Atlas Pipeline's CEO Discusses Q4 2013 Results - Earnings Call Transcript

Feb.18.14 | About: Atlas Pipeline (APL)

Atlas Pipeline Partners, L.P. (NYSE:APL)

Q4 2013 Results Earnings Conference Call

February 18, 2014 10:00 AM ET

Executives

Matthew Skelly - Head, Investor Relations

Gene Dubay - Chief Executive Officer

Trey Karlovich - Chief Financial Officer

Pat McDonie - Chief Operating Officer

Analysts

Stephen Maresca - Morgan Stanley

Derek Walker - Bank of America Merrill Lynch

Jerren Holder - Goldman Sachs

Craig Shere - Tuohy Brothers

James Spicer - Wells Fargo

Praneeth Satish - Wells Fargo

Michael Gaiden - Robert W Baird

Helen Ryoo - Barclays

Operator

Good day, ladies and gentlemen. And welcome to the Fourth Quarter Atlas Pipeline Partners Earnings Conference Call. My name is Denise, and I will be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions)

As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Matthew Skelly, Head of Investor Relations. Please proceed.

Matthew Skelly

Thank you, Denise. Good morning and thank you for joining us for today’s fourth quarter 2013 earnings call. Before our management team provides comments on our fourth quarter’s results, I’d like to remind everyone of the following Safe Harbor provision.

During this conference call, we may make certain forward-looking statements, that is, statements related to future, not past events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition and often contain words such as expect, anticipate, intend, believe and similar words or phrases.

Forward-looking statements by their nature address matters that are, to different degrees, uncertain and are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected in the forward-looking statements. We discuss these risks in our quarterly reports on Form 10-Q and our annual report on Form 10-K, particularly in Item 1.

I would like to caution you not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. The company undertakes no obligations to publicly update our forward-looking statements, or to publicly release the results of any revisions to forward-looking statements, which maybe made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.

Lastly, management's discussion this morning includes references to such items as adjusted EBITDA and distributable cash flow, which represents non-GAAP measures. A reconciliation of these non-GAAP measures is provided in the financial tables of our quarterly earnings release that went out last night, as well as our Form 10-Q.

With that, I will turn the call over to our Chief Executive Officer, Gene Dubay for his remarks. Gene?

Gene Dubay

Thank you, Matt. Ladies and gentlemen, thank you for your attendance today and thank you for your interest in Atlas Pipeline Partners. Let me start by focusing on two important issues. First, our progress in filling our South Texas plants and our simultaneous success in strengthening Arkoma our other relatively recent acquisition. And second, our expectation of increasing distributions during 2014 as a result of renewed increases in adjusted EBITDA.

Just since the fourth quarter of 2013 we have in these few weeks reached agreements with nine new producers who will be providing gas for processing in our Silver Oak I plant. We expect these commitments has actualized will fully fill the 200 million a day of capacity of Silver Oak I.

Now on to Silver Oak II, our new 200 million a day capacity facility is schedule to open in the second quarter of 2014 and we are presently in negotiations with additional customers for volumes that will more than fill up this new facility.

As per Silver Oak III, we must have this facility available to handle the excess once Silver Oak II is fully operational and utilized, and planning is now commencing for this additional plant.

We expect to exit 2014 significantly increasing the distributions per unit fully covered by increasing adjusted EBITDA. Improved distributions will result not only from our anticipated success in filling South Texas, but also because of increases in processing revenues expected system wide. Drilling activity has increased in each of the areas we operate over what we were experiencing in 2013.

As a result, we expect that the volumes we process in 2014 will approach [1.0] Bcf per day by year end. This is an exciting and challenging time for Atlas Pipeline. We are operating in the most exciting producing areas of the country and we continue to see potential projects we develop across the areas that we operate.

West Texas continues to grow as a result of booming production in the Permian Basin where our new Edward plant had 200 million a day processing plant will open in the second half of 2014.

WestOK volumes in the fourth quarter were 538 million cubic feet per day, an astounding 23% increase over the fourth quarter of 2012. In the first quarter at WestOK, we anticipate replacing a sizable package of low margin gas from one producer with higher margin gas from new drilling activity around our system and by the third quarter of 2014 a new pipeline connection between our Velma and Oklahoma facilities will enable us to bring gas beyond the Velma capacity to Oklahoma where the new 120 million a day Stonewall plant was started up in the second quarter.

The merging of our Oklahoma and Velma systems into our SouthOK system will provide the Velma operating area with the additional capacity it is requiring giving our producer customers redundancy and better residue solutions, and allow us to more efficiently manage the SouthOK operating area.

Let me move now from 2014 back into 2013. We have closed out 2013 building on the progress of 2012. Despite suffering through numerous storms and disruptions in the fourth quarter, the company produced EBITDA of $324 million, EBITDA for 2013 is up almost 50% from 2012. We have paid out $2.45 in distributions to our unitholders in 2013, which was an increase of $0.18 or 8% over what company paid in 2012.

We began 2014 with over 1.5 Bcf a day of processing capacity and despite the weather the utilization rate for our plants was 93% in the fourth quarter. The three new plants that we have under construction will take the company to 2 Bcf a day processing capacity before year end.

We made the decision not to increase the distribution this quarter and maintain the distribution of $0.62, recognizing that the disruptive weather has taken us below one-time coverage temporarily.

The outlook for this company is very bright in near and long-term. We have great systems and great people, and we are participating in an industry that is transforming a country, creating great opportunity and great challenges.

Trey Karlovich, our Chief Financial Officer will walk you through the financial results for the fourth quarter. Pat McDonie, our Chief Operating Officer will speak more specifically to each of our operating areas. Pat?

Pat McDonie

Thanks, Gene, and good morning. We do remained extremely excited about the organic growth opportunities that continue to present themselves as a result of diversified location of our assets in high quality liquids rich production areas. Producer activity behind each of our system remains high and in some areas experienced a significant rebound and drilling permits.

In our third discussion and through previous press releases, we have kept you informed about the numerous high rate of return capital projects that we are currently executing on. I will provide a quick update on the progress of these projects, expanding on Gene’s earlier comments, before jumping into the fourth quarter results for each of our operating regions.

The expansion of the Northern end of our WestTX gathering system into Martin County is progressing nicely with the initial flow of gas into the system to commence in the next three to four weeks. We expect the first two phases of this project to be completed in the second quarter.

The 200 million cubic feet a day Edward plant located on the southern end of our WestTX system is under construction and is expected to be up and running in the September, October timeframe. The current producer activity and corresponding growth in volume indicates that the Edward facility’s capacity is going to be much needed and available right on time.

The construction of the 24-inch pipeline to connect our Velma and Arkoma systems is getting underway as we have begun to clear right away and we will shortly began putting pipe in the ground. We expect this project to be completed late third quarter or early in the fourth quarter of this year.

This project will result in the information of the SouthOK region, the rolling up of the Arkoma and Velma regions into this new region. This project in the combination of the Velma and Arkoma assets will benefit from the diversity of producer supply. It will relieve residue takeaway constrains, it will give us considerable operational flexibility and it will facilitate future growth.

As to part of that future growth, we have completed a portion of the gathering infrastructure build-out to facilitate new wells being drilled in the SCOOP which are tied to substantial producer commitments recently obtained through our commercial efforts. Initial flow from these developments efforts has commenced and the two-day results are very encouraging.

This current supply in the SCOOP area will ultimately be processed at the new 120 million cubic feet a day Stonewall cryogenic plant, which is under construction, expected to be up and running by mid-April.

Construction continues on our 200 million cubic feet a day Silver Oak II processing facility with an expected in-service date of this SouthTX asset in late April to early May.

Our commercial efforts to SouthTX have been successful and we have secured supply commitments that will fill the remaining available capacity at our Silver Oak I facility in addition to filling a portion of the capacity of the new Silver Oak II facility.

Our commercial team is focused on felling the remaining available capacity at Silver Oak II and is deep in commercial discussions with producers that will more than fill that available volume. We remained excited about the long-term possibilities that this outstanding asset presents.

That concludes the project update. And as you can see, we continue to have a lot of exciting opportunities to expand our existing asset footprint due to the current high level of producer activity. Even more encouraging, this activity level is projected to continue for the next several years.

A recap of the fourth quarter. In the fourth quarter, 1.5 BCF per day was gathered across our systems and our partners dedicated Arkoma gathering system. This was slightly higher than the prior quarter and a 35% increase from the fourth quarter of 2012.

Total NGL and condensate liquids produced 122,000 barrels per day, an increase of 47% over the prior year. Fourth quarter NGL production was down slightly from the prior quarter, as a result of ethane rejection, offsetting production increases.

We remained in ethane rejection at our Arkoma, WestOK and WestTX facilities as a result of low ethane prices. For the quarter, we rejected approximately 26,000 barrels a day of ethane while maintaining higher recovery percentages for propane and heavier NGL products.

I will now provide you with an update on each of our operating areas and I will start in Western Oklahoma. Gathered volumes in WestOK system were 538 million cubic feet a day in the fourth quarter, a 7% increase over the third quarter and a 23% increase over the fourth quarter of 2013 -- 2012, excuse me.

NGL production during the third quarter was 23,789 barrels per day and 11% increase in prior quarter and a 44% increase in fourth quarter of 2012. The WestOK system recovered 1,874 barrels per day of condensate during the quarter, an increase over the third quarter of 7%.

Ethane processing margins remain negative in the fourth quarter, prompting Waynoka facilities to operate in ethane rejection. This resulted in approximately 8,900 barrels per day of ethane being rejected resulting in an incremental 25,000 MMBTUs per day of residue gas production.

During the fourth quarter, we connected 95 wells into the system and had 28 dedicated rigs operating behind the system. Based on producer comments, we expected increases of three drilling rigs in the second quarter and an additional two rigs in the third quarter of 2014.

Drilling efforts are projected to be in close proximity to our existing infrastructure, utilizing multi well pad sites which allows for a more efficient application of capital to secure these incremental volumes. During the fourth quarter, we completed our planned efficiency projects which increased our total system processing capacity to slightly less than 500 million cubic a day.

We utilized this incremental capacity in the fourth quarter to eliminate offloading gas to third parties. During the first quarter, we will discontinue processing a sizable package of low margin gas from one producer and quickly replace those volumes with higher margin gas due to drilling activity ongoing around our system.

I’ll now move to our Velma region. Our gathered volumes on the Velma system increased 2% in the fourth quarter to 161 million cubic feet a day. During the quarter, there were 12 dedicated rigs operating behind our system and we made a total of 10 new well connections.

Previously, much of our new production on the Velma system came from existing central delivery points. However we expect an increase in well connections during future periods as we build out new gathering systems, which initiate after wellheads of our dedicated producers in the SCOOP.

We operate both of the Velma processing plant and ethane recovery during the quarter and recovered 17,247 barrels per day of NGLs, a 3% increase over the prior quarter. Condensate production, which is impacted by seasonal differences and ambient temperature, was 373 barrels per day, 5% higher than the third quarter.

As a reminder, we have 160 million cubic feet a day of nameplate processing capacity between our two plants in our Velma area. And we are currently processing approximately 158 million cubic feet a day. As I previously mentioned, we have completed portion of the gathering infrastructure to build out facilitate connection of new wells being drilled in SCOOP.

We remain excited about the volume growth associated with this activity and look forward to the combination of the Arkoma and Velma regions to form the SouthOK region. The physical target between the two regions and the associated synergistic uplifts will be realized later this year upon the completion of the connector pipeline.

Now to the Arkoma region. During the fourth quarter, the lean gas gathering system in this area gathered and treated 19 million cubic feet a day and approximately 224 million cubic feet a day of rich gases gathered on our system and dedicated gathering systems.

During the fourth quarter, a total of 224 million cubic feet a day was processed on the Arkoma system. $196 million cubic feet a day at Atlas facilities and 28 million cubic feet a day was offloaded to contracted third-party processors. The asset also produced 14,030 barrels per day of NGL liquids during the quarter, a 13% decrease from the third quarter.

This decrease is attributable to operating facilities in ethane rejection due to unfavorable ethane processing economics. During the fourth quarter, ethane recoveries averaged 25% resulting in an estimated 8300 barrels per day of rejected ethane.

During the first quarter, we have made slight changes to our Coalgate plant plan to minimize ethane production while maintaining production of propane. With these changes, we expect to recover less than 10% of ethane while maintaining propane recoveries of 95% or greater.

This efficiency upgrade will improve our ability to match our recovers -- recoveries with our contractual obligations and provide an immediate economic benefit. We will continue to evaluate the ethane processing margin and will optimize our operations to maximize the value earned by Atlas and our producers on the system.

During the fourth quarter, our partner completed construction of the Brewer pipeline allowing us to move incremental production from a previously constrained portion of the Arkoma system. Although this project was completed during the quarter, we continue to offload 28 million cubic feet a day to a third party for processing and will continue to offload this volume until startup of the Stonewall Processing facility to provide operational flexibility.

As I previously mentioned, construction continues on the 120 million cubic feet a day Stonewall plant with expected startup to be mid April. We have seen an increase in producer activity in this area in 2014. Year-to-date 16 original permits have been filed which represents significant increase in activity as compared to the corresponding timeframe of 2013.

In addition, there are a total of six dedicated rigs on the Arkoma system, two of which are drilling behind the Atlas system. We are in the process of hooking up a six well package and expect flow from these wells to commence in the next two weeks.

As a result of continual discussions with our producer customers on the Atlas gathering system, regarding drilling plans for 2014, we expect to increase our share of volumes on the system. This coupled with the startup of Velma to Arkoma pipeline in the second half of 2014 ensures that we will utilize a significant portion of our own capacity on the system, thus increasing our overall margins. Again a significant increase in drilling activity around our system and highly beneficial capital project associated with this activity.

I will now look to our Texas asset and start with South Texas. We continue to experience increased drilling around the SouthTX system both within our dedicated acreage and in close proximity to our facilities.

We are currently 40 rigs operating within 6 miles of SouthTX system, of which nine are dedicated. Our SouthTX commercial team has made significant progress during the fourth quarter throughout the beginning of this year, having put in place contracts with nine new producers.

As a result, we are in the process of installing gathering infrastructure to facilitate getting these newly acquired dedications, delivery volumes into our system. We expect these projects to be completed and become operational in the second quarter.

Volumes associated with these transactions are estimated to be 50 million to 65 million cubic feet a day on connection and growing to 90 million cubic feet a day by the end of the year. We continue negotiations with additional customers for volumes that would more than fill up 200 million cubic feet a day of new processing capacity slated to be available in the second quarter upon completion of the construction of the Silver Oak II plant.

During the fourth quarter, gathered volumes totaled 135 million cubic feet a day and we produced 17,083 barrels per day of natural gas liquids. Volumes continue to fluctuate on the system as a result of a portion of production being interruptible received. This system is anchored by long-term fixed fee contracts with Statoil and Talisman and a third major producer.

These contracts have a deliver-or-pay provision which provides earning stability as we focus on the execution of our growth strategy for these assets. We remain committed to our strategy which will allow us to fill both the Silver Oak I and II plants by the end of 2014 and remain excited about the additional opportunities that we are regularly exposed to as a result of the ownership of these assets.

We will now move to West Texas, the volume growth continued on the West Texas during the fourth quarter. However a severe ice storm in late November resulted in loss of approximately 50% of the wellhead volume for seven days and a continued reduction in volumes until this past week in all the effective wells were finally returned to production.

In spite of this interruption, fourth quarter volumes were 380 million cubic feet a day a 1% decrease from the prior quarter and 27% increase from the fourth quarter of 2012. There continues to be a high producer interest in stat formations underlining our system and 64 rigs currently dedicated to the system

During the fourth quarter, the WestTX system connected a total of 66 new well connections. Similar to the Velma system, volume growth is attributable to new well connections and increased volumes through existing delivery points as a result of producer infill drilling and recompletions.

NGL production fell slightly to 46,660 barrels per day in the fourth quarter, as a result of the inclement weather and operating in ethane rejection as a result of economic considerations. Ethane recoveries were 49% and by operating in partial ethane rejections, the system was able to maintain propane recoveries in excess of 94%.

The reduction in ethane recoveries amounted to an estimated 9,000 barrels a day of ethane being rejected, resolving an incremental residue production of 25,000 MMBTUs per day. As of February 17th, our West Texas plants are processing 400 million cubic feet a day, which is 88% of nameplate capacity of 455 million cubic feet a day.

Volume growth continues to exceed our expectations due to the significant transition to horizontal drilling of the Wolfcamp, Spraberry and Cline formations by our Permian Basin producers. As I previously stated, construction of the Edward plant, a 200 million a day processing plant is underway and is expected to commence service in the second half of 2014.

This plant will be constructed on the southern end of our West Texas gathering system in close proximity to the Pioneer Sinochem JV acreage in the southern portion of the Spraberry Trend and our Benedum plant. We remain very excited about our additional organic growth projects in our WestTX area, including the previously announced and currently being constructed expansion of our gathering infrastructure into Central and Northern Martin County.

Our largest producer has initiated development drilling on their acreage around the system expansion and is moving 18,000 horizontal drillings rigs into this area during the first and second quarter of 2014. Producers are targeting multiples zones and employing pad drilling, which benefits the gathering system build out.

As previously stated, we believe that the plant producer activity in this area and across our system continues to adjust that we will need a new 200 million cubic feet a day processing plant every 12 to 18 months to keep up with the increase in volumes dedicated to our system.

On our remaining facilities, we transported volumes on West Texas pipeline, which we jointly own with Chevron. Those volumes averaged 232,758 barrels per day. We gathered 7.5 million cubic feet a day on our Tennessee system and the APL Barnett system gathered 21 million cubic feet a day. All three of these facilities continue to generate stable earnings under fixed fee arrangements and have minimal capital requirements.

That concludes my remarks and I’ll now turn the call over to Trey Karlovich.

Trey Karlovich

Thanks, Pat. Good morning, everyone and thank you for joining us. As you’ve heard from Gene and Pat, our fourth quarter financial results were impacted by some severely cold and icy weather conditions in Texas and Oklahoma. The cold weather has obviously impacted the entire country, good for prices not so good for gas gathering and processing facilities.

I would like to say I like it when it is cold, just not cold in our operating areas. We estimate the overall net impact of the cold weather to be about a $5 million hit to adjusted EBITDA and Bcf for the quarter. While we did get a little bit of a price uplift in propane for the quarter, the impact was minimal to our bottom line because of our hedges.

Our equity propane position had an average swap price of a $1.19 per gallon, which was roughly equal to the average physical price for the quarter and we ended up with about 88% of our propane hedged when factoring at lower production volumes from the weather. The remaining difference between our actual results and the guidance we issued last quarter relates to lower volumes of South Texas and Arkoma, which Pat discussed and does not anticipate at the time we gave the guidance.

Speaking of guidance, let me go over our new 2014 guidance first before discussing fourth quarter results. We based our new 2014 guidance on our Board approved budget where we are expecting to generate between $400 million and $425 million of adjusted EBITDA in 2014.

We use the natural gas price assumption of $4.37 per MMBTU, which we currently hedge every quarter of 2014 at higher price than this. Our NGL price assumption was $1.06 six per gallon on a weighted average basis, including our assumption of ethane rejection throughout the year. This price is in line with the current NGL curves, higher than some products, lower than a few others.

Our crude price assumption is $92.78 per barrel, again a price we could hedge at higher today. However, I want to remind everyone that we include all of you current hedge positions in our guidance, and we’ve essentially done with our 2014 hedge positions for several months. So while we have recently added a few positions here and there for 2014, most of our more recent trades have related to 2015 and beyond, while our average hedge price is now generally better than the prices we have hedged for 2014.

All that’s to say that any pricing changes this year other than any change in the ethane margin and natural gas was a pretty minimal overall impact to our 2014 results. We're 72% hedged and more than 40% of our margins is expected to be fee-based this year. Volumes will be the most important driver to our results and that’s where we continue to place our focus.

I’m thrilled to have some new contracts in South Texas with some of the key producers we have identified in close proximity to our system. They provide a much clear path forward from a forecasting standpoint. I’m not so thrilled that we are expected to lose some volumes in our legacy systems in Oklahoma by the end of the first quarter. So we have known that and included that in our previous guidance.

Even with the loss of those volumes, we expect to be processing about 1.8 Bcf per day of our approximately 2 Bcf per day of capacity by the end of the year with growth across each of our operating areas driven by robust drilling plans and our key producer relationships.

But we expect the first quarter to be better than the fourth quarter results, even factoring in more severe weather from January and early February. We are projecting our distributions to remain at this current level as we build back our coverage over the past two quarters.

We are expecting to exit 2014 with an adjusted EBITDA run rate of $430 million to $460 million and distributing at least $2.60 per limited partner unit on an annualized basis. We are expecting to invest approximately $450 million to $500 million this year in growth activities, including investments in our existing joint ventures.

As a reminder, capital expenditures for the upcoming year will include the completion of the new Silver Oak II plant in the Eagle Ford, the new Stonewall plant expansion in the Arkoma region, the Edward plant in the Permian, the connection of the Velma and Arkoma systems and significant gathering system expansions on each of our system as we grow our footprints. We will continue to add infrastructure and processing enhancements to meet our producer customers’ need and expectations in 2014 and beyond.

Going into 2015, we expect adjusted EBITDA between $450 million to $500 million based only on the projects and processing capacity, we have announced publicly today using the similar price assumptions and moderate volume growth across our systems as we feel that capacity. Additional information on our guidance and assumptions was included in last night’s release.

Now back to the current quarter results. We recently declared and paid a distribution of $0.62 per limited partner unit and while actual coverage was under one times, we would have coverage over 1 times when including the impact from cold weather. Our adjusted EBITDA for the quarter was approximately $87 million, an increase of about 35% compared to the same quarter last year.

Distributable cash flow was almost $52 million, a 28% increase from the same period last year. Our unhedged gross margin for the quarter was $119 million, compared to only $80 million in the fourth quarter of 2012 with an increase of 50%. Our fee-based revenue totaled $48 million this quarter, a $4 million increase from last quarter and 143% increase to the same period last year.

We are focused on increasing this revenue stream and it now makes up approximately 40% of our total gross margins. Quarterly plant operating expenses totaled $23 million and was about $1 million lower than last quarter. General and administrative cost totaled $11 million excluding non-cash compensations. G&A was also about $1 million lower than third quarter. We had indicated that we thought both of these would decrease slightly.

Interest expense totaled $24 million again this quarter. Our maintenance capital expenditures totaled approximately $7.8 million in this quarter, and has totaled almost $22 million for the year. Operating, administrative, interest and maintenance expenses were in line with, if not slightly better than our guidance for the year.

Our growth capital expenditures totaled $115 million this quarter, and we have spent $429 million on growth capital and made $13 million of investments in equity method investees this year, also in line with our full year 2013 guidance of approximately $450 million.

Additionally, we did write-off approximately $44 million of goodwill directly related to the gas treating business we acquired in 2012. We no longer expect to allocate significant capital dollars to this business and while we will continue to evaluate opportunities in the gas treating equipment leasing arena, we are not expecting to make the investment to realize the growth potential we had originally estimated when we allocated this goodwill. We provided a capital summary of our financial results, volumes and prices in earnings release that went out last night.

In reviewing our balance sheet, we had debt to total capital of about 39% and debt to adjusted EBITDA of 4.9 times as calculated into our credit facility. As we mentioned in the earnings release, we will continue to monitor our leverage and manage it accordingly and we will finance our growth capital expenditures prudently with an adequate mix of debt and equity capital.

As a reminder, our credit facility allows for a higher leverage covenant for the initial three quarters following any acquisitions and also provides an add back to adjusted EBITDA once major capital projects like Silver Oak II, Stonewall and the Edward plant come on line. Our liquidity at the end of the quarter was approximately $453 million, which does not include the $200 million accordion feature associated with our revolving credit facility.

Finally, with regards to our hedging activities, our hedge positions resulted in an overall loss of about $3.9 million to the fourth quarter distributable cash flow, including the approximately $5.2 million cost of option premiums. Looking ahead, we are 72% protected in 2014, as well as being approximately 41% protected in 2015 and 10% protected in 2016.

All these percentages exclude ethane and each of our hedge positions are detailed in the release we distributed last night. We have not made any changes to our targeted hedge percentages. While we are continuing to primarily hedge using swaps and purchase price, we have recently used the costless collar for propane at Mont Belvieu, with the second quarter of 2014 through the first quarter of 2015, which generally a floor of $1 per gallon and a ceiling of $1.30 per gallon.

While, this is our first use of a collar in recent years, I would like to point out that we will only and I stress only use product specific and location specific collars for very small percentage of our equity volumes. We will not use these types of trades as proxy edge. The way we are utilizing these trades is exactly like we have handle our swaps over the past several years, but the collar allows for a spread on price rather than a fixed dollar amount.

Additionally, our swaps for the same period of time have an average fixed price below the $1 per gallon floor of these callers. So we viewed anything above the $1 per gallon price as upside.

In summary, our fourth quarter results were impacted by severe cold weather, but we have continued to stay focused on our tasks of growing our volumes and cash flows, mitigating our commodity price risks, and managing our balance sheet. We have some great projects ahead of us for this year and we are excited to see those through to completion. We see distribution growth resuming in 2014, and with that we expect our distribution coverage to return as well.

We appreciate your continued interest in APL. That concludes our prepared remarks. We will now open the call for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Stephen Maresca with Morgan Stanley. Please proceed.

Stephen Maresca - Morgan Stanley

Good morning.

Gene Dubay

Good morning.

Trey Karlovich

Good morning.

Stephen Maresca - Morgan Stanley

First question is just trying to understand the reduction in 2014 EBITDA guidance in terms of -- could you give us what was the biggest cause, what missed your prior expectations the most on assumptions that went into that ‘14 number?

Trey Karlovich

Steve, this is Trey. So the biggest change between our prior guidance and the new guidance is the volume ramp, primarily SouthTX, but also Arkoma has a little bit of an impact as well, but it’s primarily the volume ramp in SouthTX, while we expect it to be filling up the plants, as we pointed in our overall guidance. The second plant, in our current guidance, is not full by the end of the year, obviously that’s our goal, but that’s not what’s in the guidance today.

Stephen Maresca - Morgan Stanley

Okay. And the prior just as a reminder, it was full?

Trey Karlovich

It was full, that’s correct.

Stephen Maresca - Morgan Stanley

And full when, I don’t remember?

Trey Karlovich

It was actually in the year full. It was ramp over time with essentially full at the end of the year.

Stephen Maresca - Morgan Stanley

All right. Okay, thanks for that. And was there any other moving pieces or is that -- that's the main one, is there anything else of a material nature that caused numbers to come down?

Trey Karlovich

That’s the primary changes.

Stephen Maresca - Morgan Stanley

Okay. I appreciate that. And then you talked about the 2015 EBITDA that you mentioned, 450 to 500 assumes similar price assumptions but moderate volume growth. And you obviously have significant projects underway, Stonewall, Silver Oak II, Edward plant, and all that. How should we be thinking about moderate volume growth, whether on a percent year-on-year basis or percent utilization of some of these facilities?

Trey Karlovich

Based on the projects that we’ve announced today we would have about 2 Bcf of processing capacity and we expect to exit the year processing about 1.8 Bcf, so there is about 200 million a day of processing capacity available on our existing infrastructure based on the projects we’ve announced today.

Obviously we’ve talked about expansions in West Texas, that’s not included in this guidance. We talked about Silver Oak III, that’s not included in this guidance. There is no incremental processing added in Western Oklahoma or Southern Oklahoma over and above the Stonewall plant either. So our guidance today for 2015 is based solely on the capacity we have available today.

Stephen Maresca - Morgan Stanley

Which is that 2 Bcf number that you just said?

Trey Karlovich

Correct.

Stephen Maresca - Morgan Stanley

Okay. All right, thanks for that. And then, final one for me for right now. Leverage is a bit on the high side and liquidity about 450, the growth CapEx this year of 450 to 500, how do you plan on addressing equity needs for 2014 at APL?

Gene Dubay

This is Gene. We are going to manage our leverage. So as we need equity for these projects, we will certainly add equity. We intend to keep the balance sheet intact during 2014.

Stephen Maresca - Morgan Stanley

Okay. All right, that’s it for me for right now. Thanks.

Gene Dubay

Thank you.

Operator

Our next question comes from Derek Walker with Bank of America. Please proceed.

Derek Walker - Bank of America Merrill Lynch

Good morning, guys.

Gene Dubay

Good morning, Derek.

Derek Walker - Bank of America Merrill Lynch

Just to go back on SouthTX for a sec. I know you mentioned that you are in deep discussions with several additional producers. What’s your confidence actually filling that up by the end of the year? I think when you guys originally acquired the assets, you were looking at a 160 as a run rate for 2014. Now that you don't expect that -- at least within guidance, you don't expect that to be full in guidance, just what are you assuming now for an exit rate in 2014 for SouthTX?

Gene Dubay

I am sorry, I get distracted here. Repeat that please.

Derek Walker - Bank of America Merrill Lynch

I think when you originally acquired the SouthTX system, you were anticipating a 160 EBITDA run rate for that system.

Gene Dubay

Yes.

Derek Walker - Bank of America Merrill Lynch

And that assumed Silver Oak II being full. If I heard Trey right, I think guidance does not assume that system to be full, although you guys do anticipate it to be full given the ongoing discussions that you are in right now. I guess what does guidance imply as far as an exit run rate for SouthTX?

Gene Dubay

Well, I think, first of all, I think the original guidance discussion we gave was $120 million to $160 million of EBITDA based on two plants for the year. It was $60 million to $80 million per plant. And as far as, nothing has really changed significantly, I mean the high end of that range is going to be more difficult because the condensate production hasn’t been as robust as what we expected.

But we are in discussions with producers that would fill the capacity at both of those facilities and the different contract negotiations we are in, and truthfully it’s really a myriad of different values across the spectrum of contract discussions. And so, we are confident that it will be material and EBITDA generated by both facilities upon full and we expect them obviously to be full by the end of the year, that’s what we like and expect.

And then beyond that, truthfully we think the Silver Oak III facility when constructed would be in a timeframe and obviously we haven’t announced that we are going to build that facility, but it would be in a timeframe when there is a significant amount of production coming off of existing contracts at inefficient processing facilities. So the timing would be good there and we would expect the contractual possibilities to be very lucrative.

Derek Walker - Bank of America Merrill Lynch

Thanks for the color there. And then, I know Steve had mentioned 2015 guidance, but just to touch on that a little bit with regards to distribution growth. You expect to end this year around 5% given that guidance seems to be implying moderate growth. What does that mean from a distribution growth perspective, is kind of 5% a fair assumption going forward?

Trey Karlovich

So one thing I’d point out and we’ve talked about this before Derek, but when we hit that $2.60 annualized distribution level, that’s when we will hit the giveback from the GP on the IDRs, so the growth and distributions from that point forward could be significantly higher than what you are seeing today. Again, as we go through the next few quarters and increasing the distribution to $2.60 or about $0.65 per quarter, the GP is taking half of that, from about $0.65 to about $0.75 -- from $0.65 a quarter to about $0.75 a quarter. There is the giveback from the GP. So the distribution growth over and above that could be more meaningful on a percentage basis.

Derek Walker - Bank of America Merrill Lynch

Got it. Thank. That’s it for me.

Gene Dubay

Thanks, Derek.

Operator

Our next question comes from Jerren Holder with Goldman Sachs. Please proceed.

Jerren Holder - Goldman Sachs

Good morning. Can you quantify the negative impact I guess the margins of ethane rejection at Velma, considering that you guys can't reject ethane there? And when the pipeline interconnection comes online between Arkoma and Velma, do you guys plan to move as much gas as possible over from Velma to Arkoma and fill those up first and then move back to reduce that impact?

Gene Dubay

We don’t estimate the total impact at individual plants for the ethane rejection or not being able to reject ethane. The margin while it is couple pennies negative, it depends on what’s your TNF rates are and other different variables on your contract mix to do that. So we don’t do that for each specific plant.

With regards to moving volumes from Velma to Arkoma, Velma is one of our legacy plants, the TNF rate at Velma is lower than what we see at Arkoma. And additionally at Arkoma, we do over and above our current 100% owned Tupelo plant, we would share in processing margin with our joint venture partner in Centrahoma, which is MarkWest. So we will fill up Velma first and then move volumes over to Arkoma.

Jerren Holder - Goldman Sachs

That's fair. And switching across to, I guess, your keep-whole exposure and Conway exposure in Western Oklahoma. We saw the pretty volatile NGL prices here in the quarter. How is those prices matched up to your hedging in general? Has it mainly been offset, or is there a bit of, I guess, imperfect hedges there? How do you think about that?

Gene Dubay

So we do not have any Conway specific hedges in 2014. We had some in 2013. So, most of all of our hedges are in Mt. Belvieu. So the uplift in price that we’ve seen in Conway recently has been a little bit of a benefit to us, particularly on the WestOK system. However, the Conway exposure goes away late third quarter, early fourth quarter of this year and we will be almost a 100% Belvieu, especially on the lighter end of this stream. We will also have little bit of Conway exposure on the heavy end of the NGL streams for the butanes and pentanes. But the lighter ends in ethane and propane will be 100% Mt. Belvieu at that point in time.

Our keep-whole exposure is continuing to decrease as volumes are added on the new POP agreement with SandRidge and the volume were in decline on the legacy keep-whole contract. That contract expires in June of this year and will convert over the percent of proceeds.

Jerren Holder - Goldman Sachs

Okay. So from a -- going back to Conway, so your propane exposure actually, it outweighs the benefit you get from the higher propane prices outweighs that period of time where we saw ethane actually go negative? Is that correct?

Gene Dubay

Yes.

Jerren Holder - Goldman Sachs

Okay. Thank you.

Gene Dubay

We saw, I mean, average propane prices has been over $2 so far this year to take at Conway.

Jerren Holder - Goldman Sachs

Okay. Thank you.

Operator

Our next question comes from Craig Shere with Tuohy Brothers. Please proceed.

Craig Shere - Tuohy Brothers

Hi, a couple of more clarifications. If I understand, we've had a month and a half of continued curtailments impacting the Permian Basin operations in West Texas. The 2014 EBITDA guidance, can you roughly explain how much that is impacted by curtailments?

Trey Karlovich

It’s obviously factored into our guidance. Our guidance is as of today which includes everything we’ve known from January 1st forward. But we didn’t carve that our specifically.

Craig Shere - Tuohy Brothers

Okay. Given the fourth quarter impact, I mean, would maybe at least twice that amount be a reasonable figure?

Trey Karlovich

I don’t think it would be twice that amount. The volumes have been…

Gene Dubay

Let me try that, Trey. What I would tell you is the event in November, what it really did is it took out the electric infrastructure out there. I mean, the electricity was lost, not only the processing plants but more importantly to all the production sites. And so, what you’ve seen is a slow ramp up in volume since the incident in late November, with the volumes as electricity is restored, obviously been restored with that. And then you’ve also had some other weather events that have come along and occurred.

But the November, December impact was obviously significant. Since that time, it is kept volumes off of the market, $10 million, $20 million a day, slowly coming back on over a period of time. It pushed back some of the drilling activity in three to four weeks in the completions of those wells and the new incremental production coming on.

So all those were factor as Trey pointed out that we have put into this guidance and to put a number on what that impact was as far as when the new wells are going to come on and how much volume will be associated with them and all that is very difficult to say the least. I’ve certainly would not say it’s twice of what we saw the effect in November. Is it possibly the overall effect that we saw from that storm? Yes, it’s possibly that but truthfully we have not calculated it.

Craig Shere - Tuohy Brothers

Understood. And on the more recent Eagle Ford contracting for Silver Oak I, is this similarly structured in terms of what you had originally envisioned as that 80/20 fixed-fee condensate margin mix when you first bought the TEAK assets? And you referenced the difficulty of meeting the original high-end guidance because of the condensate issues, the legacy contracts. Well, are we making any headway in the legacy contracts, and are the new ones little -- structured a little better so that you don't lose as much at the wellhead?

Gene Dubay

Well, I think truthfully Craig, it’s a mix. I mean, we’re in discussions and half of the contracts in place will have some more type of commitments. But we also have contracts that have volumetric commitment of -- I’m just using the example of say $25 million a day with the ability to give us an incremental $25 million a day under more favorable economic trend.

So it’s -- your question is hard to the answer. The volume commitments are percent of proceeds. There is some fixed fee. There are little bit of everything is what we’re seeing today. And I would say that they’re not exactly what we’re seeing in the TEAK contract in period and what we acquired through that process. But we are in negotiations works with producers for contracts that are similar to that construct.

So today it’s a little bit of everything. And we expect it will be a little bit of everything going forward. And fortunately, that’s not always a bad thing. Obviously we want fixed fee, we want guaranteed revenues and we would like commitments to capacity in our facilities. But at the same time some of the percent of proceeds agreements are better economical situation for us from the realized income standpoint.

Craig Shere - Tuohy Brothers

Are you making any progress on that loophole that the producers said was taking, I guess, trucking off from the wellhead, from the condensate you otherwise had expected to come through your plans?

Gene Dubay

The condensate volumes have not come up as we initially modeled. We have had some improvement but we have not gone back to where we modeled with regard to condensate recoveries.

Craig Shere - Tuohy Brothers

I got you. And last question, just a little confused about what you are assuming on the second plant being full in terms of your -- what you would expect to happen, what's in guidance, and maybe what's the difference between full from a contractive standpoint and full from an operating standpoint after you spend a quarter or two of building out by gathering infrastructures to serve the contracts that are already committed to.

So when you say guidance is less than full in the second plant that you're in, but then you expect to have it full at year end. Is this a difference between contracted and operating? Is this just, well, our budget is one thing, but given market dynamics we certainly would anticipate doing better? How should we think about that?

Gene Dubay

Well, this is Gene. Let me start from the back first and turn it over to Trey. As you mentioned, one of the things that we are having to do is, we’re laying out pipe on some of these new agreements. So sometimes with regard to obtaining right away with the dates are not certain as to when we will get right away accomplish and when we will get pipe laid under some of the new agreements. So, it’s somewhat difficult for us to forecast for sure when these volumes are coming out.

So from an operating standpoint, we can’t have complete clarity with regard to what’s going to happen because of the right-of-way issues. And some of that -- having said that, I’m going to turn it over to Trey to talk a little bit more about specifics with regard to guidance.

Trey Karlovich

Right, we fully expect to fill up the plant and that’s our expectation that’s not within our budget and in our forecast today. Obviously, there is a range in our guidance, the $400 million to $425 million. With the upper range, you are going to have probably a little bit more volume in South Texas than you would at the lower end. But my point being is that, we don’t have the financial results of the plants being pulled in the guidance we issued today.

Craig Shere - Tuohy Brothers

Top end of guidance. I’m sorry, the top end of guidance does not assume a year end full run rate.

Pat McDonie

No.

Trey Karlovich

Right. And I guess what I would add is some of these packages that we’re in discussions on are very large. And again, it’s contracting in South Texas is lumpy in nature and you could put two of these deals to bed and Silver Oak II capacity is spoken for. So we’re very deep in discussions as we said, we expect to have some of these deals finalizing. At the same time, it is very possible that we would get type of volume commitment that would in fact drill those up. We’re not assuming that. We’re not assuming that in our budget or guidance but it certainly is what we expect to have.

Craig Shere - Tuohy Brothers

Is it fair to say that the majority of the reduced guidance impacted by the Eagle Ford plants has to do with this uncertainty about the timing of when they are full? And, even once they're contracted, having to then get right-of-way and put in the gathering infrastructure versus issues about the margin simply being less than we originally modeled once it's full?

Pat McDonie

It’s more related to the volume and the timing of the volume ramp. Obviously as Gene pointed out, the condensate is not where we had originally anticipated it. We do see instances where they can get a little bit better but it’s primarily related to the timing of the volumes.

Craig Shere - Tuohy Brothers

Okay. Thank you very much.

Operator

Our next question comes from James Spicer with Wells Fargo. Please proceed.

James Spicer - Wells Fargo

Hi. Good morning, everyone. Just a question on the balance sheet, you had previously mentioned your expectation that you would sort of deliver starting in the first quarter throughout the remainder of the year targeting a level of around 4 times leverage by year-end 2014 in light of your new CapEx guidance and EBITDA guidance. Is this still a reasonable expectation?

Trey Karlovich

Hey James, it’s Trey. We still expect to delever throughout the year even with the -- based on the EBITDA, distribution and CapEx guidance that we’ve provided. We will adequately fund the growth capital budget with a mix of debt and equity. As the EBITDA ramps up, we’ll modify that mix appropriately. But I don’t know if we will get to 4 times but we’re going to get down well below where we are today, much closer to four times than where we’ve been with the 4.9 that we released last night.

James Spicer - Wells Fargo

Okay. Great. And then second question for me is -- I guess specifically in terms of acquisitions, I know you have a lot on your plate, but are you looking at that remaining interest in the West Texas LPG pipeline that Chevron is marketing?

Gene Dubay

This is Gene Dubay. I think that we’ve said that we are interested in owning that line. We’ll see what occurs there with pricing, if we could get the rest of that line in an accretive manner, we would be happy to do so.

James Spicer - Wells Fargo

Okay. That’s it from me. Thank you.

Gene Dubay

Okay.

Operator

Our next question comes from Praneeth Satish with Wells Fargo. Please proceed.

Praneeth Satish - Wells Fargo

Hey, guys. Good morning. Just a couple of quick questions for me. I guess at first, I am just trying to understand exactly how the processing volumes in South Texas decline this quarter? I mean I understand there is competition for new volumes but what contributed to the decline in existing volumes and is this a risk going forward?

Pat McDonie

A couple of things, one, we have a partner in the system out there and they had a start up of their processing plan. We were processing some volumes for them and those volumes moved into their facility once their plant was up and running. Secondly, we had a share producer between us they take that share producers volume and they are slowly in the process it, we still get the economic benefit the same as if it was running through our facility but it is now process from their facility.

So we actually had volume increase since those volumes moving into their facility and obviously we did have some weather issues and our largest producer commitment Statoil and Talisman volumes were up and down throughout the quarter and obviously, there is a mechanism for true-up relative to that inconsistency in volume. So those are really the different things that affected the volume.

Praneeth Satish - Wells Fargo

Okay. And my next question, I mean, I don’t want to beat the dead horse here, but you mentioned that the 2014 guidance does not assume that the Silver Oak II plant reach its capacity but is that assumed in the 2015 guidance?

Trey Karlovich

Yes. So our 2015 guidance assumes that just the plant that we have capacity for today are essentially full. So the 2 Bcf processing capacity would be for at the end of 2015, might caveat that a little bit to but the Edward plan obviously will come on towards the end of this year late third quarter, early fourth quarter and there will be a ramp of volumes through that system, again West Texas a little bit difference than what we see in South Texas.

Praneeth Satish - Wells Fargo

Okay. And I just wanted to get an update on the preferred units, should we assume that the partnership elects to convert those in ’14 or is that a 2015 event?

Trey Karlovich

Those units will be converted when we have the distribution coverage to manage the conversion and still stay over one times covered.

Praneeth Satish - Wells Fargo

Great. And just last question for me, I was just hoping you could provide a little bit more granularity in terms of the NGL price assumption for ’14 and ’15, specifically just what you are assuming for each of the NGL components?

Trey Karlovich

Praneeth, we don’t typically do that. I think if you go back and you look at the average price that we have seen again assume at the interjection I think you will see that very closed to the curve, Mont Belvieu, primarily.

Praneeth Satish - Wells Fargo

Okay. Thank you.

Gene Dubay

Thanks.

Operator

Our next question comes from Michael Gaiden with Robert W Baird. Please proceed.

Michael Gaiden - Robert W Baird

Good morning. I was hoping you could offer a little bit more color around the commercial environment in South Texas? And specifically could you talk about how that environment has progressed in the back half of ’13 and into 2014?

Gene Dubay

This is Gene Dubay. The commercial environment in South Texas, I think, it, there will be build out and processing capacity has jumped ahead of the production volumes. We see those production volumes changing but at least at this point -- increasing catching up with the processing capacity, but at least at this point in time, there is more capacity available to the producers. So there is an excess of capacity on the system today.

Michael Gaiden - Robert W Baird

Great. Thank you. And then if I could ask, we have talked a bit about our leverage in EBITDA? Could we also please talk about DCF coverage and could you offer any expectations for DCF coverage in the first quarter of ’14 or for the full year?

Trey Karlovich

Our target is to be 1.1 times covered and our guidance expect that we build that coverage back up, again that’s on an annualized basis, so we may have periods where we are better than that periods where we are under that but the guidance that we issue today has us building that coverage backup to our target level.

Michael Gaiden - Robert W Baird

And that’s 1.1 times for the full year or to exit the year?

Trey Karlovich

Yes. That’s on an annualized basis.

Michael Gaiden - Robert W Baird

Okay. Thank you very much. And just a few other items is about financing, you mentioned funding the growth CapEx with the mix of debt and equity? Could you please remind us or update us on the partnerships current ATM authorization and if you think that ATM facility will be fully capable of satisfying your equity needs for the year.

Trey Karlovich

Obviously, us and others in the industry have used ATMs over the past couple of years, it’s a great tool. It’s something that we would obviously utilize going forward, but I can’t speak to the size or when or what -- how we would use the ATM plan.

I think you have seen ATM plans used for very significant capital raises, as well as just dribbling in a little bit of activity over time. Again, it’s going to be based on a time of when we would spend our capital, that’s the benefit of the ATM as I am able to match up the capital raising with the capital expenditure. But I mean, I see that again as a useful tool and something that we will continue to use going forward.

Michael Gaiden - Robert W Baird

All right. Thank you. Is it to fair to say that’s the partnership’s preferred tool to raise 2014 equity?

Trey Karlovich

Yes, it’s a great tool to have.

Michael Gaiden - Robert W Baird

Great. Thank you. That’s it for me.

Operator

Our next question comes from Helen Ryoo with Barclays. Please proceed.

Helen Ryoo - Barclays

Thank you. The first question on your West Oklahoma system you talked about the non-renewal of low margin commercial agreement, is that contract being replaced with a more favorable contract, is that going from keep-whole to POP?

Gene Dubay

It’s a fixed fee contract that is, I will tell you, probably the lowest margin contract we have across may be all of our systems. We don’t appreciably get anything more than a processing fee on these volumes. And what has happened if you recall looking at a little bit of the history of Western Oklahoma is that we had more volumes than we had processing capacity, and we were offloading volumes to third parties and bypassing volumes around our facilities directly into residue outlets.

So the small fee we got on this particular volume of gas is going away which helps us in not having to offload the third parties which basically was an offset to what we’re receiving. We have increased the capacity or capabilities of our processing plants to be able to handle incremental volumes to be processed. We have an aggressive first half of the year and really the full year drilling plant from our producer, customers out in the Western Oklahoma area. So with the reduction in volume, it basically takes offloads and bypasses away, plus with the incremental drilling we have on our system that backfills at higher margin economics for us with new gas being added to our system and it fills that almost 500 million a day of processing capacity that we have.

So honestly it’s a -- obviously we hate to give up any volumes, but it is our lowest margin processing volumes and we feel like we are going to more than replace it in a short period of timeframe which will give us economic benefit.

Helen Ryoo - Barclays

Okay. So it’s a low margin fee business and it’s going to be replaced with commodity exposed margins?

Gene Dubay

Well, it’s going to be mainly fill back in with a POP with a fee, it has both components and I will say that the fee that we will receive on what’s going to fill it in is higher than the total that we were receiving on the contract for this gas. And on top of that, we get the POP piece.

Helen Ryoo - Barclays

Okay, that’s helpful. And your keep-whole contracts, are they pretty all going away, could you remind us the status of the keep-whole contract?

Gene Dubay

Helen, the largest keep-whole contract goes away in June of this year. So beginning June 1, that contract will convert 2% of proceeds. Our keep-whole exposure at that point in time will be minimum a 1% or 2% of our overall gross margins.

Helen Ryoo - Barclays

Okay, great. And then the other question was the impairment charge on the gas treating business, was that an asset you guys acquired? And if so, what was that, when was that, could you provide a little bit more color?

Trey Karlovich

That was part of the Cardinal acquisition in 2012 and that was a side business that we acquired. That at the time of the acquisition we saw it as an opportunity to devote some capital to get into some different operating areas within the Eagle Ford at the time we did that acquisition. Since we have done that acquisition and since we have done the TEAK acquisition, we found that it’s a better use of our capital to invest in our gathering and processing activities rather than the contract leasing business.

So it’s just an area where we are not -- we are still in that business and we still maintain the relationships we have and the leases we have and look for some opportunities there, but we don’t expect to invest the amount of capital that we had originally anticipated which that impacted the overall valuation of that line of business.

Helen Ryoo - Barclays

Got it. And then just finally and this may be just a follow-up of the previous question, but I think in South Texas, did you say that the 50,000 to 65,000 barrels per day of new volume that will connect to your Silver Oak I plant that you need to lay out additional pipe to get that? And if that’s the case, how much capital do you have to spend?

Trey Karlovich

The 50 million to 60 million a day we will have to lay out little bit of pipe, that capital was included in our overall CapEx budget and we haven’t really carved it out by area. I will say it’s not significant, it’s not like building a new plant. This is again just be an extension of the high pressure gathering system and putting in a central delivery point.

Helen Ryoo - Barclays

Okay, great. Thank you very much.

Operator

We have no further time for questions. I would now like to turn the call over to CEO, Gene Dubay for closing remarks. Please proceed.

Gene Dubay

Ladies and gentlemen, thank you for being with us today. We, the management team, are not pleased that we didn’t meet the expectations that the investment community that actually we helped set. However, we are very pleased with the performance of the assets in 2013 and we are pleased with the footprint that we have and the assets that we have in the system. We think we have a great system, we think we are going to do well in 2014 and we look forward to working with you. Thank you very much.

Operator

This concludes today’s conference. You may now disconnect. Have a very great day.

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