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Kinder Morgan Energy Partners, L.P. (KMP)

Q2 2010 Earnings Call Transcript

July 21, 2010 4:30 pm ET

Executives

Rich Kinder – CEO

Park Shaper – President

Kim Dang – VP and CFO

Tim Bradley – President, CO2

Analysts

Steve Maresca – Morgan Stanley

Jeremy Tonet – UBS

Ted Durbin – Goldman Sachs

Emily Wang – Raymond James

Brian Zarahn – Barclays Capital

Noah Lerner – Hertz Capital

John Edwards – Morgan Keegan

Operator

Welcome and I would like to thank you all for holding today’s quarterly earnings conference call. (Operator instructions) Now, I would like to turn it over to Rich Kinder, the Chairman and CEO of Kinder Morgan. Sir you may begin.

Rich Kinder

Thank you, Ed, and welcome to our analyst call. Let me start by saying that as usual we’ll be making statements within the meaning of Securities Act of 1933 and the Securities Exchange Act of 1934. Also as usual, I’ll give an overview of the quarter, then Park Shaper, our President will go through the financial information in very detail and then we’ll take any and all questions that you might have.

I guess in a general way there are three main things to mention at the start of this call. First, we raised the quarterly distribution to $1.09, which is $4.36 annualized. I believe that’s about the 37th time since we took over Kinder Morgan in 1997 that we’ve raised the quarterly distribution.

Secondly, we expect to meet our budget target of $4.40 of distributions per unit for the four quarters of 2010 that’s just a little short of 5% above the distributions we’ve made for the four quarters of 2009.

And finally and maybe most importantly, when you look at the fundamentals of Kinder Morgan, all five of our business segments were above 2009 in terms of earnings before DD&A that bodes for the second quarter and year-to-date. In fact all had double-digit increases year-to-date and all but the Canadian operations had double-digit increases for the second quarter. And we expect all five of our business segments to beat their 2009 results for the full-year 2010.

With that, let me look at the individual segments and take you through at a little more detail of what’s going on. Starting with our Products Pipelines segment, our refined products volumes adjusted for the January 1, 2010 mandated ethanol blended change in California, which is you probably know that the mandated ethanol percentage from 7 – from 5.7% to 10% and if you adjust for that, I think that’s a right way to look at the volumes.

Our refined products volumes in the quarter were actually up five-tenths of a percent versus the second quarter of 2009. Now that’s the first year-over-year quarterly increase since the third quarter of 2007. Our diesel volumes were particularly strong. They were up almost 5% and especially strong in the State of California.

Now whether all of this is a trend I’m sure and we’re taking a cautious outlook toward this volume growth but I will say that it looks like we will turnout positive in July also on a month-to-month comparison.

Our ethanol volumes in this segment were also strong. They were up 38% over the second quarter of 2009 and that’s largely a result of the same California mandate increase that I appropriately referred to you earlier. If you look at our Natural Gas Pipelines, they had a good quarter driven by several things. First of all, we had two pipelines that are now fully in service that came on in the second quarter of last year mainly our Midcontinent Express line and Kinder Morgan Louisiana. We also had contributions from the treating assets that we acquired from Crosstex back in the fall of 2009. Our Texas Intrastates performed well, their volumes were actually up about 3% for the quarter. And Rockies Express was also above its 2009 results. We also got modest help from our new KinderHawk joint venture that we closed in late May this year.

Turning to the CO2 segment, they had the significant growth over 2009 that was driven by higher oil and NGL prices on the unhedged volumes and by a 5% increase in NGL volumes versus 2009 and a slight increase in CO2 delivery volumes versus the second quarter of 2009. The oil production at SACROC declined for the second quarter versus 2009 second quarter but it was about flat to our plan year-to-date. The Yates oil volume decreased more than we expected in the second quarter and we’re working on strategies to improve that. It appears that we’ve had a pending at the oil column there so we’re doing some things to counter that, we’ll be deepening some wells and deeper into the oil column hope to get better drainage from gas cap. We’re drilling some infield wells elsewhere on the facility and we’re using surfactants to try to float oil up from below, but that is a negative that volumes at Yates have turned down somewhat although we expect to be able to correct this.

As we’re looking for the full year at our CO2 operations, we expect to be on plan except for the impact of prices. I’ll put another way we’re offsetting any downturn in crude oil volumes with reduced expenses in other enhancements that go through the bottom line. And right now to remind you, we have a sensitivity of little less than $6 million per$1 change in the WTI price and that WTI price is between $5.50 to $6 below of what we had expected it to be at the time we gave our budget which was simply the forward curve at that time. So it’s an issue but certainly not an (inaudible) issue for us and as I said we still expect to be able to meet our full distributions.

In our Terminals segment, we’d number of factors contributed to what was a good quarter there. First of all, we had an increased capacity and throughput on our Houston ship channel facilities as we’ve got more capacities online. We had higher steel volumes across our system and I think these numbers are pretty interesting. If you compare to a year ago, we had an increase in revenue from our steel throughput of about $24 million, which is significant. Another way of looking at is just to look at the steel-making capacity utilization across the country. It’s running about 74% right now. That contrast with about 45% in the second quarter a year ago, it’s still not back to the high modern mark in the 2002 to 2008 time period where the capacity utilization got as high as between 82 and 87%. Now that said it certainly a nice increase since the second quarter a year ago.

We’ve also been able to increase our bulk exports particularly of coal from our Gulf Coast and West Coast terminals. We’ve got benefits from the acquisition of US Development and Slay Terminals which we made in the first quarter of 2010. Overall, on the bulk side, our total bulk tonnage was up by 27% versus the second quarter a year ago. The gasoline imports and blending volumes over on the liquid side were down somewhat from the second quarter last year although had been they have in particular strong impact on the revenue line because most of our liquids revenue is results – results from long-term contracts on the storage and handling capacity that we have.

In the ethanol handling side, in this segment we were up 83% to 14.6 million barrels handled for the quarter. If you combine our Terminals and our Products Pipelines business segments, we think we’re handling about – we expect to handle about – we did handle about 45 million barrels of ethanol due the first two quarters of this year and we believe that’s about one out of every three barrels of ethanol used in the United States.

On our liquids terminals side, in terms of capacity we increased by about 6% in the second quarter of 2009 compared to where we were last year and we’re now over 58 million barrels of capacity.

Turning to Kinder Morgan Canada, we had growth there. It was pretty slight for the second quarter, more significant year-to-date. It’s been driven during all those periods primarily by increased throughput on our Trans Mountain system as a result of strong ship traffic across our facilities in the Port of Vancouver and we’ve had some modest impact in a positive sense from the strengthening of the Canadian dollar. So that’s sort of the segment by segment review.

Let me talk about a number of other developments that occurred in the second quarter. First of all, we continue to increase assets and our activities in the expanding natural gas shale plays across America. And we’re really doing that in three or four ways. First, as I mentioned earlier, we closed on our $900 million plus transaction acquiring 50% of PetroHawk’s gathering and treating assets in the Haynesville Shale play. Now that entity is now remain KinderHawk Field Services. We expect to have throughput on that system over 800 million at cubic feet a day by year-end 2010. And ultimately, we expect to have a capacity of about 2 billion cubic feet per day on that system.

Secondly, we entered into our first major contract in the Eagle Ford Shale in South Texas. This transaction will support our pipeline and processing at joint venture Copano. The contract that we signed caused for up to 200 million cubic feet a day of throughput on our 85 miles system and we expect to bring that system in service in the summer of 2011. The combined investment of our sales and our partners about $137 million and we have additional capacity beyond this initial contract and we expect to sign additional contracts on that capacity in the near future.

We also had a successful non-binding open season on our Marcellus NGL line just recently during the second quarter and while we negotiate binding throughput agreements, we’re now starting our environmental permitting and right-of-way work for the roughly 230 miles of new pipe that will allow us to move NGLs from the Marcellus Shale play up to our Cochin facilities in Michigan and on from there to fractionation plants petroleum facilities near Sarnia, Ontario.

Our final or another – the play that we have in the Shale is our joint venture line, our Fayetteville Express Pipeline, which will move up to 2 Bcf a day of production from the Fayetteville Shale in Northwestern Arkansas that’s on schedule and below budget. We expect to be in-service by year-end 2010.

In our Products Pipelines segment, we had continued the significant expansions of our large refined products terminal at Carson California in the Los Angeles area. We just completed during this quarter, a $69 million expansion that added six tanks or about 480,000 barrels a day of capacity there. All of those were under long-term contracts and we are now planning to invest another $85 million to build another seven tanks which will have an additional 560,000 barrels of capacity and six of those seven tanks are already under long-term lease and expect them to come on service in 2013 and 2014.

Now these projects are gone through together with numerous other ones that we mentioned in our release. I think it demonstrates wide range of opportunities that we have to expand and extend what we believe is a very broad and nice footprint of midstream assets at Kinder Morgan.

So overall, I think we’re seeing just lots of opportunities to grow our business. I think it seems to be increasing almost on a quarter-by-quarter basis.

Finally, with regard to our asset PP Products Pipelines system, we paid $206 million to eleven shippers to settle various rate challenges at FERC settlement with date back to 1992. We previously talked about this in prior calls, but the actual settlement was last by the commission and we now had paid those dollars out to 11 different shippers.

Due to the support of our general partner, the distribution that KMP’s L.P. was not impacted by the settlement and in fact the reduction that we’re taking in incentive distribution at the general partner level to an Interim Capital Transaction this quarter is expected to allow KMP to resolve its remaining FERC issues and all its CPUC rate cases without impacting future distributions to its limited partners.

And with that, I’ll turn it over to Park.

Park Shaper

All right. Thank you, Rich. As always I’ll be talking from the numbers sheet there in the back of the press release. I hopefully everyone has access to that. The first financial page that you get to is the GAAP income statement, if you look just above the bar protection which is the segment earnings before DD&A you’ll see our declared distribution per unit that’s the $1.09 that Rich in the press release.

So we will be distributing at $1.09, now that’s up about 4% from the $1.05 from a year ago. It’s up from the $1.07 that we distributed for the first quarter. And so the three, six months was well distributed $2.15 from $2.10 in 2009. And the easiest way to look at how we generate cash to support that is I actually turned to the second page. And there you look above the notes; it’s the second line above the notes and it’s all normally work up the page here. But DCF per unit before certain items, you’ll see $1.06 for the quarter from up that $0.99 a year ago. So that’s up about 7%, $2.24 for the six months, up from $1.95. So that’s about 15% for the first half of the year.

Now clearly the $1.06 is a little bit less than the $1.09 that we’re distributing and we are a little bit short on coverage at about $10 million for the quarter. But if you look at the six months, the – I’m sorry the $2.24 exceed the $2.16 that we’re distributing. And so for year-to-date, we have excess coverage of about $24 million.

Now, couple of things to note here. Rich mentioned the Interim Capital Transaction that was taken as part of the settlement payment for the majority of the plant and the FERC rate cases regarding at SFPP. And then, we chose an incremental amount so that we’re fully covered hopefully for any remaining settlement in the FERC case and the CPUC case.

The $1.06 that I’m referring to actually treats Interim Capital Transaction and why it is not happened? And the reason is we’re trying to show you what we’re generating on a recurring basis. If we’d shown you the numbers, including the Interim Capital Transaction, the distribution of the general partner would be lower and this $1.06 would be significantly higher. We don’t think that what we should focus on because again it’s a one-time item. We’re not saying that we’re generating that on a recurring basis. So we have reflected this as if the full payment that the general partner has been made and that’s how you get to the $1.06.

As we move up the page, we’ll show you the exact amount that was in essence added back and treated like it had gone with the general partner and even though it has in order to show that. But one other point before I do that while we have adjusted and we’re showing this number the $1.06 of the $2.24 as if the Interim Capital Transaction has not happened but we have included in there the general partner gives back which is associated with the KinderHawk transaction. So it's part of that the general partner agreed not to take any incentive distribution related to equity issue to finance the KinderHawk transaction and sell after 2011. That impact in the second quarter, which is the first quarter that had with the impact was about $5.3 million. And so an additional adjustment to the general partner distribution in the quarter that the general partner has foregone about $5.3 million again associated with the KinderHawk transaction.

So with that let’s talk about the distributable cash flow per unit and what’s generating in that. Immediately above that EPS per unit you see the net income per unit $0.35 up from $0.34 a year ago and $0.78 up from $0.55 a year ago for the year-to-date. Now again, the 2010 numbers there are treated as if the Interim Capital Transaction did not happen and again I’ll show you that number as we move up.

On a DCF report certain items $322 million up from $274 million that’s a $48 million increase at almost 18% growth in distributable cash flow. For the six months, $676 million up from $534 million, a $142 million or almost 27% growth in distributable cash flow, so again a very nice growth being generated by the assets.

So once again, I want to point out on the Interim Capital Transaction, if we hadn’t made the adjustment that we made these numbers would be bigger. We’re not showing these bigger numbers as we don’t think that those represent what we generate – well that it’ll represent what we represent on a recurring basis. The adjustment that we’ve made has reduced distributable cash flow and has reduced distributable cash flow per unit and has reduced earnings per unit.

Sustaining CapEx about $48 million in the quarter, up from about 41 in the second quarter of 2009, little over $80 billion for the first half, up from about 71 in the first half of 2009. Our current expectation is that we’ll have about $197 million of sustaining capital now for the year. That’s a little bit under our budget of about $207 million but that’s the forecast currently.

The two lines above that Express & Endeavor contribution and book cash taxes net. Essentially what we’re doing there is we’re backing out equity and earnings with respect to equity, with respect to Express & Endeavor that’s including the end-cash distributions from those assets. And in similar we were backing out book taxes putting in cash taxes and the important thing I think to recognize here is that we’re on budget in terms of cash distribution from these assets and in terms about cash taxes. And so on budget there, expect to be on budget for the year.

DD&A, you’ll see above that it is up for the year, those are present and then six months. It is below what we would expect based upon our budget and that’s due to the incremental reserves at CO2. We increased our reserves again at the end of the second quarter just like we did at the end of the first quarter. At the second quarter, it was related to additional patterns in a new area of SACROC that we are flooding and in also to an increase in oil prices. As of the end of 2009, the accounting rules changed and we’re now using a rolling 12-month average of prior year 12-month oil price and so that average oil price went up as we went from the first quarter to the end of the second quarter and that led to a small increase in reserves.

Limited Partners’ net income before certain items is above that. You’ll see up about 14% for the quarter and up 55% for the year. And then directly above that is the line I’ve been referring to called general partners Interim Capital Transaction impact. The number that shows up there is $167 million with true impact to the general partner in terms of cash flow it’s a $170 million. It shows up as a 166 or 167 here because of two reasons. One, some of it shows up in minority interest which actually then net income above this line. And two, some of it shows up as earnings rather than cash just because that is the income statement.

But again the true impact, the true reduction and distribution to the general partner in the quarter is $170 million. Now what we’re doing here is we are reducing income by that on this page to assets it’s about $170 million that’s really been distributed. And again, we’re doing that so that you can see what we look like on a recurring basis as opposed to get distorted numbers from the Interim Capital Transaction.

The line above that shows what actually is going to the general partner in terms of incentive distribution this quarter, $93 million. And it’s about $343 million year-to-date before the first half. And then above that we have net income attributable to KMP before certain items.

Now as always we think the most meaning numbers are distributable cash flow and distributable cash flows per unit and we would certainly focus on those when you want to see how we’re performing.

Now with that I’ll jump to the top and talk about the segments a little more. Rich already touched on most of it. Products Pipelines, up about $23 million for the quarter up about $41 million year-to-date relative to 2009. It is right on in its budget and we expect it to be on its budget for the year. And we’re getting strong performance at West Coast Terminals, Central Florida, Transmix, Southeast Terminals. So again the Product Pipelines are performing well. Expect them to be on their budget for the year.

Natural Gas Pipelines, up about $20 million for the quarter, up almost $38 million for the first half relative to 2009. They are also above their budget with the year. Now that’s being driven in part by the KinderHawk transaction although really KinderHawk is not – has not contributed a whole lot to-date. But if you look forward for the year, it will make contribution – with a bigger contribution in the second half. And then internal performance it’s another asset. The interest bases were above their budget in the first half.

Rockies Express reflecting back, remembering back to the first quarter conference call, we talked about the $15 million hit that Rockies Express it in the first quarter. Rockies Express has done a very good in recovering from that and was above the budget and in the second quarter and while we don’t expect REX to be back on its budget for the full year, it is getting very close.

Kind of the treating assets and their components for us are all adding good first half and expected to have a strong full year. And for the Natural Gas Pipelines, we’ll be above their budget for the year, again part of that is driven by the acquisition of KinderHawk and then part of it is strong performance of other asset offsetting the $15 million hit that we took in the first quarter at Rockies Express.

CO2, up $39 million in the first quarter, up $119 million in the first half, essentially consistent with budget in the first half. So we expected this kind of performance, prices are stronger in the first half of 2010 than they were in the first half of 2009. As Rich mentioned, SACROC is just slightly below plan in terms of its volumes. Our NGLs are essentially on plan. Our CO2 volumes are little bit above plan. Yates volumes are below plan. Now as Rich mentioned, firmly it was gain that we’re going to address that.

In addition to that, prices especially for the second half of the year are below our budget. You may recall that in the press release our budget called for average across the year above $84 a barrel is actually just a little bit under that. The current prices are under that and while we had most of our current production hedged. We still do have that sensitivity a little less than $6 million a barrel sort of full year to $6 million per dollar change per barrel, sensitivity to that commodity price. That means as we look at the current oil prices, we think CO2 will be a little bit under its budget for the full year.

On the Terminals side, up almost $17 million in the quarter, up about $33 million year-to-date relative to 2009. Terminals is just flatly below its plan. Its revenues are up. Its expenses are also up part of that, revenues and expenses are a function of acquisition. And then part of it is a couple of smaller astride services and other maintenance items that have come through in the first half of this year and probably will continue in the second half of the year. And so Terminals right now when we look at its forecast, just slightly under its budget but well within striking distance hopefully it can find some good opportunity even come in above its budget for the year.

Kinder Morgan Canada, a little bit above last year about $11.5 million above for the first half. It is on its budget and we expect it to be on its budget or just a slight bit above for the year. Total segment earnings before DD&A, $811 million up $100 million in the quarter, $1.64 billion, up $242 million in the first half, so again very strong growth out of these segments relative to last year.

Now our total budget in terms of segment earnings before DD&A for the year is $3.358 billion. We actually expect it will come in just a hair under that, maybe a $20 million or so under it. All driven with CO2 and that’s essentially an option oil prices. I mean again that very small variance relative to north of $3.3 billion of total distributable cash flow before DD&A, hopefully will be able to earn some of that back. But as we look at it right now, we expect segment earnings DD&A to be just slightly under budget.

With that, I’ll drop down past the DD&A and past the segment earnings contribution after DD&A and you’ll see G&A expenses for the quarter about $93 million that’s up from about $74 million in the first half a year ago and for the six months $192 million, up from about $158 million. These numbers are all sort of slightly ahead of our budget. We did expect that there would be an increase G&A this year. Now this has again, for the first half are about $12 million ahead of our budget, largely or unfavorable to our budget higher costs than our budget.

Largely a result of insurance costs, a lot of which we’ve talked about in the first quarter and then some legal costs and some benefit costs. Now some of that is going to be timing and we expect it come back to us throughout the course of 2010.

Interest, you’ll see a $124 million compared to $101 million a year ago and $239 million compared to $205 million a year ago. It’s up largely because our debt balance is up. Our overall interest rates are down just slightly. So it’s slightly offsetting the impact of the higher balance.

And then we get into the certain items, looking at the certain items in this quarter, the allocated non-cash long-term compensation and I’ll say this again we have to represent this on KMP income statement. This is compensation that KMP will never have to pay for, doesn’t have the issue and equity for, doesn’t pay any cash for, will never be responsible for, but we have to show on its income statement.

Now acquisition costs are just associated with deals that we’ve done. Mark-to-market and ineffectiveness of certain hedges, you’ll see that’s a positive $7.8 million. This is timing. We’ve said this when negative amount show up there and these dollar amounts will move in and up. They ultimately will all cancel out. The important thing to realize is that the ultimate net effect, the ultimate economic impact shows up in the segment at the time that the transaction occurs. That’s the way it’s always been reported that’s the way it’s still reported, but again on accounting basis, well in some mark-to-market through the income statement prior to the periods when these transactions actually occur. But when the transactions occur, the net impact shows up in the segment.

And then you’ll see a bigger item, $15.5 million negative related environmental expense and loss on asset retirement. Now this is a formal – former terminal property that we have in Southern California where we have demolished the tanks and that we are remediating the property. We will realign and sales proceed more than what we’re spending in demolition costs and remediation costs and it will even exceed the book value of the tanks that we’re writing on, of course that write-offs a book value with non-cash. But we are going to sell this property which they already have agreement to sell it. We just need to finish up the remediation. Well that means is what you’re going to see in future periods, our positive amount come through down here that more than offset this $15.5 million loss.

Now really and these are the expenses that we need to go ahead and run through for accounting purposes. But for cash purposes, ultimately we’re going to end up ahead on this item.

And in fire insurance reimbursement, again this is an insurance reimbursement we laid to prior events. If we write-off assets that are associated with an incident then we run that through certain items down here and as we’ve been recover from insurance company that we also run the positive through the camp here. So that does it really the certain items and most of this was then is just timing, which is pretty interested with what normally shows up down there.

I’ll put back a page just briefly because I want to show you that our net income per unit on the phase of the income statement which is a couple of lines above the required distribution per unit. Now taking (inaudible) of this $0.88 now the reason that is so much bigger is because that includes the impact of the Interim Capital Transaction.

As I mentioned, we had to pull that out on the second page to try to give you a more realistic perspective on what our operations are generating. If we had left it in the numbers on that second page would have been much bigger and that’s what you’re seeing here. $0.88 in earnings per unit for the quarter because the general partners distribution has been reduced. So yeah, I don’t think that gives you the best sense of what’s going with this business.

With that I’ll go for the balance sheet, which is the last financial page of the press release. And just walking down that, cash and cash equivalents essentially unchanged and other current assets essentially unchanged. Property, plant, and equipment goes up as a function of acquisition to CapEx which reduced by depreciation. Now I think that went up significantly over $1 billion KinderHawk has the 50% of that asset that we purchased from Petrohawk is the biggest piece of that. We also had some contributions to Rockies Express and to MEP since the beginning of the year.

Deferred charges and other assets up a little over $400 million, most of that was mark-to-market of hedges flowing through. So total assets about $21.8 billion up about $1.6 billion from where we were at the beginning of the year.

On the liability side, notes payable and current maturities of long-term debt, I’ll talk about debt in total in a minute, but as you know what the maturities are, we do have a $250 million maturity in November of this year and $750 million maturity in March of 2011 and the remainder of this amount is what we have outstanding on credit facilities or in commercial paper.

Other current liabilities is down a little bit most of that is accounts payable and the mark-to-market of the hedges. Now, long-term debt, I’ll talk about in a moment. Value of interest rate swaps that just fluctuates with the forward curve for interest rates; other is down about $365 million, vast majority of that is the mark-to-market on the hedges; accumulated other comprehensive loss, again the mark-to-market on the hedges there. Other partners’ capital is also about $155 million from the beginning of the year, it’s up about $315 million from the end of the first quarter and largely as a function of the equity that we issued in the quarter. And I’ll talk about that when we reconcile the debt.

And so that’s take you down to total debt of about $11.7 billion compared to at the end of the year, end of 2009 were about $10.4 billion. So for the six months we’re up about $1.23 billion and I’ll go through that in a minute. For the quarter, from the end of the first quarter to the end of the second quarter, we were up about $826 million. Again I’ll reconcile over those for you in a minute.

First I want to talk about debt-to-EBITDA we’re at 3.9 times at the end of the second quarter that’s from 3.8 times at the end of the year. So the beginning of this year and also we’re at about 3.8 times at the end of the first quarter. Now if you remember back to our budget, we budgeted for this number to go down throughout the year and in truth it is. But it is being swamp or it’s actually distorted by the Petrohawk transaction. And so if you think about the Petrohawk transaction closed in May, but we issued all of the dollars that we pay out the dollars for that transaction at that point in time. So all of the debt associated with that transaction shows up here on the balance sheet but we got less than half of the quarter even down from that transaction in this quarter. And really what we’re looking at here is last 12 months of EBITDA to get a very small fraction of the year that shows up for that. So that’s going to distort this calculation and really it’s going distort it all this year and it will distort it all the way until the year from now, until the second quarter of 2011 which will be the first quarter in which we have the full year of EBITDA from the Petrohawk transaction in this calculation.

So it’s just real simply if you back out the impact of the Petrohawk transaction, this way show debt-to-EBITDA would actually be at 3.7 times. And so we be down from where we were at the beginning of the year and we would be down from where we were at the end of the first quarter, exactly as we expected.

And so let’s reconcile the debt were equated of 7 in the quarter, it went up. Debt increased by $826 million and in first half it increased by about $1.26 billion. CapEx in the quarter was about 204 million, in the first half it is about $368 million. Acquisitions in the quarter, up $922 million that potentially the Petrohawk transaction, in the first half about $1.23 billion and so that’s for Petrohawk, KinderHawk transactions include plus the US Development transaction, the Slay Terminals transaction and the Mission Valley Terminal that we purchased, for the year about 1.23 billion in total acquisition.

Contributions to JV about 45 million in the quarter, 580 million in the first half. And then we have the cash that we now for the (inaudible) and 250 million of the quarter and 206 million in the first half. What that means is in the quarter we invested just a little bit less than 1.4 billion and for the first half, we’ve invested a little bit less than $2 billion. Debt has gone up that much. So, where did we generate cash beyond that? Equity issuance in the quarter about 439 million and in the first half about, 522 million. Now that equity issuance (inaudible) is on a net basis, so its net cost of the issuing any discounts that is taken on it. And also does not include a $75 million private placement of KMP unit that we did at the end of the June but that didn’t close until July 2. So, that cash is already coming and that transaction is closed but because these financial statements are as of June 30, it doesn’t show up here and so in previous as of July 2, that was $75 million lower than where it was but again we’re not including that and so the equity issuance of 439 million in the second again does not include that $75 million incremental we have done and closed on July 2.

Additionally, we retain cash related to KMR distribution of about $93 million in the quarter, about 183 million in the first half. That number continues to grow. It’ll be $96.5 million related to the distribution that will be paid in August, so rapidly approaching a $100 million a quarter that we effectively issued through the KMR distribution. And then there are working capital and other items of about $19 million both of the quarter and the first half and those where the source of cash of about $19 million. And so again, if you net those sources of cash, you get the investments that we made in the quarter and the first half. It gets to increase in debt in the quarter of about $826 million and an increase in the first half about $1.26 billion.

Working capital and other items, again relatively small. Source of cash of about $19 million. There really are a number of things. They are all relatively small but they move in different directions and even move in different directions between the second quarter and the first half. None of them are significant and (inaudible) but again those items did provide a source of cash of about $19 million for the quarter and the first half.

And then on the CapEx, just a little bit detail although really got a lot of small projects that are adding to the total amount. In the products pipeline, in the second quarter, expansion CapEx was about $23 million and in the first half about $53 million. Our ongoing expansion in Parson, our translates relocation in St. Louis, some work on the coach in east end and then a variety of smaller projects make up those amount.

On the natural gas segment, about $17 million in the quarter, about $33 million in the first half, little bit remaining dollars in Kinder Morgan in Louisiana, continued expansion at Dayton storage facility and then again a number of smaller projects. We spent about $112 million in the second quarter, $182 million in the first half. Most of that has been spent in (inaudible) while that we also have an eastern shale pipeline which is under construction and the (inaudible) project which is underdevelopment.

On the tunnel side, about 50 million in the quarter, about 95 million year-to-date and again that’s a whole bunch of smaller projects and then spent a little bit in Kinder Morgan Canada, about 2 million in the quarter and about $5 million in the first half.

And those are the financials. I’ll hand it back to Rich.

Rich Kinder

Okay. Ed, we will take any questions. Open the line for questions. We’ll take any questions we might have.

Question-and-Answer Session

Operator

Thanks you, sir. (Operator instructions) And our first one comes from Steve Maresca from Morgan Stanley, your line is open.

Park Shaper

Hi, Steve. How are you doing?

Steve Maresca – Morgan Stanley

I have two questions. First is on a recurring business issue and then on one of your growth projects. Just to go a little bit deeper into detail on the CO2 issue at Yates. Is there something you can just enlighten us on in terms of timing? You mentioned obviously, Rich, about a thinning oil column and looking to deepening wells and get better drainage for the gas. What is the timing in getting this turnaround and I guess, what is also the certainty on getting it turned around at Yates?

Rich Kinder

Turn it over to Tim Brad. Tim?

Tim Bradley

With respect for the long-term depletion plan at Yates when we acquired the property from Marathon in 2003, we forecasted that the oil production rate will decline at a currently gradual rate from the then current rate of just under 20,000 barrels a day. Since that time in last several years, we’ve been able to harvest portions of the oil column intentionally training it and getting oil production rates up to 25, 26, 27,000 barrels a day over the last few years, so, the point that we are running into this juncture is that we extend the oil column to a point to where we don’t think it’s wise to continue to thin it. And the way that we would that would be to add compression and drill more wells. Looking into economics and the long-term depletion plant at Yates, we just don’t think that’s the right move. So now the right move is to balance the greater drainage down from the gas cap and the amount of withdrawals from the oil ramp. And we think that based on our simulation studies and the work that we have done about partners, the long-term equilibrium rate is closer to 23,000 barrels a day just based on those figures alone and that’s about what we’ve been running for the last two or three months, 23 five or there about.

There are other things we can do at Yates other than just upon this drainage mechanism though and Rich touched. In the Western side of the field, there’s an area of the reservoir that is not over lying by a gas camp. So there is an area of the field that we can drill into wells and have been doing so, for the past two years. Unfortunately, these wells are not big producers. Generally, they are producing 30 or so barrels a day per well but we have locations that could be over 100 of these locations that we could drill this year, next year and the year to come, so that’s one of the things we could do and other thing we can do is, we can deepen wells in a gas camp as a result of this spilling back into the oil column and that will help us produce the oil during the remains more efficiently than continuing to produce some out of these wells that are completed a little bit higher.

So, my expectation is that unless we can develop a surfactant opportunity which represents, preserves below the oil water contact, we are doing work on that this year to try and improve that technology. A gravity drainage process will probably result in a slowly declining rate at Yates over the long-term that could be offset by additional element from below oil water contact that surfactant but that’s yet to be proven and established.

Steve Maresca – Morgan Stanley

Okay, as a brief follow-up, is this level that you had this quarter something that you think is a base level for the remainder? Or like you said, is it something that will slowly decline from here?

Rich Kinder

Well long-term it will slowly decline but we are taking steps to offset it to try and keep it flat. What’s in our evergreen as a very flat production profile with the recent levels that you’ve seen?

Steve Maresca – Morgan Stanley

Moving to one of your projects, Rich, the KinderHawk that you closed, can you talk a little bit what the next steps are? You mentioned you expect to be at 800 million cubic feet a day by the end of the year and then 2 billion obviously capacity ultimately. What are the next steps to get the volume ramp-up in terms of operationally or money spent? If you could discuss that, that would be great.

Rich Kinder

Well the first thing is that we are working very hard to sign up additional third parties for throughput on the system and that’s running ahead of what we had in our acquisition assumptions and in fact the distributable cash flow from little proceeds from Kinder Hawk is running ahead of what we had in our acquisition assumptions for about 2010 and early look at volumes 2011 appears to be running ahead also. So, we’re – so far we’re having good luck in increasing these third party volumes and we expect to be able do even more about – they have several view, significant contract negotiations underway now but I think we’ll get to a point of assigning within the next – certainly in the coming quarter.

So, we think all of that looks good. The capital that is associated with that obviously will be in the budget. It looks pretty much on par with what we thought it would be when we do the acquisition. So, so far, so good I think is the answer. Longer-term obviously we are very interested in shale plays when we talked about the steps we have take in Eagle Ford. We met those very good and I think we’re going to have additional opportunities there also. So we’re very bullish on our activities in the shale plays.

Steve Maresca – Morgan Stanley

Okay. Well I’ll get back in the queue but thanks a lot for the color.

Rich Kinder

Thank you.

Operator

Next question will come from Jeremy Tonet from UBS. Your line is open.

Rich Kinder

Hi, Jeremy.

Jeremy Tonet – UBS

Hi, how are you?

Park Shaper

Fine.

Jeremy Tonet – UBS

Good. I was just hoping if you could give a little color on the natural gas pipeline segment looking at a quarter-on-quarter, looking at first quarter versus second quarter of this year and what were some of the drivers of the variance there?

Park Shaper

Right that seasonality is typical when we attract to interest rates. If you go back over the prior years, you’ll find a similar pattern.

Jeremy Tonet – UBS

And so it was strictly seasonality, because in 2009 I see the things to have but then looking back further I didn’t see quite as much of a seasonality though.

Park Shaper

But sometimes there are different things that happen in different quarters and actually I think if you go back to 2008, typically in the effect with interest rates we had some high items that were larger in the second quarter of that year and so there are other things that can shift those dynamics but that’s a typical pattern. It was consistent with our budget and our expectations.

Jeremy Tonet – UBS

Okay. Great. And looking at the Natural Gas Pipelines operations outside of the KinderHawk acquisition is everything reaching in line with the budget that you’re expected in isolation not looking at that acquisition?

Rich Kinder

Yeah. I think Park went through some of that and I did too. If you look at it, we expect to be above our plan for the year and the KinderHawk was certainly contributed to that full year basis. It’s not contributed very much yet because we only closed the thing the May 21st. But the other moving parts, again as Park said, we had this force measure event on Rockies Express the last part of Rock – the eastern most part of Rockies Express from late November until roughly the end of January. And in January that caused us our 50%, $15 million. So we’re overcoming that and as Park was saying right now, they caught back within Rockies Express about two-thirds of that shortfall already and we’re hopeful we’ll get the rest of it that’s not our numbers right now, but at anyway yeah we’re very satisfied, the rest of the – as we said year-to-date the Texas Intrastates were above plan. We expect for the whole year they’re probably about on plan but because some of this is O&M shifting from quarter-to-quarter. But overall, yeah Natural Gas Pipelines even if you strip out our KinderHawk looks good.

Park Shaper

And Jeremy, the only thing I’ll add to your question is actually there are some specific transactions that the Intrastates have been in the last couple of years which even that seasonality in truth, what they do is they add income in the first quarter and if we go back and with those of prior years I think you’ll see it, it may be bigger and again that’s just a function of different transactions that we entered into around that asset.

Jeremy Tonet – UBS

Okay. Great. Thank you very much for the color.

Rich Kinder

Okay.

Operator

Our next question comes from Ted Durbin from Goldman Sachs. Your line is open sir.

Park Shaper

Hey, Ted, how are you doing?

Ted Durbin – Goldman Sachs

Hi I’m fine thanks. Just wanted to get a little bit more detail on your Marcellus NGL pipeline both from the upstream and the downstream side, can I – how the interest is looking and if you can give us a first sense of what that the cost estimates are looking like where the tariff might come in?

Rich Kinder

Yeah. I know this is preliminary obviously. We have a non-binding open season. The response was good. Now I’ve been around this industry a long time and I’ve told you guys many times non-binding open seasons are just what the main implies and till you get contract signed the horse is not in the crowd. That said we had a good non-binding open season. We’re now working to finalize contracts with some of those shippers. In the mean time, we’re confident enough that we’re going to get a project off the ground that we had begun; our environmental permitting and preliminary right away work, while we are signing up the binding contracts. Again we think it’s a very good project and we think we’ll able to lose NGLs costs so high and that’s about 230 miles new construction into our coaching system. And if you look at the overall costs and these are still very rough numbers but it's been between 500 and $550 million about middle that range we think. The tariff we previously said I think is around $0.15 is that right?

Park Shaper

Yeah. But, I think the right way to think about it is, given the assets that we have already out in service which is primarily helping and we believe that we will be very competitive on tariff. We think that ultimately we’ll able to offer the most economic project with shippers.

Rich Kinder

Because we’re just building fewer miles than anybody else would because we have this coaching facilities. So we’re encouraged right now and we’re looking forward to be a successful project but again we’re certainly not going to build it till we have contracts. I think we’re also going to have the opportunity to which is one of the advantages of setup we have to move – we do have some customers who want to move NGLs from a midcontinent also up to NGL in Sarnia which would mean losing at across culture from west to east which we can certainly do also.

Ted Durbin – Goldman Sachs

Okay. Thanks. And if I can just ask one more project-related question. The Enbridge filed to build their Gateway pipeline to crude oil to West Coast of Canada in a just a month or two ago. Can you just discuss the relative merits of that proposal versus what you guys have proposed and how are you thinking about that it relates to long-term project but just kind of comparing contrast?

Rich Kinder

Well I don’t want to – what Enbridge does is their business and I can just tell you that we have a viable pipeline now that moves 300,000 barrels a day down from Alberta to Vancouver and about a third of that on into Washington state. A big junk of the rest of is now going across our docks at Port of Vancouver that we had been setting records for the amount of crude that’s moving on the ships. A lot of that’s going to California but some of it is now beginning to go to Asia and elsewhere. It’s a system that can be expanded incrementally, for example, the next expansion that we would have would be about 80,000 barrel expansion. So the advantage to our customers to our shippers is that they don’t have to sign up for 500,000 barrels a day or 400,000 barrels a day. They can sign up for quarter all 80,000 barrels a day of the next expansion. We have the capacity to eventually take that up to as – really as much as 700,000 barrels a day through a series of expansion. So what I like about our position is right now, we are the only conduit for Alberta crude oil to the Pacific coast. We’re built, we’re in-service. We have a long record of booming to prudent across there and it cost the dock and we can be expanded on a very incremental basis again depending on the needs and wants of our customers. So I think our position is very good. I don’t know if we also have the capability of building a pipeline off of our main system not across to northern British Columbia if the customers demanded that way, but we have real throughput from our customers of about 300,000 barrels a day and we think that will move up over the next few years.

Ted Durbin – Goldman Sachs

Okay. I appreciate the color. Thanks.

Rich Kinder

Sure.

Operator

Our next question comes from Emily Wang from Raymond James. Your line is ma’am.

Emily Wang – Raymond James

Great. Thank you. You guys mind talking a little bit more about the sequential growth in the product volumes? I know you guys mentioned that diesel was particularly strong in California. Can you talk a little bit more about gasoline? And if you think the volume this quarter was just abnormally higher or if that could kind of be a good base run rate going forward?

Rich Kinder

Well, I think we have – just to be clear we want be talking about sequential growth.

Park Shaper

We were comparing year-over-year.

Rich Kinder

Yes. We’re comparing year-over-year second quarter of 2010 to second quarter of 2009. So with regard to that growth, again as we’ve said this is on an overall refined products volume, this is the first time we’ve added year-over-year and partly well since back in the third quarter of 2007. What we found was the gasoline I think is a pretty good story. The diesel is a strong story and the only weakness that we have right now is the jet fuel. The jet fuel volumes are still down on a year-to-year comparison basis. And I think that result of frankly just fewer flights in and out at some of the airports that we serve particularly in California, Arizona, and Nevada. So I think it – I’m cautiously optimistic but I would say cautiously. When you are down in the trenches fighting these battles day after day and week after week, it sort of refreshing to look at the full quarter’s numbers and I guess if you look at our overall company position, the pause days would be the tremendous jump again on a year-on-year basis in bulk volumes across our terminals group, the tremendous increase in ethanol handling and then this modest increase in refined products volumes. So I guess you can take those and say gee it looks like the economy is coming out of the tailspin but I will be more cautious about. I mean I think it is but let’s wait another quarter or two and see. Yeah, we’re just looking where 21 days in the July. It looks like, overall put all the Products Pipelines together for July and again compared to July a year ago, we’re modestly up again this month. But one month doesn’t make the whole quarter, so we’ll have to see. And the reason that it’s important and again I think that was Park, the reason is it’s important to compare calendar quarter one year to calendar quarter the prior year is that there is tremendous differences and utilization based on the quarter of the year. So the only apt comparison I think is quarter-to-quarter not sequential quarter. Did that answer your question?

Emily Wang – Raymond James

Yeah. It did. And I was just wondering, are there any particular areas that you’re seeing the stronger volumes?

Rich Kinder

Well, we’re actually it sort of a mixed bag. For example, we actually saw a pretty nice pickup in Las Vegas for gasoline and on the other hand, jet fuel at McCarran was actually, which is the Las Vegas Airport, was down. In California, as I said that if you strip out for the ethanol blend increase, gasoline was up in California. And as I said, diesel was up very nicely in California. The Orlando Airport in Florida was for some reason, are up very nicely. So it just varies. Military volumes in California and Nevada were up nicely from a year ago. Arizona volumes were down somewhat from a year ago as were Southern California volumes. So it’s really a mixed bag, I think the only way you can get to it is just to look at the overall totals up for the whole system.

Emily Wang – Raymond James

Okay. Great, great. And shifting gears over to the Natural Gas side, the Eagle Ford is definitely a very competitive area right now and you guys are able to get the SM energy commitment. How are talks going with some other shippers on to signing commitments right now?

Rich Kinder

I think Don Martin who heads our group is in here Natural Gas, because we feel very good that we’re going to have significant additional capacity sign that’s behind. As we previously said, the joint venture between Kinder Morgan and Copano we agreed to build this gathering system together and then we agreed we would make 375 million cubic feet a day available on our South Texas long line system and they would make the same capacity available on their Houston Central processing facilities. So we’re offering one-stop shopping and the SM contract as we’ve said provides for up to 200 million a day it ramps up. We believe we’ll able to fill the rest of the capacity on that line. In addition, that’s the rich gas line and in addition that we are in serious discussion to increase pipeline capacity to build to serve some customers at the lean gas portion of the field. So we feel good about where we are to Eagle Ford it is competitive. The big advantage we have is that we have a huge infrastructure of Natural Gas coming out of there. We’re able to go in there and actually buy the gas and redeliver it or transported for our customers all the way in the KB or all the way the ship channel. So and we’re able with our joint venture with Copano with rich gas to actually process it on the way at Houston Central. So we also course out our moderate pipeline that moves Natural Gas the other way down in New Mexico. So we have a lot of outlets for this gas, I think that gives us competitive advantage but there are other midstream energy companies who have significant positions there too. So I’m pretty bullish about what we’re going to see in the Eagle Ford have already said to be very careful to make sure we get a long-term contract signed up.

Emily Wang – Raymond James

Okay. That’s great. Thank you so much.

Rich Kinder

You’re welcome.

Operator

Our next question comes from Brian Zarahn from Barclays. Your line is open sir.

Rich Kinder

Hi, Brian.

Brian Zarahn – Barclays Capital

Hi, Rich, how are you?

Rich Kinder

Okay.

Brian Zarahn – Barclays Capital

I just want to follow-up on the Marcellus lateral, what do you estimate the capacity will be on the pipe?

Rich Kinder

Well we think the capacity will start out in the probably in the 70-day range but we could expand it up to 200 a day. So that’s another advantage of it. We can start front away small and ramp up as the production and the need to move NGLs out when the Marcellus comes online.

Brian Zarahn – Barclays Capital

Okay. No please continue.

Rich Kinder

No. it’s a – so it’s a good project from a lot of standpoints. Again we – at the Intrastates be very good from our shipper customers and we just got to get that converted into contracts before we actually commit to build a lot.

Brian Zarahn – Barclays Capital

So, if you (inaudible) 70,000 barrels a day, what percentage of that capacity would need to be contracted out for you to proceed?

Rich Kinder

Well I’m not going to give in the details but certainly far or less and certainly it’s a very viable project. It’s far or less 70,000 barrels.

Brian Zarahn – Barclays Capital

Okay. And I guess given all of your new projects and recent acquisitions, can you give an update to your 2010 growth CapEx budget?

Kim Dang

It’s about 150 – 125 to $115 million incremental to the plan.

Park Shaper

The expansion CapEx is. And then of course, we had, I can’t remember how much in acquisition in there and we significantly exceeding that. Did we have couple of hundred on the budget? I would just want to thank that we’ve identified like USB and I think we have (inaudible).

Rich Kinder

We’re already at $1.25 billion.

Kim Dang

Right. And we have some incremental Petrohawk.

Park Shaper

Right.

Brian Zarahn – Barclays Capital

On the organic side, you’re saying about an incremental $150 million?

Kim Dang

Yeah. $125 million.

Brian Zarahn – Barclays Capital

Okay.

Park Shaper

It’d be around a little bit.

Brian Zarahn – Barclays Capital

Okay. Thank you.

Operator

Our next question comes from Noah Lerner from Hertz Capital. You’re line is open sir.

Noah Lerner – Hertz Capital

Thanks. Hi everybody how are you doing?

Rich Kinder

Fine.

Noah Lerner – Hertz Capital

Quick question, more of a big picture question. I was wondering if you could comment at all what type of impact you think some of these regulatory changes, whether it’s the additional disclosure for the volumes of the Intrastates and the FERC or from the derivative side from the Fin Reg that was just signed, what impact if any it might have on the business operations and the competitiveness or is it just going to be immaterial, it’s not really going to impact business as it’s been going on?

Rich Kinder

Well I think any time we have more regulations. It put somewhat of the burden on any company of the size. I think the regulatory changes as far as reporting intrastate volumes I don’t think we think is significant to a more reporting effort but really won’t have any impact on our business. The derivatives, I want to just see how to price that up. I think it’ll be a year or more before we actually get the Regs. To see what would happen and there is a possibility you could have some additional cost in terms of derivatives. I don’t think it will significantly affect the overall scheme of events, but we’ll have to wait and see when the regulations come out.

Noah Lerner – Hertz Capital

Okay. And then one other final question, if I may. There have been reports in some of the papers about some of your partners looking to bring the GP public. I just wonder if you could comment on that at all. To your knowledge, are they looking to divest 100% of their interest right away or is it just to get some liquidity for their funds for the right investors?

Rich Kinder

It’s not a publicly traded company and we don’t have any comment on that.

Noah Lerner – Hertz Capital

Okay. Thanks.

Rich Kinder

Yeah.

Operator

Our last question comes from John Edwards from Morgan Keegan. Your line is open, sir.

Rich Kinder

Hi, John, how are you doing?

John Edwards – Morgan Keegan

Pretty well. I have a few questions here. Just one more question on the liquids line out of the Marcellus with respect to timing. When do you think – assuming you get your – the rest of your negotiations out, when do you think that would start to go into service?

Rich Kinder

If we get the rest negotiations underway and that’s one reason we’re starting some of the environmental firming right now as we would expect to be third quarter 2012 is expected to be at service. And that’s assuming we get the contracts signed on volume basis, but that’s one of the reason we’re doing it now. You may remember from the days when we were building the REX pipeline, the infamous Indiana bats. There were only certain times of the year when you can go out and do certain because god knows that we don’t want to disturb these little bats that are nesting or whatever bats do. And so there are some windows of opportunity and that’s really what we’re doing on the environmental permitting side it’s getting taking advantage or – taking advantage of those windows of opportunity. But if all that works we can bring it online by like I say mid third quarter of 2012.

John Edwards – Morgan Keegan

And then – and so how long of a construction time would you envision?

Rich Kinder

Well the construction time would be basically one construction season because we were brought it in multiple spreads. But, as you know, the big thing in your job is permitting and getting it right away and permitting and getting all the – they’re geared up and ready to go with the construction as it won’t be the problem from a time standpoint.

John Edwards – Morgan Keegan

Okay, great. And then on your interest expense this quarter, just where are you relative to budget on that?

Rich Kinder

We’re actually – go ahead Park.

Park Shaper

Yes. You know what on-budget makes that to be slightly below budget for the year.

Rich Kinder

For the year, we expect to be a little bit below budget, few million dollars below budget.

John Edwards – Morgan Keegan

Okay. And then on any comment on the ratings downgrades on MEP and REX by some of the ratings agencies?

Rich Kinder

Yeah. I think you’re just – are your referring to S&P.

John Edwards – Morgan Keegan

Yeah.

Rich Kinder

And, I mean the important thing is that all of these are investment grade. They’re now stable. Maybe Kim you want to add anything to that?

Kim Dang

No. I think that’s – I mean that’s the main point. I think again John may look at the differential overall part of their analysis as well and I think to make it to circus in and judgment on wanted to look a long way out and looking to see more time fly out and that’s why we have all these pipelines built with fully subscribed our hunger for subscription from a customers.

Park Shaper

Yes. I think that’s important thing. So the – pipelines are fully contracted in for nine years but and I think those areas and that would issue in the near-term and exactly what the pipeline sells and that their differentials will look like nine years from now is difficult to predict.

Rich Kinder

For example, just during this quarter, this spreads wide and significantly on REX and we actually had some period of time where the total base differential from one in the system and the other was north of doubt. So it just buries as – I think well a lot of people that haven’t quite realized is, this natural gas transportation market in North American is inordinately complicated. And to me, the real advantage is going to be if you’re down steel brown and you are good promotional operator of your pipeline systems chances are you’re going to be very well, because it’s always the cheapest alternative to rapture throughput through pipes that’s already built. As opposed – if you are shipper as opposed contracting on something that hasn’t even built, so I think if you look at our pipeline that work and others too I think having those two underground is going to pay real dividends for many, many years even beyond the original time commitment for ten years, now that we’re over nine years on these pipelines.

John Edwards – Morgan Keegan

Right, I agree. Park, could you give us the maturities again on the debt? I think you said – I missed the details on that.

Park Shaper

Yeah. The near-term maturity is $250 million in November of this year and then $750 million in March of ‘11.

John Edwards – Morgan Keegan

Okay. Great, thanks. That’s all I had.

Rich Kinder

Okay.

Operator

At this time, I show no further question sir.

Rich Kinder

Okay. Well, thank you very much. Thanks everybody for listening in and have a good evening.

Operator

At this time, that concludes today’s conference. You may disconnect and thank you for your attendance.

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Source: Kinder Morgan Energy Partners, L.P. Q2 2010 Earnings Call Transcript
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