Thank you for standing by, and welcome to the Quarterly Earnings Conference Call. At this time, all participants are in a listen-only mode until the question-and-answer session of today’s call [Operator Instructions]. This conference is being recorded. If you have any objections, please disconnect at this time. Now, I would like to hand the call over to Mr. Rich Kinder, Executive Chairman of Kinder Morgan. Sir, you may begin.

Okay. Thank you, Jay and welcome to our quarterly call. Before we begin, as always, I would like to remind you that today’s earnings release and this call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1935 and the Securities and Exchange Act of 1934, as well as certain non-GAAP financial measures. We encourage you to read our full disclosure on forward-looking statements, and use of non-GAAP financial measures set forth at the end of our earnings release, as well as review our latest filings with the SEC for a list of risk factors that may cause actual results to differ materially from those in such forward-looking statements. Before turning to Steve Kean, our CEO and Kim Dang, our CFO for an update on our operational and financial performance, let me just start the call by reiterating our strategy at Kinder Morgan. We’re all about creating value for our shareholders. To accomplish that goal, we’ve worked really diligently in 2016 to strengthen our balance sheet, and we did. We also achieved financial performance consistent with the guidance we’ve been giving since our first quarter call in April 2016. We expect that the strengthening of the balance sheet will continue in 2017. We also expect that when we finish our work on JVs and as we work through the backlog, we will be producing cash well in excess of our investment needs. While we have alternatives in using that cash to deliver value to shareholders, our current thinking remains that the best way to deliver that value is through substantially increasing our dividend. We expect to update you on that in the later part of this year when we announce our dividend policy for 2018. Steve?

Yes. Ken, will take you through the fourth quarter and full year performance in detail. So I am going to focus on three themes on our performance that have implications for 2017 and beyond; first, our balance sheet strengthening initiative; second, progress on our growth projects; and third, where we are beginning to see some positive indications in the sector. On the first, we ended the year ahead of target at 5.3 times debt to EBITDA after executing on a number of joint ventures and divestitures through the year. We've built our plans for 2017 to continue that progress, including a joint venture, or IPO, of the Trans Mountain expansion. Both of those approaches are attractive to us and interest is strong. We will develop both alternatives further this quarter and position ourselves to take advantage of the best one in terms of value and other key terms. We believe that syndicating Trans Mountain is the right answer for our shareholders and for the project. It now represents close to half of our backlog. And we believe the value we can receive from investors willing to participate plus the syndication of risk that comes with it, makes bringing in other investors to best approach. We've counted nothing to the value we believe will be realized from investors who wish to participate in the project when we came up with our ending debt metric of 5.4 times for 2017. So, we believe we've left ourselves some room to improve on that metric as the year goes on. Bottom line, we exceeded what we said we would in 2016, and we will work to beat our 2017 target as well. Second, with respect to progress on our projects, starting with the backlog, it now stands at $12 billion, which is down from…

Thanks, Steve. Today, we’re declaring a dividend of $0.125 per share, consistent with our budget. I'm going to take you through all the numbers as usual. But I don’t think you’re going to find any surprises in our results. As adjusted EBITDA, GCF and net debt to adjusted EBITDA are all consistent with the guidance that we have provided since April updated for the SNG transaction. Starting with the preliminary GAAP income statement, you will see that revenues are down and costs of sales have increased, resulting in about $457 million reduction in gross margins. As I've told you many quarters, we do not believe that changes in revenue, or revenue itself, are a good predictor of our performance. However, when revenues are down, we generally see a reduction in our cost of sales, which more than offset the reduction in revenues as we have some businesses where revenues and expense fluctuate with commodity prices, but margin generally does not. That did not hold true this quarter, so let me explain. Both revenues and cost of sales are impacted by non-cash, non-recurring accounting entries, which we call certain items. Certain items contributed $237 million of the quarter-over-quarter gross margin reduction with the largest being an approximately $200 million of revenue that we recorded in the fourth quarter of 2015 related to a pipeline contract buyout. Adjusting for these certain items, gross margin would have been down $220 million. The largest contributor to this decrease is the sale of 50% interest in SNG. As a result of the sale, we no longer consolidate SNGs revenues or cost of sales. But it's fair to report our 50% interest in net income further down the income statement as equity earnings. Keep in mind also that SNG did not have significant cost of sales.…

Okay, thank you. And Jay, we're willing to take questions now.

Thank you, sir. Participants, we will start the question-and-answer session [Operator Instructions]. Our first question is coming from the line of Kristina Kazarian from Deutsche Bank. Your line is open.

So, congrats on the TMX milestones, I got a quick question here though. So I know, I'm still waiting for FID, and you guys were thinking about what the final cost number will be. But could you just talk a little bit about that in the context of the 6.7 times spill-over with multiple you referred to when talking about the project backlog. And just generally, how I should be thinking about the return on this project?

The return on -- it’s a very good return on the project. It is if you think about our overall backlog multiple being about 6.5 times EBITDA, it's a little bit better than that. Now, keep in mind, there's capital spend that's going on for a while under this project, so that doesn't translate directly into an IRR. But it’s a very attractive returning project. And what we invest in this project, wherever that number comes about, we earn on that number when we set the final cost.

And then could you give a quick update on Utopia, as well? I know the press release reference progress made on the right of way. But how should I be thinking about that?

So actually this call last quarter we had just gotten an order from one of the courts in Ohio, finding that Utopia did not have imminent domain in that particular jurisdiction. We’ve since had mixed results, meaning that some have found eminent domain rights, common career status, and public utility status in the eminent domain. But we can't wait for all of that to resolve itself so we Ron McClain and his team put together a strategy to go pursue the right of way, notwithstanding whatever the courts decide. And they've made very good progress on that. And so I think the way to think about it is we believe we're going to get it done, and we've acquired a substantial amount of the right of way, and we believe we're going to complete it.

And last one from me. Can you guys talk a little bit more about this, small but looks like new JV with EnLink? And what the genesis for this project and strategic venture is?

Yes, so we have a position in the scoop/stack area that came as part of the Hiland acquisition, and some acreage dedications there, commitments there. And we looked for the most, the best, returning opportunity to get that system built-out. And essentially because there's additional processing capacity in the area, we were able to come up with a much better project from an NPB standpoint, and if we had later on pipe and built the brand new processing facility. So it turns out better for shareholder. We utilize some under-utilized capacity that our partner had, and end up with the better results for our customer and shareholders.

Thank you. Our next question is coming from the line of Shneur Gershuni from UBS. Your line is open.

Just had a couple of quick questions. I guess, just following up on the TMX question. With the focus towards the -- to a potential JV, I was wondering if you can talk to us about how we should think about expectations of what the promote could potentially look like? If I recall with Utopia did about 20% promote. But at the same time, when I look at where Canadian pipelines are trading at these days, it seems to be far higher than that. Is there a scenario where we could see a promote that’s -- it will in excess of 20%. I was wondering if you can give us some color as to how to think how it would work?

Well, no. We specifically have not given specific guidance on that, because frankly we don’t want to set a marker out there. We want to run a process and test that value. But we don’t want potential counter parties to see a number out there that they feel like if I hit that then I’m done. And so, we think it’s best for our shareholders, best for the project overall, if we just run the process.

But we can say that the interest has been very strong from potential JV partners, and also strong interest in an IPO as an alternative.

And as a follow-up question, in your prepared remarks, Steve, you talked about green shoots. What I think about the contracted nature of many of your assets in terms of some MBCs and fee base and so forth. I was wondering if you can talk about if these green shoots to do continue, where we can potentially see a positive revision to your EBITDA guidance for 2017?

What might affect our guidance, actually we’ll get into that in a fair amount of detail next week at the call. I think one place that we’ve seen some value that actually have had an impact, and now we’ve got, and I’d say it’s going to exceed 2017 plan. But the return of some value to the storage assets, I think, has been a good sign. And that’s a place, that’s a potential positive. But we’re getting to some -- and you could say that too about throughput on our products pipeline potentially, throughput on -- through our terminals facilities, et cetera. But we’ll give you a pretty good look next week on what we think the drivers are in our business for 2017.

And the final follow up and I suspect this is the next week answer as well too. But you put out the return marker of 6.7 times, excluding CO2 projects. I was wondering if you can remind us what the target was for CO2 related projects, and how much of the backlog is represented by CO2 these days.

Yes, so we have set a minimum of 15% unlevered after-tax for CO2. And the projects that we’ve approved recently were well in excess of that amount. So, we’re now trying to identify -- we’re trying to identify good high returning projects, stress test for different oil price scenarios et cetera. But we set that as kind of a minimum. And the total on EOR -- the total on CO2 is $1.4 billion of the $12 billion in the backlog.

Our next question is coming from the line of Brandon Blossman from Tudor, Pickering, Holt & Company. Your line is open go ahead please.

Let's try a couple of LNG related questions. Thinking about the potential for an Elba JV, what are the metrics that will help you determine whether or not it makes sense to you? Is it a return threshold? Is it a de-levering -- deleveraging metric, EBITDA or something else, or a combination of all the above?

Well, the reason for considering a JV on Elba is to address the balance sheet. So we of course take into account what the impact is going to be on our leverage metric. But it's really a function of return. Now, it's the value that we get for someone buying-in and participating in the project.

The Southwest Louisiana supply project, is that tied to the Cameron online date, or is that contractual February 18th?

No, it is tied to the first in service on that project.

But it looks like there's the potential you get your part done before them, I guess. And then just very simplistically, on CO2 projects north of 15% return, and I assume that that's for crude pricing, correct?

Yes, we look at it on a strip, but then we also look at it with the sensitivity off of that strip to make sure that to look at what a NPV '15 breakeven price would need to be. So, we look at the pricing in a couple of different ways.

Okay, that’s all. Thanks…

There's always the potential if there's downside risk in the pricing where we still have a nice return in economic project works.

Our next question is coming from the line of Jean Ann Salisbury from Bernstein. Your line is open, go ahead please.

It's been an enabler that Trump is supportive of Keystone. I'm just wondering what impact, if any, that has on the potential of Trans Mountain shippers, and maybe they're willing just to pay?

So, we don't think that it has much impact. We think that there're some significant advances to the Trans Mountain project. Of course it is under contract with shippers. And it is these projects that we believe is in the lead, and gets people to tide-water where they can access a world market price. And so there's a strong interest in it, and that strong interest has continued after Trump's election and after his comments on Keystone.

And also on Trans Mountain, the Canadian dollar has fallen pretty significantly since you've started the Trans Mountain process. I think that’s also true. But I just want to make sure that both the CapEx and the tariffs are in Canadian dollars, so there’s not really any ForEx impact either way?

So, we’ve carried the CapEx in our backlog in U.S. dollars. But yes, the tariff is in Canadian dollars, and the CapEx that gets communicated to our customers will be in Canadian dollars as well.

So just in terms of return, there is not really ForEx exposure?

No.

Okay, thank you. And then…

Most of the spend is in Canadian dollars.

Right.

Okay, thank you. And then last one is, you noted that figures in the gas volumes were down because of Texas intrastate due to declining Eagle Ford. I am just wondering how much room there is for Permian gas growth to offset this or if you’re kind of near your max for Permian gas lift? [Ph]

On the Intrastate?

Yes.

Yes. We are fairly full of intrastate rate system of what we can see from the Permian. As Steve said earlier, I think we are approaching a bottom in the Eagle Ford volumes to expect those to flatten out towards the middle of the year and more the likely with oil later in 2017.

And Permian volume, I mean the intrastate aside for a moment, Permian volume growth does tend to drive good value on our EPNG assets.

Right.

Our next question is coming from the line of Darren Horowitz from Raymond James. Your line is open.

Couple of quick questions. The first, within Products Pipes, on that segment, exiting 4Q and I realize, we will get more detail on this next Wednesday, but exiting 4Q, were you guys more optimistic about the incremental uplift on NGL volumes and margins or possibly what KMCC and Double H could do as capacity utilization improves into the first quarter?

Ron, do you want to…

Well, what we are seeing recently is strong volumes in Q4 and in January and we expect that to fall off a little bit, but I think we expect KMCC volumes to return as Tom said, rest of the year, and should drill [indiscernible]

I am just trying to get a sense of the expected pull through and kind of how that segment ultimately shakes up for year-over-year performance thinking about the quarters, but I know we are getting to that on Wednesday, so we can defer till then. If I could just switch quickly over to CO2, within that 8% lower reported production estimate or actual, outside of those project deferrals and that reallocation of capital, the projects, production response that you guys discussed, was there anything from a legacy organic field decline perspective that caught your attention, maybe pattern conformance or anything that we should be looking out for?

I think, look, there is a natural decline associated with those fields and we continue to work for ways to offset those declines, and historically we have been able to do that. And we are looking at and we will go over this next week as well looking for some opportunities to flatten out again or potentially even grow that production with some new opportunities in those fields. I guess, I wouldn’t say that there was anything unexpected in what we saw in our results there.

Okay. And then, last question from me. Kim, just a quick housekeeping one on that $215 million impairment on the equity investment in Ruby, recognizing obviously the non-cash nature of it, can you quantify for us maybe the magnitude and timing shift of that West Coast natural gas demand that drove the impairment to be recognized? I am just trying to get a sense of the drivers behind it.

Sure. It probably moved out three to four years.

Okay, thank you very much. I appreciate it.

Our next question is coming from the line of Keith Stanley - Wolfe Research. Your line is open.

How are you guys thinking about some of the legal challenges to the Trans Mountain project, just your thoughts there on where you expect to be challenged, how you are feeling about the legal case and over what timeline we should expect some of these challenges to play out?

Okay. Yes, several parts to that answer. So, one is legal challenges have already been filed. Most of the legal challenges to date related to the project have resulted positively for the project continuing. And a big part of that I think is due to the fact that the Canadian government provincially and federally has taken a long time, a lot of care, and gathered a lot of information, and attached to lot of conditions and engaged in lot of consultation in order to make the orders that they ultimately issued very strong and hard to overturn on appeal. So, it was a lot of good work, building the record and listening to, responding to, and putting in place the appropriate conditions to deal with the legitimate concerns that have been raised. Our view of the appeals and we’ll be filling our responses today or shortly to those that have already been filled is that they are unlikely to succeed on the merits on appeal and that given the much higher standard for something like in injunction for example, they are unlike to succeed in getting something that actually stops the project. So, I think the credit goes to our team up there, but certainly the government engaging in such a thorough process which ultimately makes those orders very strong.

Great. So, you sound pretty confident there. One follow-up, just any more color on the merits when you are considering a JV partner for the project relative to an IPO of the Canadian business, just how you are weighing what some of the positives and negatives would be of each option? And then also how do we think about the timing of when you would look to do a sell down, is it soon after FID or would you wait a little while on this?

Let's start with the timing. We would anticipate doing something [indiscernible] with the FID or shortly thereafter. And as far as timing is concerned, I think that that will give you an idea. There is a lot of pros and cons between the JVs and IPO, and we can get into more detail perhaps next week on that. But I think the real salient point is that both are very good potential alternatives. And we think we're going to have the ability to make a selection between the good and the better. So, we think that it's going to be a decision that benefits our shareholders for the long run.

Our next question is coming from the line of Craig Shere from Tuohy Brothers. Your line is open.

Quick question, once you are done with the balance sheet repair, are you still planning on financing half of ongoing growth CapEx that is separate from JV partners in the debt markets and the rest sub operating cash flow?

I think that's a good summary. Obviously, we’ll look into circumstance as we go forward. But, predilection would be to get to the point where we have gotten our balance sheet in the right shape, and we think we are getting a lot closer to that. That's what we've indicated. I think you’ll see good results from JVs over the course of this year that will move us in that direction. And when we’ve done that and as -- we will be able to maintain that balance sheet that debt to EBITDA ratio and without putting out new equity, unless we desire to do so. So, we will be using excess coverage dollars above our dividend payouts to fund the equity portion of the capital expenditures. And while we look at all the alternatives, as far as good new projects on a going forward basis, obviously Trans Mountain project is a little bit like that over you saw about the pig going through the restricted. [Ph] It is a huge pig going through and when you get through on the other side, we anticipate our capital expenditure levels will be less. We are still going to be looking for growth opportunities but our capital expenditures will not be as great.

On that node, it didn’t sound like there was maybe much added in terms of new project origination in the fourth quarter. How comfortable are you given the positive signs already discussed that maybe would just start to move over the next couple of years back towards that 2 billion to 3 billion and annual project origination?

Yes and that could happen. I mean, like we’ve always said, we will continue to look for good, higher returning projects. We believe that is the best way to deliver values who invested in good, high returning projects. But I think our current view is that we are likely to generate cash as these projects come on. We are likely to generate cash in excess of those -- equity portion of those investment opportunities. And in those circumstances, we believe the best way to return value to shareholders is within increasing dividend.

Understood, yes. If you are only having to cover half of that, your operating cash, so you definitely have a lot free.

That’s right.

So, last question, any update, I suppose that you might touch on some specifics on the segments next week but any update about prospects for contracting remaining unhedged Jones Act tankers?

Yes. Currently, I believe everything that’s on the water is under charter.

11 of the 16 are under long-term contracts. That have some exposure, the total exposure for next year to our budget is $2.9 million or 0.2% of our total budget for 2017.

0.29% for the total budget.

I got you. So, all the exposure is for what's -- in terms of anything meaningful, what’s yet to be delivered?

Well, in sum, our existing charter terminations as well as ships roll off of charter. And look, I think we’ve been very active in re-chartering vessels as charter expirations come up, and I think have been pretty successful in what is no doubt a down market and making sure that our ships have charters even if it’s at a reduced rate. And that will continue to be our goal through the year. I think also, we would hope that we and the other large vessel companies would be able to take a little business from the ATB market and I think we are beginning to see; we are competing for that business as well. We’re starting to see that.

Alright our next question is coming from the line of Danilo Juvane from BMO Capital Markets. Your line is open.

I wanted to circle back the question on Ruby. So, there was a write down on Ruby this quarter. I think if I’m not mistaken, MEP was written down last quarter. Are there any expectations of additional write downs on a going forward basis perhaps?

I think carrying value on Fayetteville is like a $100 million. So, it’s got a relatively low carrying value. We have to asses our assets every quarter and to make sure that we’re carrying them at the right value. I don’t see significant risk of imperilments going forward but we will have to make that assessment based on market conditions at the end of every quarter.

Got it. And the last question for me, most of my questions have been asked. What was the CO2 CapEx spend this past quarter?

I don’t think we have a quarterly number for you.

Our next question is coming from the line of Jeremy Tonet from JPMorgan Chase. Your line is open. Go ahead, please.

Just want to go back to TMX here and just want to clarify, do you see any situation where you would go to loan with this project or at this point you feel you have a lot of certainty with regards to the JV or IPO options, if you’re pretty certain that that would happen at this point?

It’s the latter, it’s the latter. I mean, that’s an option to us but I’d say, as I said at the very beginning, we think that syndicating this is the right answer overall. And we think that the interest level is high enough and strong enough for whichever route that we take that we’re going to be successful in that syndication.

Great, thanks. And then, could you just walk us through what you think might be the optimal amount to monetize at this point and how you kind of think about gives and takes there?

It varies so much depending on the structure that’s pursued and it’s a broad enough range that I can’t really give you a specific answer there.

Okay, great. And then just a housekeeping one there, what was the last number for the CapEx spend there; how current is that?

We have been carrying -- so it is as we said in the earlier discussion, we’ve been carrying it at 5.4. And if you did -- U.S., so when you see it in our backlog, it’s sitting there at U.S.$5.4 and if you converted that at the current exchange rate, it’s about U.S.$6.

And when was that last updated?

We’ve carried that same number for a while and what’s happened is just by kind of happenstances the FX rates have changed; it stayed reasonably closely in line, so we haven’t updated U.S. dollar number since the beginning of the project for our U.S. investors. But it was done at a time when the loonie and the dollar were at par.

Okay, not material cost or anything that’s changed much. And then just one last and as far as shipper contracts, is everything set there, is there any deadlines where things go past certain time frames that that could be changed or anything like that?

No, to be clear on the earlier question, costs have changed, costs have changed and what we’re in the process of doing now, an increased and is communicating that final cost estimate to shippers which we expect to have prepared and delivered to them in early February. That’s the current thinking. And then, there is a 30-day period of shipper review where they examine the underlying cost because once that cost is set, that is the investment; that is what we earn on. So, there'll be a review process over the 30 subsequent days after we give them the final cost estimate.

Great, and all the shippers are fully committed; are there any kind of drop dead dates where contracts should reopen or anything like that?

If the costs exceed a certain level, then there is an opportunity for customers to reconsider their position and turn their capacity back. But as I said at the beginning, there's enough interest from current shippers potentially in expanding their position as well as from other potential customers who are not currently shippers, wanting to come in that we remain very confident that capacity gets placed at the level it is today.

That makes a lot of sense, I would expect there to be very high demand. And then, just one last one if I could, as far as -- it seems like we're starting to see the makings of some industry consolidation out there, kind of small players can pull there in GP LP consolidation, continuing to pick up pace after you guys. I'm just wondering how you see Kinder Morgan playing in that -- within that context going forward and whether that could be an opportunity to expedite delevering if you could do an all equity deal there?

We continue to look in that market, continue to look for those opportunities. We do, and implied in your question, we're looking at DCF accretion but we are also looking at leverage improvement as well. That narrows the feel frankly, that narrows the feel, but we continue to look actively in that market for opportunities.

Our next question is coming from the line of John Edwards from Credit Suisse. Your line is open, sir. Go ahead.

John, how are you doing?

Doing good, Rich, and congrats on the approvals on Trans Mountain.

Thank you. We think they're very significant.

Just a couple of clarifications, can you share with us or remind us how much has been spent on Trans Mountain development to-date? And then in terms of the cost overruns or if there's cost overruns, it sounds like the way things are structured with the shippers that they would in terms of what they would pay on the shipping cost, they in fact bear a portion or all or maybe if you can share if there's cost overruns how that works?

So, starting with the first question, it's roughly CAD$600 million gross and so there's also, remember, we have part of our development costs are covered; it's over a 10-year period but they're covered under our what we call our firm 50 dock charges. So, years ago, we signed up shippers to give them access to firms based across our existing Westridge dock and those proceeds go toward the deferring of development costs and over the life of that, those charges is about 250, CAD$255 million. So, you have to net that off and those don't all come in the same time that we're doing development. As I said some of it can come over time but it's CAD$600 million gross. And then that’s a firm 50 off of that. On how the cost structure works, once the final cost estimate is delivered and we proceed toward project execution, there are two categories of costs. There's a set of uncapped costs, and those are costs where if there is an overrun, then that overrun would be to the projects accounts. Then there is a set of uncapped costs. And those overruns, if there are any, those overruns would be added to the investments in the project, and we would earn on those. So, it’s not just flow through, it becomes part of the investment and we earn on it. And those tend to be, as you’d expect, the most predictable elements of the build. They apply to things like steel costs, which are not going to be an issue, aboriginal consultation, ultimate accommodation -- consultation and accommodation costs and two particular parts of the build that are likely to be difficult and unpredictable when we’re forecasting it. Having said all that, what we’re delivering to shippers will be P95. So, we feel like with all the work that’s been done, we have narrowed the estimates, both on capped and uncapped costs to a very, very narrow level. And at a 95% probability, meaning a 95% probability that would come in at or under the number that we deliver. So, we think we’ve done a lot of work to make sure we have our arms around what the cost risks are there, and are taking them into account in the final cost estimates.

Okay. And just to help about what percentage is capped and what percent is uncapped?

I don’t have that off hand; the majority is going to be capped. But I don’t have the specific percentage of the uncapped portion. But the majority -- the substantial majority of the costs will be in the capped category.

Okay. That’s really helpful. So, it sounds like there is some kind of a sharing on the uncapped and then the capped, that’s basically predictable costs that are locked in. So that’s the idea, correct?

Well, yes, and on the uncapped, to be clear on that too, there is a possibility since these are the more unpredictable category of costs that they come in lower. And if they come in lower, the shippers get the benefit of that lower cost as well.

Just rolls into the tolls, John. If it comes in higher on the uncapped portion, the tolls increase; it comes in lower, then tolls [ph] decrease.

Okay. That makes sense. And then, just on the schedule, I think the last schedule you shared with this was fourth quarter 2019 or end of 2019 start-up. Is that factoring in any expected litigation, how should we think about that?

We still view the project and services, the end of 2019; so, really think of 2020 is being when the revenue starts to arrive. And the schedule we’re billing takes into account what we think we’re going to encounter include the need to deal with litigation as obviously.

Okay, great. And then, the other thing I just wanted to touch on briefly was just every now and again, we hear these rumors flying around about the sale of the KMI E&P business. You had some discussion last year; it sounds like we hearing some rumors fly again. We’ve always thought about it that you would sell down, if it could be effectively balance sheet accretive, otherwise you wouldn’t do it. Any other comments you could share with us in that regard?

We don’t comment on that kind of transaction activity. But, I can tell you what we -- the same things we talked about, I think last quarter and we’ve talked about in conferences in between which is that we like that business. We get good returns in that business. We’ve built a particular proficiency in that business in the EOR part of it, the midstream part of it, the source and transportation part of it. We integrated forward into EOR, because we’ve got a scarce resource and that is CO2 and that resources is essential to getting certain barrels of oil out of the ground and we figured out how to do it. So, we’re happy to have that business. We are a shareholder-directed Company and we entertain in any context really something that will give us the opportunity to increase shareholder value including the disposition of an asset that we own as we’ve shown through this year. But again, this is a business that we like. We don’t have to do anything with it. The considerations around it in addition to the ones that you mentioned, John, have to do with, if you did a disposition and likely it would be DCF dilutive and is the multiple uplift that you get on the remaining cash flows because the deal is more secure enough, so that the day following, your investors are better off and so that is a very important constraint as well.

Our next question is coming from the line of Tom Abrams from Morgan Stanley. Your line is open. Go ahead, please.

Thanks a lot. A couple of segment questions. One is back on CO2, is the 8% decline something that is given your current spending and projects timing, is that 8% something we should assume for the next few quarters or is it something that accelerates or even declines?

The way we invest in that business is not based on a decline rate or offsetting a decline rate or holding a decline rate, we’re reversing it. It’s really based on individual projects and whether the incremental oil that’s produced for that capital is going to pay us handsome enough return for us to make that investment. So, that’s the way we do it. And we don’t plan for it, can’t forecast for you a targeted decline rate or a targeted level of production. We address the project opportunities as they come forward and fund the ones that make economic sense.

And that being said, we will go through the 2017 budget next week, and I think you will see in there the 2017 production is relatively flat versus 2016. And then to answer the question that was asked earlier about the CapEx for the fourth quarter on CO2, $73 million.

Thanks for that. The other question I had left was on the Natural Gas Pipeline segment, just trying to understand a lot of moving parts there. But if you took SNG out of both years or both fourth quarters, what would be the comparison?

If you take SNG out of both fourth quarters?

My impression is it’s partly in 2015 but below somewhere in 2016. I just wanted to clarify the change, the rate of change there.

In other words, you want a number that reflects SNG -- even though SNG wasn’t joint ventured until September of this year, what would be the number Q4 of 2015 to Q4 of 2016 if SNG were out of both quarters?

Correct. Just what the underlying is doing?

The underlying business in SNG is relatively flat.

Okay.

The SNG’s underlying business, make that clear. Year-to-date, I think the sale probably hasn’t impacted on the segment. Let me make sure that’s clear, on the segment versus our plan of a little over a $100 million. Now, net to the Company, the impact is much less, because you are getting -- there is a piece of G&A that goes away, there's a piece of the sustaining capital goes away and…

Interest.

And you have substantial reduction in interest because we use the proceeds to pay down debt.

Next in the queue is coming from the line of Sunil Sibal from Seaport Global Securities. Your line is open. Go ahead, please.

Most of my questions have been asked but just one clarification. When you look at Natural Gas Pipeline segment, seems like TGP and NGPL kind of had good uptick year-over-year while other segments were probably -- other pipelines were pretty flattish. Wondering if you could talk about what kind of uptick you're seeing in NGPL and the TGP pipelines in flows or cash contributions?

Yes. Project driven I would think, largely, project driven on TGP. But if you think about the prospects for those systems just looking at the underlying fundamentals of the flows et cetera, TGP continues to be a system that grows in value. The return of growth in Marcellus and Utica will just drive that further. It's participating in Mexico market demand expansion, it's participating in LNG markets expansion and it's participating in the power sector, and it's had record power data I think this year time if I remember right. Same thing with SNG, very strong, NGPL is also benefiting from volumes coming in from REX -- on REX West, well that’s a Marcellus-Utica phenomenon as well and then hold on the downside from Sabine Pass on the bottom of the system from Sabine Pass and some incremental power demand and growth into Mexico. So, all three of those systems I think are doing well, have good underlying fundamentals.

Any update on re-contracting for some of the contracts rolling off on NGPL?

Contracts going off on NGPL, generally the re-contracting is done…

[Multiple Speakers] I mean some of our bigger customers who actually have long term commitments as long as 10 years, but the regular tenure on some of the more traditional LAC [ph] customers are every three years and we’re we still think that will add better rates than some instances than we’ve seen in the past. And there seems a bigger interest in the projects that we're working on NGPL as well. So, I think the prospects are very good for all the reasons that Steve just mentioned as far as the drivers.

Alright, thank you. Speakers, at this time, we don’t have any question in queue.

Okay, Thank you very much. We appreciate you all sticking with us for a pretty long call, and have a good evening.