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Boardwalk Pipeline Partners, LP (NYSE:BWP)

Q2 2012 Earnings Call

July 30, 2012 9:00 am ET

Executives

Allison McLean - Director of Investor Relations of of Boardwalk Gp Llc

Stanley C. Horton - Chief Executive Officer of Boardwalk GP LLC, President of Boardwalk GP LLC and Director of Boardwalk GP LLC

Jamie L. Buskill - Chief Financial Officer of Boardwalk GP LLC, Senior Vice President of Boardwalk GP LLC and Treasurer of Boardwalk GP LLC

Analysts

Paul Jacob

John Edwards - Crédit Suisse AG, Research Division

Louis Shamie

S. Ross Payne - Wells Fargo Securities, LLC, Research Division

James Jampel

Elvira Scotto - RBC Capital Markets, LLC, Research Division

Sharon Lui - Wells Fargo Securities, LLC, Research Division

John K. Tysseland - Citigroup Inc, Research Division

Jeremy Tonet - JP Morgan Chase & Co, Research Division

Bernard L. Colson - Global Hunter Securities, LLC, Research Division

Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2012 Boardwalk Pipeline Partners, LP Earnings Conference Call. My name is Carissa, and I'll be your coordinator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now turn the presentation over to your host for today's conference, Ms. Allison McLean, Director of Investor Relations. Please proceed.

Allison McLean

Thank you, Carissa. Good morning, everyone, and welcome to the Second Quarter 2012 Earnings Call for Boardwalk Pipeline Partners, LP. I'm Allison McLean, and I'm pleased to be joined today by Mr. Stan Horton, our President and CEO; and Mr. Jamie Buskill, our CFO.

If you'd like a copy of the earnings release associated with this call, please download it from our website at www.bwpmlp.com.

Following our prepared remarks this morning, we will turn the call over for your questions. We would like to remind you that this conference call will include the use of statements that are forward-looking in nature. Statements in this earnings call related to matters that are not historical facts are forward-looking statements. These statements are based on management's recent assumptions using currently available information and expectations. Actual results achieved by the company may differ materially from those projected in any forward-looking statement. The company expressly disclaims any obligation to update or revise any forward-looking statements made during this call. I'd also like to remind you that during this call today, we may discuss certain non-GAAP financial measures, such as EBITDA and distributable cash flow. With regard to such financial measures, please refer to our earnings release for a reconciliation to the most comparable GAAP measures.

Now I'd like to turn the call over to Mr. Stan Horton.

Stanley C. Horton

Thank you, Allison. Good morning. I hope you've had a chance to review the earnings press release that we issued this morning. We also announced a quarterly distribution of $0.5325 per unit, or $2.13 annualized. The distribution this quarter is unchanged from the amount paid last quarter.

Over the past several quarters, we've been increasing our distribution per unit by a relatively modest $0.0025 per unit, or approximately 2% on an annualized basis.

As you can see from our earnings release, earnings for the quarter were positive. So let me give you some background as to why we made the decision to maintain the distribution rate at the $0.5325 per unit this quarter.

As you are well aware, new shale gas basins have developed and are continuing to develop in areas not traditionally associated with natural gas production. Over the past several years, the industry has constructed significant new pipeline infrastructure to provide transportation from these natural gas basins to market. These developments have caused changes in natural gas transportation dynamics and have increased the overall amount of transportation capacity.

Both have caused increased competition in certain pipeline markets and resulted in lower basis spreads in many locations. In addition, these new supply sources have narrowed seasonal gas price differentials, thus, impacting natural gas towards spreads and have also dramatically reduced the overall price of gas to levels not seen in years.

Although gas price spreads between time periods have improved short-term and have positively impacted park and lending this year, they narrowed when looking at the future price curves.

Revenues from contract renewals can also be impacted by these current market conditions. In the near term, we have, on average, approximately $100 million of contract renewals each year, which represents less than 10% of annual historic revenues. Our current weighted average contract life for transportation contracts is about 6 years, and approximately 96% of annual revenues in 2011 were derived from firm contracts.

We have historically done a good job of recontracting our firm capacity at reasonable rates and terms. However, the fact remains that revenues from contract renewals can't be impacted by these market conditions. Most of the contract negotiations for 2012 are complete. And on average, across all contracts, things came in relatively flat to 2011.

However, when considering the factors discussed above, uncertainty for future contract renewals remains. There are a number of factors when considering -- that we consider before recommending to our Board of Directors that a distribution be declared. These factors include, among other things: an assessment of the earnings from our existing business and growth projects; our current and expected market, economic and regulatory environment; future financing requirements for new projects; and our financial position. Simply stated, under current market conditions, we do not believe it is prudent to increase the distribution this quarter. Our focus is to strengthen our financial position and complete our announced growth projects on time and on budget, while allowing time for the market fundamentals to improve.

This long-term approach will help us take advantage of future growth opportunities. Each quarter, as conditions change, we will continue to assess the company's position and make decisions based on those facts and circumstances. We do, however, still remain bullish on market fundamentals longer-term.

We are beginning to see demand respond to all of the ample shale gas supplies that we have discovered. Potential projects such as the Southeast market expansion open season, which I will discuss shortly, and opportunities that connect new firm gas towards electric-powered generation load, which we have announced previously, are signs of new demand-driven growth opportunities for Boardwalk.

The HP Storage salt cavern expansion is on schedule for April 2013 gas injections. The new cavern has been leached to approximately 60% of its designed volume. When complete, the cavern will add 5 billion cubic feet of working gas capacity. Now this incremental storage capacity has been sold out under a firm basis for the first year the new cavern is scheduled to be in service.

The initial portion of our Marcellus gathering system was placed into service in May of this year. The scope and timing of the remainder of the project are dependent on the producer's drilling program in the area.

The construction of our Eagle Ford expansion project is proceeding as planned. We are on budget, and the processing plant is expected to go into service in the first quarter of 2013.

We recently concluded an open season on our Southeast market expansion. I am encouraged by the initial customer reception we received from the open season. This potential project could increase Gulf South's ability to transport natural gas supplies located in the East Texas and Perryville, Louisiana areas to growing areas of demand in the Southeastern region of the United States, including, industrial and power generation markets in Mississippi, Alabama and Florida.

If we proceed with this project, it is expected to go into service by late 2014. When we obtain the necessary firm commitments needed to anchor this project, we will provide you with more details.

That concludes my comments, and I will now turn the call over to Jamie.

Jamie L. Buskill

Thanks, Stan, and good morning, everyone. Operating revenues for the second quarter were $276 million, an increase of $14 million or 5% from $262 million for the comparable period in 2011. Taking into account fuel and gas transportation expense on a net basis, revenues for the quarter were $261 million, an increase of $27 million or 12% from $234 million for the comparable period in 2011. The increase was driven by the revenues associated with the acquisition of HP Storage, which contributed $12 million in net revenues for the quarter and increased firm transportation revenues and higher park and land revenue.

Turning now to operating expenses. We reported operating expenses of $167 million for the quarter, a decrease of $40 million or 19% from $207 million for the comparable period in 2011. The primary drivers for the decrease were due to the 2011 materials and supplies impairment and a decrease in administrative and general expenses. The decreases were partially offset by operating expenses incurred by HP Storage at $6 million.

EBITDA for the quarter was $169 million, an increase of $58 million, or 52%, from $111 million for the comparable period in 2011. EBITDA for the quarter was primarily impacted by the revenue and expense drivers previously discussed.

Net income for the quarter was $65 million, an increase of $50 million or 328% from $15 million for the comparable period last year. We generated $130 million in distributable cash for the quarter. This compares to $88 million generated in the second quarter of 2011, an increase of 47%.

Growth capital expenditures were $48 million in the second quarter. We expect our 2012 growth capital expenditures to be approximately $210 million, a decrease of approximately $45 million from previously reported estimates. The decrease is primarily due to timing.

Maintenance capital was $17 million for the quarter compared to $26 million in the second quarter of 2011. Our spending target for maintenance capital remains at $91 million for the year.

Now an update on financing. Our subsidiary, Gulf South Pipeline Company, raised $300 million of 4% senior notes due 2022. We used the net proceeds of $296 million from the offering to repay borrowings on our revolving credit facility. As of June 30, the balance borrowed against our revolver was $215 million, leaving an available borrowing capacity at $785 million.

One final comment. Allison McLean will soon be leaving Investor Relations in order to pursue a different opportunity within Boardwalk. As you know, Allison has done an outstanding job in Investor Relations, and she is going to continue to broaden her experience for the company as the Director of Compensation, Training and Professional Development. Molly Ladd Whitaker, who recently joined Boardwalk, will become our Director of Investor Relations and Corporate Communications. Molly comes to us with more than 15 years in the energy industry, primarily with natural gas pipeline. That includes Investor Relations and Southside experience. We are very excited to have Molly onboard and wish Allison the best of luck with her new opportunity within the company.

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

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Paul Jacob from Raymond James.

Paul Jacob

Real quick, just a touch on the distribution growth policy. Do you think it will be fair to say that it might make some sense to postpone that until after the Class B units convert in 2013?

Jamie L. Buskill

I'm not sure I followed your question. Postpone, where are you asking the postpone?

Paul Jacob

The distribution growth. I mean, you're keeping that distribution flat Q-over-Q. And I'm just kind of wondering if I could get some -- a little bit of insight into whether or not you might postpone growing that distribution out through 2013?

Jamie L. Buskill

Well, I'll just point back to what Stan mentioned on how we determine the distribution. We -- I think he laid that out fairly well as to how we look at that. As far as the -- so I don't really think that has relation to the Class B question that you're asking.

Paul Jacob

Okay. And then touching real quick on the P&L segment. Given the contango curve for natural gas, how do you see that shaping up in the back half of the year? I mean, the Q was pretty good relative to what we were thinking and definitely a big step change over 1Q. Do you think that, that continues, or do you think that's going to taper off into 3Q and 4Q?

Stanley C. Horton

I think the curve is a pretty good indication about what we think is going to happen over time. That's probably the best answer right there.

Paul Jacob

Okay. And then last question for me. On maintenance CapEx, how do you see that shaping up for the last 2 quarters?

Jamie L. Buskill

Well, we've spent approximately, I believe, $37 million or so on maintenance capital through the first half. And for the year, we're anticipating a total spend of approximately $91 million.

Operator

And your next question comes from the line of John Edwards of Crédit Suisse.

John Edwards - Crédit Suisse AG, Research Division

Just, Jamie, what was behind the G&A decrease?

Jamie L. Buskill

We've -- it's something, John, that we've been focused on over the last year or so trying to reduce our G&A cost, mainly dealing with outside-type services.

John Edwards - Crédit Suisse AG, Research Division

So contractors and consultants and so on?

Jamie L. Buskill

Right.

John Edwards - Crédit Suisse AG, Research Division

Okay. And just maybe, I guess, this relates to Stan's comments earlier regarding contract renewals. He -- I think you indicated that there is going to be about $100 million in annual renewals and you are flat this year relative to 2011. Are you expecting that to change going forward? And also, if you could also give us the volume metric data, the throughput data.

Jamie L. Buskill

Well, let me look at the first 6 months. And if you look at our revenues there, John, we're at $34 million for the first 6 months on net revenues. Roughly $24 million of that is HP Storage and about $4 million is PAL. That's $28 million of $34 million. The other $6 million is the slight increase in our revenues, mainly transportation revenues. So you can see that our contract renewals, to Stan's point earlier, had been relatively flat so far, and you see that in the numbers. As far as your question on the volumes, we moved in the quarter at about 621 TBtus year-to-date, that puts us at 1,295 TBtus.

John Edwards - Crédit Suisse AG, Research Division

621 TBtus year-to-date, or was that for the quarter?

Jamie L. Buskill

No, 621 is for the quarter. Year-to-date, it's 1,295.

Operator

Your next question comes from the line of Louis Shamie of Zimmer Lucas.

Louis Shamie

I just want to follow up a little bit on John's question regarding G&A. Is this kind of a good run rate for future G&As going from here? Or do you expect it to normalize a little bit back to what we've seen in the past few quarters?

Jamie L. Buskill

Yes, on the G&A, I think you need time. When you look at expenses, you're better off looking at -- when you get to the full year, because you do have some noise throughout the year as far as quarter-over-quarter. But generally speaking, and as I've said before, we've been really focused on reducing our G&A cost. You are going to see reduction there, assuming all the plans go as we are planning on. So it's probably best to answer that when you get to the year-end and see where the year-end number falls out.

Louis Shamie

Okay. And I wanted to ask a little bit about that Southeast expansion. Can you give a little bit more detail on what that project is expected to look like? What kind of overall cost you're expecting it to come in at? And which potential customers you're speaking with?

Stanley C. Horton

Yes, that project, when we announced it, is basically about -- and these are approximate numbers, I don't have the actual ones in front of me. But $170 million of capital cost. It's a new lateral that moves out of our large mainline into the Eagle Ford oily play to pick up some -- oh, Southeast, I'm sorry, I thought you said South Texas, my correction. Yes, on the Southeast project, we do have an open season that just concluded. And we've got a lot of information posted on the bulletin board that would give you a lot more detail, and that may be a good place for you to go. But basically, what we're looking at is utilizing Gulf South's existing 42-inch pipeline that originates in East Texas and extends eastward to Perryville, Louisiana. Including Gulf South's Perryville exchange, we interconnect that with our Petal Gas Storage facilities in Jasper County, Mississippi. Then from there, we would be building a new pipeline down into the panhandle area of Florida and Alabama to pick up some industrial and electric generation loads in those areas. I think on the open season, we said, depending on the open season, it will establish what the expansion capital would be. But probably in the range of about $300 million is what we're looking at right now. As I said, we just concluded that open season. It's going to take us a little bit more time to conclude all of the contract negotiations for that. As I said, when we get those done, we'll have additional announcements of that. This project was one of the projects that we actually kind of thought about when we purchased the HP Storage assets from Enterprise. We talked about synergies between our -- those storage facilities and our pipeline facilities, and these are one of the synergy projects that we had actually thought about when we bought those assets from Enterprise. So we've been able to put that together. As I said, we're very pleased with the response that we got from the open season, and hopefully, we'll have more announcements later on.

Operator

Your next question comes from the line of Ross Payne of Wells Fargo.

S. Ross Payne - Wells Fargo Securities, LLC, Research Division

Jamie, if you can just tell us what your debt levels are, and perhaps, what your availability is on your lines?

Jamie L. Buskill

Sure. The total debt, Ross, is $3.45 billion. We have $215 million currently borrowed on the credit facility. So on that facility, we have $785 million of capacity.

Operator

Your next question comes from the line of James Jampel of HITE.

James Jampel

If you could talk a little bit about which metrics in particular you're looking at in the future that caused you to have some -- the level of uncertainty which would cause you to have the -- leave the distribution flat? So for example, which exact basis spreads are you looking at or which seasonal spreads are you looking which caused you to back off a little bit right now?

Stanley C. Horton

Well, our Gulf South and Texas Gas systems touch a lot of different shale gas basins and move gas to a lot of market centers. So basically, we tend to watch basis spreads between major points. We move a tremendous amount of gas out of South Texas and East Texas on into Louisiana. So those spreads are important. But they're really spreads that are just across the basins and the markets and the major hubs that we transport gas from and to. And those spreads have been relatively flat. And in some cases, they've come down a little bit. It's not that they have deteriorated a lot, it's just that they haven't gotten much better. So when those basis spreads are flat, they tend to impact us. As we mentioned before, we've seen, on a short-term basis, the forward price curve kind of widen out a little bit. That's helped our park and lending and our storage this year. But if you look out, that starts narrowing again. So there's a lot of information out there that you can look at on basis spreads and forward price curves that would probably lead you to the same conclusion that we did, that the prudent thing to do right now, considering everything else that I've mentioned, was just to hold the distribution flat right now.

James Jampel

The seasonal spread -- what your seasonal spread would you consider to be the most important metric that you would be looking at?

Stanley C. Horton

Well, certainly, when we sell park and lending, and we tend to sell that more on a 12-month basis. So we tend to start looking at April '13 to a corresponding period in '14, May, to corresponding period in '14. Those are spreads that you tend to take a look at when you're looking at what you think the value of park and lending may be. Now I would caution that as you tend to look out a little bit, those tend to narrow. And oftentimes, those tend to spread out the closer you get to the period. They can be impacted by a lot of things, what kind of winter you're having, what kind of -- I mean, if you look at this last winter to where we came out with very, very high storage levels, you saw those spreads widen pretty good. They benefited our park and lending. Not only will that benefit '12, it will also benefit '13, because a lot of that park and lending is 12 months park and lending service and you book it over a 12-month period, too. So those are the things we tend to look at, but they're not the only drivers that we look at in setting the distribution, as I mentioned in my opening comments.

Operator

Your next question comes from the line of Elvira Scotto of RBC Capital Markets.

Elvira Scotto - RBC Capital Markets, LLC, Research Division

I think you answered part of my question. But can you remind us when the bulk of your contracting for the year happens? I think you said most of your 2012 contracting is done, but when does 2013 kind of happen?

Jamie L. Buskill

Yes, Elvira, a lot of the contracts may not officially come up to even later in the year, but you negotiate those before you get to the end date. So we're just at that point of the year in 2012 where we have a good handle as to where those contract negotiations are. So most of -- that's why we said 2012 we have a good feel of where that is. 2013, we'll actually start talking with those customers this year, and it'll go through next year. Just really depends on the customer and the nature of the contract.

Elvira Scotto - RBC Capital Markets, LLC, Research Division

Okay, great. So I mean, just to go back to the distribution discussion. So you're not really seeing deterioration of fundamentals. Just you haven't seen much improvement, is that fair?

Stanley C. Horton

Yes, I think that's a fair analysis, a very fair analysis.

Jamie L. Buskill

And I think you see that, Elvira, in the numbers so far this year.

Elvira Scotto - RBC Capital Markets, LLC, Research Division

Okay, great. I think you said a part of the Marcellus project came on in May. Did that have much contribution to the numbers this quarter?

Jamie L. Buskill

No, it had minimal impact.

Elvira Scotto - RBC Capital Markets, LLC, Research Division

Okay. And then the last question for me. The Eagle Ford processing plant, where are you in terms of negotiating the remaining capacity there?

Stanley C. Horton

We have active negotiations going on with several parties for the remaining capacity at that plant. We feel very bullish that, that plant is going to be fully utilized once it comes on to service at the end of the first quarter.

Operator

Your next question comes from the line of Sharon Lui of Wells Fargo.

Sharon Lui - Wells Fargo Securities, LLC, Research Division

I guess, just following up on Elvira's question about the distribution policy. If there is no further deterioration in terms of the natural gas environment, you do have, I guess, several projects coming on in the beginning of 2013. Would you, I guess, would it be supportive of the distribution increase at that point in time?

Jamie L. Buskill

Well, Sharon, we can't comment about what the future, as far as trying to predict the future, what forecast may be out there for distributions.

Stanley C. Horton

As I mentioned, there's just a number of factors that we tend to look at. And I mentioned those in my opening comments. So as Jamie said, it's hard for us to talk about distribution in the future. We don't have one of those policies that say that if you do this, this, this and that, then we're going to increase it or decrease it or keep it the same. There's a host of things that we look at when we make a recommendation to the board, and we do that on a quarter-by-quarter basis.

Sharon Lui - Wells Fargo Securities, LLC, Research Division

Okay. Have you guys, I guess, set a target distribution coverage ratio? And where you want to be at long-term?

Jamie L. Buskill

No. I mean, Sharon, kind of like we said in the past, it's -- the reason we don't do that is it's really a matter of risk and where you are with the company, and that changes over time. So we don't have any specified set of policy. And also, we're focused on we're wanting to reduce our leverage more on the balance sheet. And that's another reason. As Stan mentioned, we're focused on that and getting our debt metrics down.

Sharon Lui - Wells Fargo Securities, LLC, Research Division

Okay. And, Jamie, I guess, there was like a $5 million settlement in the additional cash flow. Is that just payment related to the fire at the compression station or something else?

Jamie L. Buskill

Yes. Yes. That's primarily what that is.

Operator

Your next question comes from the line of John Tysseland of Citigroup.

John K. Tysseland - Citigroup Inc, Research Division

Just a question on the transportation contract renewals. Do you differentiate between Texas Gas and Gulf South in terms of how those renewals -- how you believe those renewals will occur and what the contracts look like on the opposite side of those explorations? I mean, to date, has it predominantly been Gulf South that you've gotten reasonably good renewal rates on, or has it been Texas Gas?

Stanley C. Horton

We really don't look at them pipeline by pipeline like that. In some places, some of our transportation paths include both pipelines. So I wouldn't say one is predominantly different than the other. So we tend to look at them together.

John K. Tysseland - Citigroup Inc, Research Division

The only reason I asked is if you have contract renewals of one that is greater than the other, for example, if Texas Gas has more contract renewals in 2012 and 2013 than Gulf South, is that -- should we think about the renewal rates any differently, I guess, or is that similar to how things have been recontracting so far this year? In other words, Gulf South has been the one that has been recontracting.

Jamie L. Buskill

No, I mean, I think we look at a better way of an idea of how we look at it. It's really looking at the type of customers in the regions, not pipeline-specific contracts. For example, I think we talked about, over the last year, how power generators across both our systems have really stepped up and wanted firm contracts on our systems and has had an impact on our recontracting. So we really look at it more by the types of customers in the regions, not a pipeline-by-pipeline focus.

John K. Tysseland - Citigroup Inc, Research Division

And then last, I guess, to further that point. When we think about contract renewals, is there any kind of number that we should kind of forecast in terms of what the overall success rate should be on either the overall utilization of that renewal or a percentage of the fee? For example, should we think about it as -- do you think that it's about 90% contract renewal rate and volume? Or do you not really think about that in those terms, either?

Jamie L. Buskill

Well, I think, as Stan mentioned, we roughly have $100 million a year. And right now, it's -- the numbers have really have come in flat to a little better. As I mentioned, if you look at the first 6 months, you strip out HP Storage and the PAL increase, we're up about $6 million on everything else, which is primarily transportation. So it's really been a flat effort at this point.

Operator

And your next question comes from the line of Jeremy Tonet of JPMorgan.

Jeremy Tonet - JP Morgan Chase & Co, Research Division

I was wondering if I could pick up on the end of that last question, actually. You talked about rates in '12, the renewals being similar to '11. Are those on contracts or one-year contracts that were signed in '11, or were they more longer-term contracts? If you could talk about that mix. And if they are longer-term contracts that are being renewed, can you talk about how these renewals compare to the original rates that were signed, say, 6 years ago or whenever that was?

Jamie L. Buskill

It's really a mix, Jeremy. It's -- when you look at the -- really, the best way to look at that is our contract life. If we were doing all these on a one-year contract, you'd start seeing a movement in that contract life. But our contract life remains right around the 6-year mark. And so we're seeing them really across-the-board. Some are long. Some are shorter. It's really a mix.

Jeremy Tonet - JP Morgan Chase & Co, Research Division

So would it be possible to provide any color on how the current renewal rates compare to the older -- on the older contracts, the longer ones that are being renewed?

Jamie L. Buskill

I mean, basically overall in the system, I'll go back to what Stan said, it's been relatively flat. I mean, some areas, we've seen them lower. Some actually have been higher. And you put it all together, then it's basically been a flat performance.

Stanley C. Horton

And in some cases, we've seen a mix change, where, excuse me, we may have had reduction in some contract and volumes. We've seen other customers come in and pick up that volume and put those under firm contracts. So it really has been a mixture. Our commercial people do a pretty good job of keeping this system contracted and what we've seen on the last couple of years is an increase in some electric -- firm electric generation load being attached to the system. And in some cases, that has displaced some contracts that we've had with marketers or producers that have reduced their contracts or turned back contract quantity. So it really is a mixture.

Operator

And your next question comes from the line of Bernie Colson of Global Hunter.

Bernard L. Colson - Global Hunter Securities, LLC, Research Division

So okay, so you had total debt at the end of the quarter of $3.45 billion. I assume this year your equity balance is around the same. So you're basically just...

Jamie L. Buskill

It's about $3.4 billion, Bernie.

Bernard L. Colson - Global Hunter Securities, LLC, Research Division

Okay. And then, are your -- I mean, do the banks, when they're looking at that, are they looking at trailing 12 EBITDA? I mean looking at debt to EBITDA, are they looking forward, or...

Jamie L. Buskill

Basically, I mean, most people look at the published numbers, which is a trailing 12.

Bernard L. Colson - Global Hunter Securities, LLC, Research Division

Trailing 12, okay. I mean it seems like, looking at it, 50-50 is obviously a lot more comfortable than being between 4.5 and 5x debt-to-EBITDA. So I'm just -- I'm trying to figure out how to balance those 2 and whether that the banks are going to give you some credit for improving business fundamentals going forward, or whether we are, in fact, in that kind of 4.5-plus type of range?

Jamie L. Buskill

Well, I would say, really, irregardless of what the banks are saying. Internally, and we said publicly, is our goal is to be in the low 4x on our debt-to-EBITDA. And that's what we've been focused on. And we've been chipping away at that. I think we're in the high 4s now. And our goal is to, again, get that down in the low 4 area.

Operator

At this time, I will turn the call over to Allison McLean for closing remarks.

Allison McLean

Once again, I'd like to thank everyone for joining us this morning. We appreciate your continued interest in Boardwalk Pipeline Partners, LP. As a reminder, an online replay of this call is available on our website at www.bwpmlp.com. This concludes today's conference call. Thank you, and have a great day.

Operator

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.

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