclusion, let me sum up why we are reducing the quarterly distribution now and why are we reducing it to this level. In the past several months, we have seen the deterioration of storage spreads accelerate. The reasons include a reduced need for storage as production decline, tighter sum of winter spreads and a reduction in gas marketers who previously contracted for storage to arbitrage volatility.

In addition, market fundamentals for natural gas transportation on our pipeline systems continue to put pressure on our contract renewals. We took this outlook into account when preparing our 2014 budget in December and began discussions with our Board on whether the distribution rate was sustainable in light of market conditions in our business objective. Even though we are still generating significant cash flow, we believe that we should not only solve for sustainable distribution coverage, but we should also use that cash flow to strengthen our balance sheet and position ourselves for future growth.

We continue to pursue growth opportunities that leverage our asset base and we would prefer to finance these projects with internally generated cash and if required support from Loews. Reducing the need to issue equities would prevent unnecessary dilution to existing unitholders. Over the long run, this strategy will maximize the value of our company and the returns to our unitholders.

Now, I would turn the call over to Jamie to review results for the quarter.

Jamie Buskill

Thank you, Stan. Good morning, everyone. Operating revenues for the fourth quarter were 313 million, which is 13 million or 4% lower than a comparable period in 2012. The decrease in operating revenues was primarily driven by a $13 million reduction in our transportation revenues primarily related to firm contract renewals.

We continue to experience unfavorable time period price spreads which negatively impacted our PAL and storage revenues by 4 million for the quarter. For the fourth quarter, we transported 608 TBtu of natural gas and 8 million barrels of liquids.

We reported operating expenses of 254 million for the quarter, an increase of 58 million or 30% from 196 million for the comparable period in 2012, primarily as a result of a $52 million goodwill impairment charge. Adjusted EBITDA for the quarter was 130 million, a decrease of 68 million or 34% from 198 million for the comparable period in 2012.

Net income for the quarter was 20 million, a decrease of 70 million or 78% from 90 million for the comparable period last year. Both adjusted EBITDA and net income were impacted by the items previously discussed. We generated 139 million of distributable cash flow for the quarter. This compares to 143 million generated in the fourth quarter of 2012.

In 2013, certain costs came in lower than originally forecasted for the year and in 2014, we anticipate these costs will increase to their previously forecasted levels. As an example, we originally forecasted that maintenance capital costs for 2013 would be approximately 100 million, however, actual maintenance capital costs came in at approximately 70 million. In 2014, we are forecasting maintenance capital costs of approximately 90 million. These higher costs are factored in the 2014 forecasted distributable cash flow of approximately 400 million that Stan mentioned previously.

We invested 236 million in our growth projects for the year and plan to invest approximately 330 million in 2014. As of December 31, we had 175 million borrowed under our revolver and as Stan mentioned, a subsidiary of Loews Corporation provides Boardwalk with up to 300 million in subordinated debt to fund growth. All the details have not been worked out yet, but as you may recall we entered into a similar arrangement with them previously in 2009.

Per our current forecast, we expect to have sufficient liquidity so that the partnership does not need to issue or sell additional limited partner units in 2014 in order to fund its growth.

That concludes my remarks. I will now turn the call over to the operator for questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). Your first question comes from the line of Shneur Gershuni from UBS. Please proceed.

Shneur Gershuni - UBS

Hi. Good morning, everyone.

Stanley Horton

Good morning.

Shneur Gershuni - UBS

Just a couple of questions to start off here. Given the fact that you have a very high distributable cash flow coverage ratio as a result of the distribution cut and so forth, is it fair for us to think about you getting back on and increasing the distribution more in line with a more typical coverage ratio once your leverage basically falls below 4 times? Is that a fair way to think about how you're going to approach it on a go-forward basis?

Jamie Buskill

Yes, we're talking really just to 2014 at this point. The Board has made the decision to reduce the distribution in order for us to decrease leverage and that's done through either growing the company through growth projects or reducing debt. It will be up to the Board to decide a future date as to what action to take for the distribution.

Shneur Gershuni - UBS

Will there be any impact from a minimum quarterly distribution perspective or any accruals of sorts?

Jamie Buskill

Excuse me?

Shneur Gershuni - UBS

I'll take that question off-line. Just as a follow-up question, given the recent movements in natural gas prices that we've seen lately, have there been any improvements at all on the storage and lending side at all? Does the volatility sort of move us towards potentially a better market going forward or as you see things as they sit right now, this is still going to be kind of a similar market to where it has been for the last couple of months and the most recent spikes don't really have much of an impact?

Jamie Buskill

If you take a look at the market today, it's a backward dated market. And in a backward dated market, as I said, we're not parking any gas. We're actually lending gas out of our storage facilities today. So that's been kind of a complete reversal of what we've seen in the last couple of years. And once the winter is over and this severe weather that we've been having is also over, seeing whether these markets return to a more normal contango market is going to interesting to watch. But if I could forecast what prices we're going to do and what storage spreads we're going to do, it would be a lot easier – there's a lot of forecast out there. We'll just wait and see what the market does for us.

Shneur Gershuni - UBS

Great. Thank you very much.

Operator

Thank you. The next question comes from the line of Harry Mateer from Barclays. Please proceed.

Harry Mateer - Barclays Capital

Hi, good morning. Just a couple from me. First one, can you talk a little bit more about the deleveraging process in terms of how long you expect it to take, when you think you might achieve that leverage target and why you're budgeting for 160 million of interest expense in 2014 versus – I think it was just over 150 million in 2013, which on the face of it, doesn't seem to imply much deleveraging this year?

Jamie Buskill

Yes. Again, I'm going to just speak to 2014. It's hard to forecast beyond that. But if you look at interest expense, a couple of things. Part of the interest expense in '13 we capitalized about $7 million of interest expense. Also, in the forecasted numbers that you see, we did assume some additional sub debt from Loews in our calculation and that's causing some of the increase in interest costs.

Harry Mateer - Barclays Capital

Okay. And then what should we think about in terms of levers to pull here? I mean you mentioned you had some bank debt at the end of the year. What else could you pay down or are you really just targeting to pay down the bank debt at this point in 2014?

Jamie Buskill

So, if you look at '14 we have about lower 300 million of capital growth projects and then we have 175 million of bank debt. Starting at 2015, we have 525 million of fixed rate debt that comes due and then basically every year thereafter we had debt that comes up for maturity. You can look at our 10-K and that kind of lays out the debt maturities.

Harry Mateer - Barclays Capital

Okay. So I guess given that 300 million growth CapEx, so 400 million or so of DCF, about 100 million of distributions, 300 million of growth CapEx, that gets you to I guess roughly breakeven cash flow. So where does the deleveraging kick in?

Jamie Buskill

Well, as you mentioned, we have the 175 million on the credit facilities, so to the extent if we decide to pay that down, that's where we would pay off.

Harry Mateer - Barclays Capital

Right, but do you anticipate having excess cash flow given the 300 million of growth CapEx or is the deleveraging really just going to come…?

Jamie Buskill

Again, that's part of our rationale of what we were doing was to generate sufficient excess internally cash flows to help fund this project and not have to enter into the capital markets.

Harry Mateer - Barclays Capital

Okay, thank you.

Operator

Thank you. The next question comes from the line of Stephen Maresca from Morgan Stanley. Please proceed.

Stephen Maresca - Morgan Stanley

Hi. Thanks everybody and good morning, guys.

Stanley Horton

Good morning.

Stephen Maresca - Morgan Stanley

I just wanted to discuss the year-on-year reduction in DCF for 2014, which is I guess about roughly 30%. You talked in the press release 56 million from no gas storage sales and 40 million from contract renewals, and I think that leaves another 60 million or so reduction. Can you discuss what that other reduction is and year-on-year cash flow for 2014?

Jamie Buskill

I'll add a little additional color. We're not going to get into a line item by line item. If you look at the earnings release and look back at that DCF table, you'll see about 65 million of sale of assets are nonrecurring, the biggest being the gas out that Stan mentioned. So that's roughly 65 million. We mentioned on the call that our maintenance capital spend came in about 30 million below what we forecasted. We're going to see that get spent in the following year. So that explains 95 million to 100 million. The other 60 million are the various factors that Stan and I laid out on the call; contract renewals, storage, et cetera.

Stephen Maresca - Morgan Stanley

Okay. All right, thanks for that. How did your collective view on the Bluegrass project impact your decision here to cut cost and do you expect that project to still move forward?

Stanley Horton

The Bluegrass project really didn't have any impact on our decision to reduce the cash distribution. As we've previously said, Loews Corporation has agreed to help us finance that project. So with that great assistance from Loews, it really didn't factor in.

Stephen Maresca - Morgan Stanley

Okay. Do you expect that the Bluegrass moves forward?

Stanley Horton

As I said, we've got discussions going on with potential customers and it's dependent upon those discussions. We've already said since the project was first announced, we'll only go forward to the extent that we were able to market commitments to support the project and that we received all the regulatory approvals that we needed to go. And that's still where we are. Once we get the market commitments and the regulatory approvals, then the projects are ready to go. We're in discussions with potential customers now and we'll see where they discussions go.

Stephen Maresca - Morgan Stanley

Okay. What is the subordinated debt from Loews? What's the rate that it's being contemplated at for 2014?

Jamie Buskill

We still have to work out those details with Loews and once we get to that point – if we get to that point, it will be something that we'll disclose in our filings.

Stephen Maresca - Morgan Stanley

Okay. A final one from me. On the growth capital 330 for 2014, can you discuss returns on that money?

Jamie Buskill

No. We typically don't provide returns on that money. I will say most of the expenditures in '13 is related to our Southeast project and that doesn't come in until late 2014. So you're not really seeing any meaningful pickup for that in the '14 numbers.

Stephen Maresca - Morgan Stanley

Okay. Thanks.

Operator

Thank you. The next question comes from Darren Horowitz from Raymond James. Please proceed.

Darren Horowitz - Raymond James & Associates, Inc.

Jamie, I'm just curious, is there any opportunity or have you had any discussions with the lenders with regard to possibly relaxing the leverage covenants or maybe any opportunity if the existing plan doesn't end up materializing around the timing that you have scheduled where there could be any sort of waiver on a trailing basis with regards to the debt?

Jamie Buskill

We haven't had any discussions related to our lenders. We still like the plan we laid out here, continues the progress we've made over the last couple of years in reducing our debt and this is the best course of action that the company believes we should take.

Darren Horowitz - Raymond James & Associates, Inc.

At this point, do you have a preliminary target as to where you think you'll be able to end 2014 on a debt to EBITDA ratio? Do you think you can get to that 4 or slightly under times by the end of the year?

Jamie Buskill

I'll like to run the numbers as to what you want full in or not but actually it's probably going to be slightly higher based on the numbers we gave you for 2014. And the reason for that is as I mentioned to previous caller, we are financing our Southeast expansion and we're really not getting any contribution of that until late 2014, so you're really not going to see that reflective until 2015 numbers.

Darren Horowitz - Raymond James & Associates, Inc.

Okay. And last question from me, with that being said, at this point, do you have a preliminary estimate as to where you think you'll be on a full year 2015 leverage basis relative to trailing EBITDA?

Jamie Buskill

No, that's too far in the future to look. We're right now just focused on 2014.

Darren Horowitz - Raymond James & Associates, Inc.

Okay, thank you.

Operator

Thank you. The next question comes from Ross Payne from Wells Fargo. Please proceed.

Ross Payne - Wells Fargo Securities

Hi, Jamie. I know you probably have had conversations with the rating agencies. Do you sense this plan is enough to keep UIG? Any comment on that? Thanks.

Jamie Buskill

We believe the actions we took today enhances our overall credit. We have discussed with the rating agencies our plans as we typically do, we keep them updated on what we're focused on. I can't speak for the rating agencies, so we'll just have to wait and see what if any comments they have.

Ross Payne - Wells Fargo Securities

Thanks.

Operator

Thank you. The next question comes from Sharon Lui from Wells Fargo. Please proceed.

Sharon Lui - Wells Fargo Securities

Hi, good morning. Just wondering what factors you took into consideration when you determined the new distribution level? And did you consider maybe just suspending the distribution altogether?

Stanley Horton

There were a number of factors that we looked at, most of the ones that I talked about, the market conditions that were impacting the company, how long we thought those market conditions would be with us, our financial ratios that Jamie has talked about, the targets that Jamie has talked about. All of those things were taken into effect and forming the $0.40. We did not really look at totally suspending the distribution as a viable option. So the – I mean that was it.

Sharon Lui - Wells Fargo Securities

Okay. So does the MTD reset to $0.10 now?

Jamie Buskill

Right. At this point there's not any IDRs that are being paid out on the distribution. And the waterfall table remains the same.

Sharon Lui - Wells Fargo Securities

Okay. And then I guess in terms of making a decision on the Bluegrass project, do you anticipate making a decision in the first half of this year or what's the potential timing of that?

Stanley Horton

We'll work with our partner and see how the discussions go with the customers. And it's based upon those discussions and when the customers are ready to commit it that we'll make the decision.

Sharon Lui - Wells Fargo Securities

Okay, thank you.

Operator

The next question comes from John Edwards from Crédit Suisse. Please proceed.

John Edwards - Crédit Suisse AG

Yes, good morning, everybody. Just following on Sharon's question on Bluegrass, I'm just curious is there a particular issue on Bluegrass that is perhaps common to customers, if it might be hanging up securing commitments that you might be able to share with us?

Stanley Horton

The only thing that I'd like to say is that we are in discussions with customers who have expressed an interest in the pipeline and we continue to have those discussions. And as we have always said, if we can the right market commitment and the right regulatory approvals then we'll proceed with the project. And we are in the process of trying to do both of those things.

John Edwards - Crédit Suisse AG

Okay, fair enough. And then just, Stan, you were alluding to continuing downward pressure on re-contracting. I mean can you give us a sense here for – in terms of a percentage basis in terms of renewal rates about what are you guys looking at now?

Jamie Buskill

I'll talk to the re-contracting, John. For 2014 we have about 25 million of transportation contracts that are up for renewal. And as we stated, the annualized reduction from that is approximately 40. And part of that is because on some of those contracts where we're seeing the rates, we're just not going to enter into long-term agreements at those rates. So we're going to be selling a good portion of that capacity in the short term or enter simple markets for now and that's what driving the 40 million.

John Edwards - Crédit Suisse AG

Okay. So on a longer term basis, what kind of decreases are you…?

Stanley Horton

You just can't use a percentage and apply it to the contract renewals. I mean it's very much dependant on where the contract renewals are, which of our systems they're on, what part of our systems they're on. So, you just can't pick a number and say, well, it's been a 30% reduction or a 40% reduction. That's just not the way it works. It's largely dependent upon the mix of the contract renewals that we have coming up on any given year.

John Edwards - Crédit Suisse AG

Okay, fair enough. And then in terms of – you have been speaking to some opportunities regarding reversals going forward. Maybe if you could speak a little bit more to reversal opportunities.

Stanley Horton

Yes, I think our policy is not all that different from other pipelines. I mean we are looking for ways to repurpose pipe, we are looking for ways to reverse flow pipe, we're looking at opportunities to abandon pipe where pipe is no longer useful or you can get rid of the expense. We repurposed about 400 miles of pipe down in South Texas. It was successful in the Bluegrass project, it's about another 600 miles of pipe that we'll repurpose which is in about 1,000 miles of our 14,000-mile pipeline network. With the Ohio to Louisiana project that we have on Texas Gas, we're going to be reversing flow for over 600 million cubic feet a day. We continue to look for opportunities to do that. So, any way that we can figure out how to best use the pipeline assuming that you got a changing flow of the way natural gas is moving in the interstate markets, we're doing that and we'll continue to do that. I mean that's what we're trying to do. That's the strategy. Unfortunately, these pipes were put in the ground a long time ago and you can't dig them up and just repurpose them, so you figure out what you can do with them. And in those situations where you can't do anything, you try to abandon them and get them out of service and save the expense. So, those are the things that we're doing and we'll continue to do.

John Edwards - Crédit Suisse AG

Okay, great. And just one last question with regard of the distribution, I'm just curious to what extent you looked at or discussed say subordination of cash distributions from your parent or say suspending just the general partner take versus just…?

Stanley Horton

I would like to talk to that. We've had a very, very supportive general partner. They've helped us in the past with sub debt, they've helped us in the past with acquisitions, they've helped us in the past with financing, they're stepping up there and putting an opportunity for us if we need it for another $300 million worth of sub debt. They are financing 90% of all the development costs on Bluegrass. They've told us that if we need help in financing Bluegrass if we go forward that they're ready to step in and do that. I'm sure that if there were an acquisition that made sense to us that we could go to them and see what help – no promise but see what help that we could get from them. And that's the kind of help that I would like from my general partner, help to allow us to grow. Just flat out subsidy from the general partner I don't think had a lot of value. So again, the support that they've offered us, the financing support, the support to help us grow the company, I think that's meaningful support for the master limited partnership and again, I would rather have that support than just straight out kind of subsidies that I don't think adds a lot of long-term value to the partnership.

John Edwards - Crédit Suisse AG

All right, that's really helpful. Thank you very much.

Operator

Thank you. The next question comes from Elvira Scotto from RBC Capital Markets. Please proceed.

Elvira Scotto - RBC Capital Markets

Hi. Good morning. On your sort of – your targeted debt to EBITDA of 4 times, is that – how you think about that? Is that on the – kind of looking at it on a forward basis assuming your projects come on and that includes the EBITDA from both projects or is this a trailing look?

Jamie Buskill

So, when we look at it we do look at projects that are in the door basically and when we factor that in, we don't want to go out there and assume anything beyond that. So, yes, to the extent where we're using cash to fund those growth projects, we do look at that.

Elvira Scotto - RBC Capital Markets

And I realized you're not giving much guidance beyond 2014, but if I look at the 650 million of adjustments to EBITDA for 2014, I mean do you think that's – is it fair to say that that's sort of a base level of EBITDA or do you think things could deteriorate further from here?

Jamie Buskill

The 650 – we only look at '14 that's our estimate to where we think the market is going to be. Are there opportunities where that could be higher? Yes. Are there risks where it could be lower? Yes. Based on our analysis of where things are that's where we think EBITDA will show up in '14. It's really hard to comment beyond '14.

Elvira Scotto - RBC Capital Markets

Okay, thanks. And then just on maintenance CapEx, so you had guided to 100 million in 2013, but you did 70 million and now you're guiding to 90 million in 2014. Can you just comment on why you came in so much lower in 2013 and why '14 would be lower than what you had originally guided for '13?

Stanley Horton

Yes, let me answer that. In 2013, we had a couple of large maintenance projects that we were trying to get completed by the end of the year and we did not get all the permits that we needed to go ahead and finalize those maintenance projects. It was absolutely not any attempt whatsoever not to spend the money. We target a certain amount of maintenance CapEx and maintenance capital every single solitary year and I expect our people to spend that money. I want them to spend that money and we just will not cut back on maintenance capital and maintenance expense to hit any kind of arbitrary financial number. The fact that it didn't get it, I wasn't pleased, but it was due to delays in getting the permits.

Jamie Buskill

Elvira, to talk to why isn't 100 million for '14 and only 90 million, that 10 million difference is actually being spent because of the type of work that's going to be undertaken for accounting purposes, it's considered maintenance expense with the maintenance capital. So we from a run rate standpoint we're going to spend the same amount of dollars that we had originally planned for '13, it's just color coded a little different in '14.

Elvira Scotto - RBC Capital Markets

Got you. Okay and then just my last question. How has Boardwalk Louisiana Midstream performed versus your original expectations when you acquired it?

Stanley Horton

They've performed very well. They've met our expectations. And quite frankly a large part of the Bluegrass project would not be available to us if it were not for that acquisition. The frac and storage part of the Moss Lake project, the projected LPG Moss Lake project, all of those and the location of those around the salt storage opportunities that we have with BLM are a good reason that we've been able to do the downstream portion of that whole Bluegrass project. So we're very, very happy with the project. We're very happy with the growth prospects of that company. We recently promoted Kevin Miller into being the President of that company. He had been the Chief Operating Officer for the past year and I'm excited working with Kevin. He has some good ideas about what we can do with that company.

Elvira Scotto - RBC Capital Markets

Thanks. That's all from me.

Operator

I would now like to turn the call over to Molly Ladd Whitaker for closing remarks.

Molly Ladd Whitaker

Once again, we'd like to thank you for joining us this morning and for your continued interest in Boardwalk Pipeline Partners. 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.

Operator

Thank you for joining today's conference. This concludes the presentation. You may now disconnect. Have a good day.

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Source: Boardwalk Pipeline Partners' CEO Discusses Q4 2013 Results - Earnings Call Transcript

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