Dominion Energy, Inc. (D) Q1 2015 Earnings Report, Transcript and Summary

Good morning, and welcome to the Dominion Resources and Dominion Midstream Partners' First Quarter Earnings Conference Call. At this time, each of your lines is in a listen-only mode. At the conclusion of today's presentation, we will open the floor for questions. At that time, instructions will be given as to the procedure to follow if you would like to ask a question. I'd now like to turn the call over to Tom Hamlin, Vice President of Investor Relations and Financial Planning for the Safe Harbor statement. Thomas E. Hamlin - VP-Financial Analysis & Investor Relations: Good morning, and welcome to the first quarter 2015 earnings conference call for Dominion Resources and Dominion Midstream Partners. During this call, we will refer to certain schedules included in this morning's earnings releases and pages from our earnings release kit. Schedules in the earnings release kit are intended to answer the more detailed questions pertaining to operating statistics and accounting. Investor Relations will be available after the call for any clarification of these schedules. If you have not done so, I encourage you to visit the Investor Relations page on our website, register for email alerts and view our first quarter earnings documents. Our website addresses are dom.com and dommidstream.com. In addition to the earnings release kit, we have included a slide presentation on our website that will follow this morning's discussion. And now for the usual cautionary language. The earnings release and other matters that will be discussed on the call today may contain forward-looking statements and estimates that are subject to various risks and uncertainties. Please refer to our SEC filings including our most recent annual reports on Form 10-K and our quarterly reports on Form 10-Q for discussion of factors that may cause results to differ from management's projections, forecast, estimates and expectations. Also on this call, we will discuss the measures of our company's performance that differ from those recognized by GAAP. Those measures include our first quarter operating earnings and our operating earnings guidance for the second quarter and full year 2015, as well as operating earnings before depreciation and amortization, interest and taxes commonly referred to as EBITDA. Reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measures we are able to calculate and report are contained in the earnings release kit and Dominion Midstream's press release. Joining us on the call this morning are our CEO, Tom Farrell; our CFO, Mark McGettrick; and other members of our management team. Mark will discuss our earnings results for the first quarter and our earnings guidance for the second quarter and full year 2015. Tom will review our operating and regulatory activities and review the progress we've made on our growth plans. I will now turn the call over to Mark McGettrick. Mark F. McGettrick - Chief Financial Officer & Executive Vice President: Good morning. Dominion Resources reported operating earnings of $0.99 per share for the first quarter of 2015, which was at the top of our guidance range of $0.85 per share to $1 per share. Favorable weather condition in our electric service area, particularly in February, added about $0.05 per share compared to normal. Higher-than-expected earnings from our Marcellus farmout activities were $0.04 per share above guidance as we closed a new agreement on development rights for 11,000 acres and amended the terms of an existing agreement. On the negative side, margins from our merchant power business were below expectations, largely due to lower power prices in New England. GAAP earnings were $0.91 per share for the first quarter. The principal difference between GAAP and operating earnings was a charge associated with Virginia legislation enacted in February that required the write-off of Virginia Power prior period deferred fuel cost during the first quarter of 2015. A reconciliation of operating earnings to reported earnings can be found on schedule two of the earnings release kit. Now moving to results by operating segment. At Dominion Virginia Power, the EBITDA for the first quarter was $402 million, which was at the top of its guidance range. Kilowatt hour sales were above expectations due to colder-than-normal weather. Excluding weather, sales growth for the quarter was about 1.5%, slightly higher than our full year expectation of 1%. Dominion Generation produced EBITDA of $676 million in the first quarter, which was in the middle of its guidance range. Earnings from utility generation were above expectations due to colder-than-normal weather, while merchant generation was below expectations due to lower-than-expected power prices. First quarter EBITDA for Dominion Energy was $413 million, which was above the top of its guidance range. The colder weather and higher earnings from farmout activities drove the strong results. On a consolidated basis, interest expenses and income taxes were in line with our guidance. Overall, we are pleased with our first quarter operating results. For the first quarter of 2015, Dominion Midstream Partners produced adjusted EBITDA of $11.8 million and distributable cash flow of $11.9 million, all consistent with management's expectations. On April 22, Dominion Midstream's board of directors declared a distribution of $0.175 per unit payable on May 15 to unitholders of record on May 5. On April 1, Dominion Midstream acquired Dominion Carolina Gas Transmission from Dominion Resources for a combination of debt and units valued at approximately $495 million. The acquisition is supportive of management's plan to grow limited partner distributions at a 22% compound annual rate through the end of the decade. We do not expect to drop any more assets into the partnership this year to reach our projected fourth quarter annualized distribution rate of $0.85 per unit. Moving to cash flow and treasury activities at Dominion, funds from operations were $1.1 billion for the first three months of the year. Commercial paper and letters of credit outstanding at the end of the quarter were $3.25 billion. We had $4.5 billion of credit facilities at the end of the first quarter. And taking into account cash and short-term investments, we ended the quarter with liquidity of $1.4 billion. For statements of cash flow and liquidity, please see pages 14 and 25 of the earnings release kit. Finally in the financing area, we began an aftermarket program earlier this year to raise $500 million of common equity. Through the first week of April, we had raised $264 million and expect to complete our equity issuance by year-end. Now, moving to earnings guidance, our operating earnings guidance for the second quarter of 2015 is $0.65 per share to $0.75 per share, compared to operating earnings of $0.62 per share for the second quarter of 2014. Positive earning drivers for the quarter compared to last year are return to normal weather, higher revenues from rider projects, the absence of a refueling outage at Millstone. Negative earning drivers for the quarter were higher operating expenses. Our operating earnings guidance for the year remains $3.50 per share to $3.85 per share. As to hedging, you can find our hedge positions on page 27 of the earnings release kit. As of mid-April, we have hedged 88% of our expected 2015 production at Millstone and 60% of our expected 2016 production. So let me summarize my financial review. Operating earnings were $0.99 per share for the first quarter of 2015, at the top of our guidance range. Favorable weather and higher earnings from our farmout activities were the principal factors in the strong performance. Operating results for Dominion Midstream Partners were in line with management's expectations, and the Dominion Carolina Gas Transmission business was dropped into the partnership effective April 1. And finally, our operating earnings guidance for the second quarter of 2015 is $0.65 per share to $0.75 per share. Our operating earnings guidance for the full year remains $3.50 per share to $3.85 per share. I would now turn the call over to Tom Farrell. Thomas F. Farrell - Chairman, President & Chief Executive Officer: Good morning. Our business units delivered strong operational and safety performance in the first quarter. Year-to-date, OSHA recordables for all units are consistent with their respective targets for the year. Dominion ranked first in safety in the Southeast Exchange in the fourth quarter of 2014. Our nuclear fleet continues to operate well. The net capacity factor our six units was 97.7% for the first three months of the year. Our Power Generation group also performed well during the quarter with record production from our combined cycle and large coal plates and a first ever six-month breaker-to-breaker run for the Virginia City Hybrid Energy Center. Virginia Power experienced a new record peak demand of 21,651 megawatts on February 20, exceeding the previous winter peaks by 9% and the previous record summer peak by 8%. Our natural gas transportation storage and delivery businesses also operated well during the recent winter. Despite the cold, DTI had no interruption to firm service customers. The system experienced a record storage turn of 67.4 billion cubic feet for the month of February and set a record throughput of 7.24 Bcf on February 15. Our natural gas distribution companies also met the higher demand brought on by the cold weather safely and efficiently. Before I discuss the progress we are making on our growth projects, I want to update you on a number of regulatory and legislative issues affecting the company. As many of you are aware, Virginia General Assembly passed legislation in the recent session modifying the base rate review process for the next several years. The changes were advanced because of the uncertainties and potential impact to the state from the proposed Clean Power Plan being formulated by the Environmental Protection Agency. In its current form, this plan would impose some of the strictest CO2 emission standards in the Eastern U.S. on the Commonwealth of Virginia and could result in substantial cost for our customers and have a negative impact on our economy. A study by the Virginia State Corporation Commission estimated total compliance cost of $5 billion to $6 billion, excluding up to $2 billion for the cost of potentially retiring much of our existing fleet of coal-fired generating plant. The recently enacted legislation suspends the biannual review process during the early years of the compliance period for the new CO2 standards. During this time, the company will file its integrated resource plan annually with the commission to include various compliance strategies and has committed to seek a solution to the new rules, which will allow the continuing use of coal as an energy resource in our state. We will file our integrated resource plan with the commission on July 1 of this year. We filed our review of earnings for 2013 and 2014 on March 31, showing an earned return of 10.13%, which was below the top of the allowed range of 10.7%. We expect the commission order in this review by the end of November. The biannual review process will resume in 2022 covering earnings for the calendar years 2020 and 2021. Now for an update on our growth plans. Construction of the 1,358 megawatt combined cycle facility in Brunswick County was about 60% complete through the end of the first quarter. There are approximately 1,140 workers on site. The turbine building construction is in progress and all field-erected tanks were in various stages of construction or hydro testing. Construction of the air-cooled condenser is approximately 75% complete. The facility is on budget and on time for a mid-2016 commercial operation date. Dominion announced that Greensville County will be the site for the next three-on-one gas-fired combined cycle facility to be constructed in Virginia. We expect to file a request with Virginia State Corporation Commission for CPCN and Rate Rider for this project in July. If approved, this 1,600 megawatt station is scheduled for commercial operation in late 2018. During the first quarter, the company announced plans to invest $700 million to build several utility scale solar projects in Virginia, totaling up to 400 megawatts. Legislation enacted by the General Assembly states that the development of 500 megawatts of large-scale solar by utilities within the Commonwealth is in the public interest. Also during the first quarter, Dominion announced the development of a 20 megawatt solar facility at our Remington Power Station and filed for an A-6 Rider and CPCN in January. If approved, the facility would be in service by late 2016. Construction is also on schedule for five merchant solar plants totaling 132 megawatts scheduled for service this year. The largest of these projects is our 50 megawatt Pavant project in Utah, which is currently under construction. Two projects in California totaling 42 megawatts should be in service by the end of this quarter. We also recently announced the acquisitions of the Richland Solar project, the 20 megawatt facility in Georgia, and the Alamo Solar project, a 20 megawatt facility located in California. Both projects will be operational later this year and bring our merchant, solar portfolio to 384 megawatts. Our plan is to grow this portfolio to 450 megawatts by the end of this year and to 625 megawatts by the end of next year. At Dominion Virginia Power, we have a number of electric transmission projects at various stages of regulatory approval and construction. During the first quarter, $199 million of transmission assets were placed into service. Electric transmissions capital budget for growth projects, including NERC, RTEP, maintenance, as well as security-related investments will average over $700 million per year through at least the remainder of this decade. Progress on our growth plan for Dominion Energy continues as well. At our February 9 meeting for analysts and investors, we highlighted a number of producer outlet and market access projects underway at Dominion Energy. Five of the nine producer outlet projects, which are designed to relieve congestion and move Marcellus gas out of the basin, are in service, while remaining four are all on time and on budget for completion over the next two years. Similarly, all four market access projects, which are customer-driven expansions, are on time and on budget for completion in 2016 and 2017. On March 31, Dominion East Ohio filed an application with the Public Utility Commission of Ohio for expansion of the PIR program. If approved, DEO's annual capital investment would increase from $160 million to $200 million by 2018 and by 3% per year for the following three years. In West Virginia, legislation was passed authorizing the West Virginia PSC to approve expedited cost recovery of natural gas utility infrastructure projects. Dominion Hope plans to file an application later this year for this replacement and expansion program. During the first quarter, we closed on a new farm-out agreement and adjusted the terms of another. In March, DTI closed on an agreement to convey approximately 11,000 acres of Marcellus Shale development rights underneath one of its storage fields. The agreement provides for an upfront payment of $27 million plus an ongoing overriding royalty interest in gas produced from the acreage. Also in March, DTI and a natural gas producer amended the terms of a December 2013 agreement covering 79,000 acres of Marcellus Shale development rights for payments over a nine-year period. That amendment resulted in immediate conveyance of approximately 9,000 acres or 11% of the overall development rights and a two-year extension of the term of the original agreement. We are continuing to work for the commencement of construction on the Atlantic Coast Pipeline and the related Supply Header Project. We began the FERC filing process last November and expect to make the formal filing in September. On February 27, FERC issued a notice of intent to prepare an environmental impact statement for both projects. During March, FERC held 10 scoping meetings at locations along the pipeline route. We have been continuing our public outreach efforts. 11 open houses for the Atlantic Coast Pipeline and two open houses for the Supply Header were held in January. Three additional open houses were held in March for proposed reroutes. Surveying is about 72% complete and engineering is about 42% complete. We awarded the pipe manufacturing contract in January to Dura-Bond Industries in Pennsylvania, and expect to award the pipeline construction contract this summer. We should begin construction in the fourth quarter of next year and begin operations in November 2018. Dominion completed the acquisition of Carolina Gas Transmission from SCANA in January, and sold it to Dominion Midstream Partners in April. This transaction is illustrative of the kind of third-party acquisitions we will be seeking to supplement Dominion's already large inventory of MLP eligible assets that support our growth targets for Dominion Midstream. Now, an update on our Cove Point Liquefaction Project. Construction is continuing at the site and is on time and on budget. The first foundations have been poured and the first structural steel has been erected. Engineering is nearly 80% complete, and approximately 85% of the engineered equipment has been procured as of the end of the first quarter. So to summarize, our business has delivered strong operating and safety performance in the first quarter. Brunswick County construction project is proceeding on time and on budget. We continue to work toward a formal filing with FERC for the Atlantic Coast Pipeline in September. And construction of the Cove Point Liquefaction Project is continuing on time and on budget. Thank you, and we are ready for your questions.

Thank you, sir. At this time, we will open the floor for questions. Our first question will come from Greg Gordon from Evercore Group.

Thanks. Good morning, guys. Thomas F. Farrell - Chairman, President & Chief Executive Officer: Good morning.

Pretty thorough presentation as I really only have one question. I know that you've been given a lot more runway in Virginia to run the business given the flexibility of the new legislation and the uncertain – but there's also a lot of uncertainties that goes with that. It doesn't look like the weather normal sales were moved one way or the other that dramatically versus last year. Can you talk about whether or not you're still running behind your longer-term growth expectation for kilowatt hour sales in your market and what your base case assumptions are over the next several years for growth? Mark F. McGettrick - Chief Financial Officer & Executive Vice President: Hey, Greg. This is Mark. We actually were quite happy with the first quarter weather normalized sales where we were up slightly more than 1.5%. If you recall, we guided everybody this year to 1% sales growth annually, 2015 over 2014. And then as we talked on February 9, we looked for growth beyond that 1.5% next year and then a more normal 2% range for us, 2017 through the end of the decade. But for the first quarter, residential sales came in strong. And what we're very pleased about is commercial sales came in strong, excluding data centers, which we already knew were going to be very strong. Commercial sales were where we lagged in the last couple of years due to sequestration particularly in Northern Virginia and Eastern Virginia. So we'll see how that trend continues through rest of the year, but with just three months' worth of data, we think we're off to a strong stale start.

Right. The only – it looks like even industrial – it looks like across the board, everything was pretty strong. Maybe industrial is a little bit weaker delivers... Thomas F. Farrell - Chairman, President & Chief Executive Officer: (22:10) weak but – excuse me, Greg, the industrial was a weaker right, but it's very deceiving because most of the industrial weakness was due to low curtailment activities in the first quarter based on weather.

Fabulous. Good answer. Thank you. Have a good day.

Thank you. Our next question comes from Michael Weinstein from UBS.

Hey, it's Julien here. Good morning. Thomas F. Farrell - Chairman, President & Chief Executive Officer: Hey, Julien.

So turning to the farmouts and just broadly the volumetric outlook on the Dominion Energy side, can you talk to just hitting the target you laid out at the Analyst Day as you think about subsequent execution of farmout deals and also the royalty payments given the oil price environment? And then subsequently the Blue Racer impacts from where we stand today. So basically kind of a G&P, are you on track to hit the target farmout royalties and just generally G&P. Thomas F. Farrell - Chairman, President & Chief Executive Officer: Julien, sure. Paul Koonce is going to handle the farmouts first and then I'll talk generally about Blue Racer versus what we showed in February.

Good morning, Julien. Yes. We still remain very much engaged with producers on Utica acreage. We had a lot of success with the farmouts in the Marcellus. We're now moving into the Utica, which is really the dry Utica, which right now seems to be where a lot of producers are putting forth their interest. So if you go back to the chart that Tom showed at February 9, the $450 million to $500 million between 2015-2020, we really haven't seen anything change that. We've been quite encouraged, frankly. So that's kind of where we stand. We're in negotiations right now, and we'll continue that. Mark F. McGettrick - Chief Financial Officer & Executive Vice President: Julien, on Blue Racer – this is Mark. If you note in the script, there were two areas that we didn't talk about mainly because we gave such comprehensive update in February, and one of them was Blue Racer. And what I want to mention on Blue Racer is that we need to bound Blue Racer because we get lots of questions on it, we get lots of questions on the basin. But Blue Racer's contribution at $85 million to $95 million, which we showed on February 9, is less than 2% of the total contribution to Dominion's overall earnings. The other area that we will update only on significant changes are unregulated gas retail business, which again, the reason we've stopped including that in our script is because it's 1% of our total overall earnings. So I just want to give that backdrop. And in terms of Blue Racer, in the first half of this year, we feel real good with the processing volumes that are out there. We have three processing units up and running. The frac addition that was scheduled for the second quarter is in commissioning. So I think – and we feel real good with Blue Racer. The question I think will be with Blue Racer and others is later this year, do we continue to see the tie-ins that we expected before, and we'll have to wait and see what producers do. But permits continue to grow in Ohio and Pennsylvania, and we are optimistic, but we'll wait and see what the fourth quarter brings.

Great. And then subsequently just in terms of the 22% CAGR and thinking about subsequent dropdowns, vis-à-vis M&A, how are you thinking about more drops? Is there still the potential to have acquisitions at the MLP or is generally the thought process at this point in time to warehouse those assets, whatever you may be targeting at Dominion until a subsequent period of time to smooth out the growth rate, if you will? Thomas F. Farrell - Chairman, President & Chief Executive Officer: Julien, I think it can happen in a number of different ways. Most of the assets that are in the market right now are liquid-sensitive assets which we would not be interested in. But there are some that have fairly stable regulated earnings pipeline-type assets. We – if they were accretive and supportive of our growth rate at DM, we could do it at DM. We could do it at D and house those until we want to drop them in the future. So we have tremendous flexibility. That's why we like the model of D and DM, focusing on these assets together. And we may well be a straight unit buy at DM or it might be buy at D with a dropdown very similar to Carolina Gas Transmission. So lots of flexibility, but I can assure you, we are not going to buy anything unless it adds value to both DM and D.

Great. And then lastly, just on the – speaking of housing, any developments on finding a yieldco partner, maybe too early? Thomas F. Farrell - Chairman, President & Chief Executive Officer: For solar?

Yep. Thomas F. Farrell - Chairman, President & Chief Executive Officer: We're pretty far down the road on how we want to structure that, Julien. We've had a lot of inbound from all kinds of people that would be interested in partnering with an ultimate sell-down. I think the structure is going to be very similar to what we've talked about publicly before, and that is a partial sell-down into a joint venture and then an ultimate absolute sale in the future after certain tax restrictions are released. So look for more on that probably late summer or fall, but that process is well underway.

But a cash sale to get – to bind to the JV up front. And that's where you will get the premium for effectively having this transaction. Thomas F. Farrell - Chairman, President & Chief Executive Officer: I think the way it will work, Julien is that we will get a cash sale for the interest that we sell initially into the JV. And then we'll get a cash sale when we ultimately sell down the remaining interest at a future period.

Great. Thank you.

Thank you. Our next question comes from Neel Mitra from Tudor, Pickering. Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc.: Hi. Good morning. Thomas F. Farrell - Chairman, President & Chief Executive Officer: Morning. Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc.: First question was on Carolina Gas Transmission. Could you discuss in a little bit more detail the growth projects that kind of get you from the 10% CAGR in EBITDA from 2015 to 2018? And then also if there was any synergies between CGT and Atlantic Coast? Thomas F. Farrell - Chairman, President & Chief Executive Officer: I'll ask Paul Koonce to answer the first part of that. In terms of Atlantic Coast, we're only focused on the existing project we have at Atlantic Coast and moving that process through the approval and construction period. We don't, at this point in time, see any other project but what's been announced on ACP.

Yeah. Just on CGT growth, there are three projects in particular that have already been executed with the counterparty. They execute – the counterparty in this case being South Carolina Electric and Gas. So the growth is in place. The contracts have been signed. The permitting process is well underway. So we really don't see anything there that would really cause any question or concern. Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc.: Great. And my second question was on generation. So in the past, you've said your CCGT projects were used to kind of catch up with retirements and Greensville County is going to be used to serve the additional load in your territory. After Greensville County, are you set for generation for a while or are there other needs within your service territory that would require additional builds, whether it's gas or other forms of generation? Thomas F. Farrell - Chairman, President & Chief Executive Officer: This is Tom Farrell. Of course, we have Brunswick. We just finished Warren. Brunswick is 60% complete. Greensville County will be filing for. We also announced the 400 megawatts of solar. And it is – I am highly confident that we will need more generation construction in Virginia post Greensville County as a result of the carbon – the so-called Clean Power Plan. How much and what it will look like? We'll have to see how the final rule comes out. There's issues around the interim target and how rigorous that will be, whether it's a cliff-like target for 2020 or whether it'll be some kind of phasing in over the first few years of the compliance period ultimately getting to 2030. But I don't think there's – I think there's very little chance we won't need to construct significant more generation in Virginia over the next 10 years to 15 years. Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc.: Got it. And then just as far as the approval for Greensville County, can you give us a timeline for that? And then the RFP process for looking at merchant generators was that any different than Brunswick or Warren or was that pretty standard? Thomas F. Farrell - Chairman, President & Chief Executive Officer: It was – we ran this typical RFP process. It's all done completely at arm's length. It was reviewed by independent parties and you'll see all that supported in the filing when it comes. We should have the approval on Greensville County early next year and then get under construction. Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc.: Great. Thank you.

Thank you. Our next question comes from Daniel Eggers from Credit Suisse. Daniel Eggers - Credit Suisse Securities (USA) LLC (Broker): Hey. Good morning, guys. Thomas F. Farrell - Chairman, President & Chief Executive Officer: Good morning. Daniel Eggers - Credit Suisse Securities (USA) LLC (Broker): Tom, I know it's not a big amount of capital, but can you maybe give your thoughts on kind of the takeaways in the Artificial Island process and decision and maybe how that might affect some of the transmission investment decisions you guys might be looking at going forward? Thomas F. Farrell - Chairman, President & Chief Executive Officer: Well, Dan, it was interesting results, obviously, after a very long drawn out process. I'm not sure, to be honest with you, what it pertains to the future. We have our new Chairman – our new FERC Chairman is there. We'll have to see what emphasis there is on these kinds of projects. We'll continue to look at them. And if we think it makes sense for us to participate, we will. And it's hard for me to – I wouldn't want to try to judge much about the future of that one data point. But we're going to – I can understand why you would ask. We're all going to continue to watch it. Daniel Eggers - Credit Suisse Securities (USA) LLC (Broker): Okay. And I guess just on the stay out in Virginia with the legislation in place. Are there any major things you guys need to change operationally to be able to manage earning your ROE for such a long period without kind of the review process or something we should be watching change in strategy-wise out of the business? Thomas F. Farrell - Chairman, President & Chief Executive Officer: Well, there will be – just to make sure there's not a big deal, but there's nuance in this. There is a ROE reset in 2018. There is not in this biannual, and that will apply to the riders going forward. There's no earnings test, but there is a ROE review. We're just, Dan, I would just say that we will focus very carefully on how we manage the business and we expect to be able to balance the needs of our customers and our other constituency as – constituents as we go through the next five years. Daniel Eggers - Credit Suisse Securities (USA) LLC (Broker): Okay. And I guess just on the FERC pipeline investments, you guys have done a good job of finding opportunities in the last year or so. Are you seeing things popping up right now or bubbling out that were opportunities going to exist here forward or do you think the market is at a spot we are going to have to absorb what is in process before the next wave of announcements comes? Thomas F. Farrell - Chairman, President & Chief Executive Officer: Well, we have a lot in process but Paul Koonce spends a lot of time day-to-day on this, so I'll let him answer the question.

Hey, Dan. Good morning. What is interesting is that people sort of look closely at the clean power plan. We're starting to see a lot of our business development effort shift towards providing supplies to combined cycle. So we're seeing it off of the Dominion East Ohio System up in Ohio. And of course, we're seeing it along the DTIs system along the East Maryland and Eastern Pennsylvania in those areas. So I think as we go forward in time, you'll hear us talking about combined cycle, gas supplies for combined cycle. That I think is going to be the next wave of growth. Daniel Eggers - Credit Suisse Securities (USA) LLC (Broker): And Paul, you see that being newbuild generation or rerouting to existing plants?

No, I think we're seeing combination of both, but new build certainly is one area where we've seen a lot of activities. So our pipeline team is really spending a lot of time looking at the flexible services that generators need. So, for example, we've typically designed pipe to provide ratably over 24 hours. If you need to supply all of that in an eight-hour period, it's a little bit different design spec. So those are the things that we're looking at. It's not just repowering, it's newbuild as well. Daniel Eggers - Credit Suisse Securities (USA) LLC (Broker): Okay. Got it. Thank you, guys. Thomas F. Farrell - Chairman, President & Chief Executive Officer: Thank you, Dan.

Thank you. Our next question comes from Steve – I'm sorry, Steve Fleishman from Wolfe Research.

Yeah. Hi, good morning. Just on the farmout, was this something that was in your kind of rough guidance expectation for the year or was this kind of a new thing? Mark F. McGettrick - Chief Financial Officer & Executive Vice President: Hey, Steve. It's Mark. One of them was in our guidance for the year. The other one was an agreement that we have with a producer that was not in this year's guidance. And so that was $0.04 of the $0.07 difference, but that's kind of the breakdown.

Okay. Thank you. And then on the Atlantic Coast Pipeline, I think and just generally – not just this, but other pipelines – are just starting to see maybe a little bit more noise in terms of citing these pipelines and I guess some pressure at FERC. Is this – do you think this is like a big change or is this more just the nature of the fact that there is just a lot of building going on and so it is not really a big change? Thomas F. Farrell - Chairman, President & Chief Executive Officer: Steve, I actually think it's a little bit of both. There is a lot of activity going on. And so – and I think the nature of the conversation has gotten louder. But when you back up and look at it, we've already surveyed nearly 80% of the right of way for the Atlanta Coast Pipeline. We've let out the making the steel. We're going to – we're doing looking on the construction projects. Now FERC has – this is what they do. They're very professional about this. They recognize their role. And I just think it's – the world has changed some for sure, but we'll see how it all goes on from here. But I think it is – there's going to be more noise around all pipeline.

Okay. Maybe just one last question, just the overall environment for the Dominion Midstream in terms of both G&P and new pipeline growth. Obviously, we have oil collapse, now it has stabilized some. Things keep changing, but would you say your overall market perspective is still the same as it was three months, six months ago? Has anything changed meaningfully? Thomas F. Farrell - Chairman, President & Chief Executive Officer: Steve, I don't think anything's changed measurably. We had the drop-off in oil. It went down to mid-$40s [ph prop month (38:52), but the strip is back to – in the low-$60s for 2015, mid-$60s for 2016, 2017. So I think if oil continues to stabilize and recover, we have a growing confidence that a lot of the producers will start tying in a lot of these wells and continue to grow at least in the regions that we're operating in. That's why I mentioned earlier we're just going to have to wait and see till the fourth quarter or so as they work through. The wells are already been drilled and those – in that production. But I guess what makes us feel pretty good, if you look at the permitting in Ohio and Pennsylvania, West Virginia, you continue to add every month new permits and new growth. And so it's just going to come down to producer confidence on how quick they're going to tie in and what basins they're going to ship resources to. But it certainly looks like Marcellus and Utica are still the two prime regions to drill for gas oil and liquids if you're going to invest your capitals. So we'll see where we go between fourth quarter next year in terms of volumes.

Great. Thank you.

Thank you. Our next question comes from Shahriar Pourreza from Guggenheim Partners.

Good morning, everyone. Thomas F. Farrell - Chairman, President & Chief Executive Officer: Good morning.

Just broadly speaking, can you maybe just provide a little bit of color on what you're seeing as far as muni and electric co-op opportunities. I think there's at least maybe one muni or electric co-op within the state that's helped public hearings as far as the potential sale? Little bit of color there will be good. Thomas F. Farrell - Chairman, President & Chief Executive Officer: I think that's Bristol you're referring to, which is in the far southwest part of the state, which is outside of our service territory. We have a – I think there are 14 electrics co-ops that are in our service territories, it's like that, and it's above 10. Now, they're all – we work very cooperatively with them. We're their transmission providers. We have a – they have a collective group that advise generation on the markets, some from us they own, some plants, they own part of North Anna with us and part of Clover. But that – I don't – I haven't heard any notion of that from any of the other co-ops other than or munis for that matter other than Bristol.

Okay. Got it. It's a little bit preliminary, but just on Atlantic Coast, if you're seeing any potential opportunities to upsize that pipe to a little over 2 Bcfs per day. And then maybe just touch on some of the comments that came out of those potential reroutes of the pipeline. Thomas F. Farrell - Chairman, President & Chief Executive Officer: As we've said about the – right now, it's a 1.5 Bcf pipe. It can be expanded to 2 Bcfs a day with just adding some compression to it. It's almost 100% sold out at the 1.5 Bcfs. And that's – we're just going to sit there for now until we get through this permitting process. There've been – and the second question was on the comments?

Right. (42:03) Thomas F. Farrell - Chairman, President & Chief Executive Officer: (42:04) reroutes.

Right. Thomas F. Farrell - Chairman, President & Chief Executive Officer: We look at – this happens with every pipeline, whether it's 10 miles or 500 miles. We've already done over 100 small reroutes along the lines. It's one of the reasons why you go survey is to be able to meet with the landowners and they can express concerns about a particular – where you're touching their property. If you can figure out a way to change it to make it work for everybody, that's what we do. And then we're looking at 10. We've already adopted 10 major reroutes and looked at others. So this is all part of the process. This is why you go through the pre-filing process to make sure everybody gets the chance to be heard on it, and you can figure out what's the best approach. We've had – there've been almost 30 open houses and scoping meetings on this project so far, 7,500 people attending. And that's the natural outcome, is to have reroutes.

Great. Thank you very much.

Thank you. Our next question comes from Chris Turnure from JPMorgan.

Good morning, guys. Thomas F. Farrell - Chairman, President & Chief Executive Officer: Morning.

Tom, did I hear you say that the legislation that was passed back in February, I think, allows for gas reserve by you guys. Thomas F. Farrell - Chairman, President & Chief Executive Officer: No. No.

Okay. Thomas F. Farrell - Chairman, President & Chief Executive Officer: I didn't touch on that at all. That's an interesting idea and we'll have to – we'll talk to our staff about the – staff at the State Corporation Commission – the Utility Commission staff to see what interest level they have in it. It's the kind of thing you would – we would want to have sort of stakeholder process to go through and see if people really wanted us to do that or not, but the legislation did not touch on that.

Okay. Do you think that you have the ability to do that without legislative approval if you wanted to proceed? Thomas F. Farrell - Chairman, President & Chief Executive Officer: Possibly. But it's not something that I would think about with us right now.

Okay. And then my second question is on equity issuance. You mentioned in addition to the outstanding ATM that you're going to exhaust this year and the, I think, converts that you have coming due in the next couple years, you're potentially going to need $500 million to $1 billion of incremental equity through 2017 or 2018. Is there any update that you can provide us on that number or the timing there or the method by which you would want to issue them? Mark F. McGettrick - Chief Financial Officer & Executive Vice President: Chris, this is Mark. No, there's no additional update other than what we talked about at the Analyst Meeting. And you're exactly right. We said after we do the aftermarket, we could have potentially an equity need of $500 million to $1 billion over the next three years. But what we're watching closely in terms of influencing this is what's going to happen with bonus depreciation. If bonus depreciation were to be extended a year or two year, we would be a very large beneficiary of that because we have some very large projects underway that could well have a significant impact on any equity needs that will be remaining over the next three years. So stay tuned on that later this year and see what happens in Washington and then we'll be able to give some more clarity from 2016 and 2017.

Okay. Great. Thanks.

Thank you. Our next question comes from Paul Patterson from Glenrock Associates.

Good morning, guys. Thomas F. Farrell - Chairman, President & Chief Executive Officer: Good morning, Paul.

Just back on the farmouts, what is the expectation for server run rate on them for this year and next? Thomas F. Farrell - Chairman, President & Chief Executive Officer: Paul, we said at the Analyst Meeting that we saw about $500 million worth of earnings for farmouts over the planned period that we talked about.

Right. Thomas F. Farrell - Chairman, President & Chief Executive Officer: It's going to be – I think it's going to be a little lumpy depending on what region you're in. We've done most of our Marcellus farmouts already, so we're focused on that 180,000 acres of our Utica. We've had some strong interest in acreage there. But I think if you want to model it, I'd model a $100 million a year or so as you'll go through, but just knowing that depending on the timing of producers' interest, it could move around.

That's a $100 million pre-tax? Thomas F. Farrell - Chairman, President & Chief Executive Officer: Pre-tax.

Okay. And then on the ISO New England, the new zones, I know you guys filed sort of protest or a complaint because of the process. But I was wondering if there was anything that you saw in those zones that the economic impact, if any, that you might be seeing as a result of the zones for the next capacity auction? Thomas F. Farrell - Chairman, President & Chief Executive Officer: Well, Dave Christian will go ahead an answer that for you. David A. Christian - Executive Vice President & CEO-Dominion Generation: Yeah. We filed comments mostly regarding the process. We thought that there should been additional opportunity for some stakeholder input. So the way they went about it was a little unusual on our view. But our most sensitive unit up there, Millstone, stays in the Connecticut zone, and we don't see any meaningful changes there. The rest of it we're still evaluating, and it'd be too early to say if there's anything substantial. But I'm not seeing anything meaningful at this point in time.

Okay. Great. Thanks a lot.

Thank you. This does conclude this morning's teleconference. You may now disconnect your line and enjoy your day. Thank you.