Good day, ladies and gentlemen, and welcome to the Third Quarter 2011 NiSource Earnings Conference Call. My name is Lacey and I'll be your coordinator for today. [Operator Instructions] And I would now like to turn the presentation over to your host for today's call, Mr. Glen Kettering, Senior Vice President of Corporate Affairs. Please proceed.

Thank you, Lacey, and good morning to everyone. On behalf of NiSource, I'd like to welcome you to our quarterly analyst call. Joining me this morning are Bob Skaggs, President and Chief Executive Officer; Steve Smith, Executive Vice President and Chief Financial Officer; and Randy Hulen, Managing Director of Investor Relations. As you know, the focus of today's call is to review our financial performance for the third quarter of 2011 and provide a business update. We'll then open the call to your questions. At times during the call, we'll refer to the supplemental slides available on our website at nisource.com. I'd like to remind all of you that some of the statements made on this conference call will be forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements. Information concerning such risks and uncertainties is included in the MD&A and Risk Factors sections of our periodic SEC filings. And now, I'd like to turn the call over to Bob Skaggs.

Thank you, Glen. Good morning, and thanks for joining us today. This morning's agenda is brisk to allow time for your questions. To start things off, I'll touch on a few key highlights that demonstrate the team's continued progress on executing NiSource's business plan. I'll provide a few specific updates on NiSource's results, as well as the performance of our key business units, and then we'll open the line to your questions. Starting off, let's turn to Slide 3 in the supplemental deck, labeled Key Takeaways for the Third Quarter. I'll discuss in a moment, despite sluggish economic conditions, our balanced investment-driven strategy continues to deliver solid earnings growth and increased shareholder value. Our strategy also has remained true to our underlying commitments to do the right thing in enhancing customer service, modernizing our energy infrastructure and expanding our network across the entire NiSource footprint. As noted in this morning's release, our performance today has NiSource on pace to deliver earnings at the upper half of our 2011 guidance range of $1.25 to $1.35 per share, non-GAAP. NiSource is also on track to deliver double-digit shareholder returns for the third consecutive year, significantly outperforming the utility indices and the broader markets. This performance record is the direct result of the continued exceptional execution in array of core initiatives across each segment of NiSource's businesses. Just a few examples. From a regulatory standpoint, we've received approval for a significant rate case settlement in Pennsylvania. We also advanced settlement of our Columbia Gulf rate case, as FERC approval targeted by year end. In Indiana, our watershed electric rate case settlement remains on track for approval late this year or early 2012. Meanwhile, NIPSCO's substantial environmental scrubber investment program at our Schahfer Generating Station remains on schedule and on budget. And then our…

[Operator Instructions] And our first question will come from the line of Stephen Maresca with Morgan Stanley.

Thanks a lot for the color kind of, Bob, on the midstream side.

Good.

I'd a couple of questions just to follow-up on that. So you said 100,000 to 200,000 acres, now that's what you have associated with the storage. Are you still trying to figure out what mineral rights you have? Is that the deal or do you know your mineral rights on that number, that 100,000 to 200,000 acres?

Typically, we have mineral rights associated with that number. I've got to be clear, we are in the midst of extensive legal geotechnical analysis to prove out, to establish precisely what we have with regard to the 100,000 to 200,000 acres. And to emphasize again, extensive legal and geotechnical work lies ahead.

Okay. When you're thinking about once you find out what exactly it is, what are you thinking about in terms of how you deal with it? Should we think about how you handled the Marcellus transaction as something as a blueprint?

Well, that's certainly one approach, but I would say that we are taking through various approaches to best realize the long-term value of the assets and do what is expected, and as I mentioned in the prepared remarks, we are intently focused on how to ensure we optimize our downstream investment opportunities that are associated with those lease positions. More to come.

Okay, absolutely. And you're building up quite the team in midstream, it seems. And you mentioned you added 1.2 Bcfe capacity in the Marcellus. And I appreciate the thoughts on the structure given all the activity. What would change your mind on structure? It seems to me that the opportunity side is growing, which is a good thing, but something where you could potentially benefit from another type of vehicle frees up capital and you could become even more of this kind of dividend growth company? What are you looking at that would change your mind, I guess, going forward?

Well, to your point, we believe that our base business plan is extraordinarily strong. We believe it will be even more strong as we find our minerals position, as we complete the development of this midstream commercial team that Jimmy is compiling. We believe we have a strong, strong prospect and to deviate from that strong plan, it's going to have -- we're going to have to see something that is extraordinarily compelling.

Okay. The final one is anything that could cause the NIPSCO settlement to slip? And could you remind the magnitude that you think potential impacts on earnings?

Yes, we're literally at the stage of the process where the Commission is deliberating, so the hearings, the briefing process has been completed so this is in the Commission's office being considered for approval. As you may recall, the parties to the settlement urged the Commission to approve this agreement prior the year-end, and we believe that the way that we've handled the briefing -- the very small amount of opposition, we have a good shot of getting this approved prior to year-end. I don't see any blockages at this point. In terms of ongoing operating earnings lift ballpark number, it's about $40 million pretax. That's what we're looking at in the way of a lift. Yes, I would just remind you, tagging onto that, that we will be providing 2012 guidance probably in that January timeframe when we announce our earnings for the fourth quarter and the full year, and that will include the results of the NIPSCO rate proceeding.

And our next question will come from the line of Paul Ridzon with KeyBanc.

Thank you for the update on the Utica every -- it's been on everyone's mind.

Yes, absolutely, we recognize that. And again, Paul, you and everybody else, we're going to be timely, transparent and it will be meaningful information, so stay tuned.

I just had a question. The NGT&S, there's $11 million remediation charge. Is that behind us or do we need to think there could be more of that coming?

We believe that it's behind us now; never say never. There may be minor additions required in reserve over a period of time, but we believe that this -- [indiscernible] for all intents and purposes of it yet. And this relates to historic PCB cleanup, a consent decree, so this has been placed for many, many years and, again, we believe it's the tail-end of that project.

How long do you think it takes discussions with producers to mature? Is this something you could talk about when we potentially meet early next year?

Again, we are going to keep you up on a consistent basis with those discussions. We expect over time that we will be in a position to announce infrastructure investment arrangements with producers, so it's going to be an ongoing dialogue with the financial community.

If you could pick the relationship you're going to have, what kind of interaction is there going to be between the infrastructure and the actual molecules?

Sorry, Paul, I'm not following the question.

Do you think you're just going to sell the mineral rights outright or do you think there's going to be a more complicated relationship with the producers involved to your infrastructure?

It's impossible to speculate on the exact nature of relationships with those. It's awfully dynamic and it does vary from case to case. But in my first question-and-answer, what I -- maybe the allusion to was at any arrangement we might have around minerals, we certainly want to ensure that we're positioned to capture the bulk of the downstream infrastructure investment opportunities, that sort of our business, investing in infrastructure, we want to capture everything we possibly can.

And our next question will come from the line of Yves Siegel with Credit Suisse. Yves Siegel - Crédit Suisse AG, Research Division: Just to kick to continue -- to continue to kick the can down the road, I'm just -- really, just 2 questions as it relates to the Utica. One is, how complicated are the legal issues that you need to -- or perhaps the better way to say, could you elaborate on the scope of the legal issues that you need to evaluate?

Yes, the entire oil and gas legal arena is pretty complicated. I want to put it in that context, I'm not sure our leases are extraordinary in one way or another. But if you're going to gain perspective, we're talking about thousands of leases over an extended period of time, it involves many, many different forms of leases and, therefore, different language the lease has been operated differently according to the storage. There are statutory considerations, there are common law considerations, there are equity considerations, so that gives you a bit of the dimensions that are involved when you undertake this sort of an extensive analysis. And again, I would emphasize, Yves, my point of view, this is not really extraordinary when you get into the oil and gas leasing legal arena, but our intent is to fully understand what we're on so we need to go through this very methodically and a very thorough manner. Yves Siegel - Crédit Suisse AG, Research Division: Okay. And the follow-up to that is who owns the leases though? Would that approve to the NiSource shareholders? Or do some of those leases belong to your -- to the utility customers?

These are leases. We are the lessee, and they are held by our operating corporation, Columbia Gas Transmission. Yves Siegel - Crédit Suisse AG, Research Division: Okay, I got it. And then lastly, not to be nitpicky but I think this is the second time you've discussed a 5% zip code as opposed to saying 3% to 5% in terms of thinking about earnings growth. Could I suggest that maybe you’re in a new zip code?

Zip code, area code, what we've tried to be consistent about, we've been saying to the finance community, if we can sustain a -- annual CapEx spend at $1 billion or so, we would be at the upper part of the 3% to 5% range. This is now the second year that we've spent $1 billion. Certainly, next year, we would like to be a bit north of that. So we do believe that we are at a bit of a different zip code, so let's call it 5% though for the time being .

And our next question will come from the line of Carl Kirst with BMO Capital.

Now you've said -- all right, so not to again beat a dead horse but one other question I wanted you to go, just with -- and this was really more of a clarification and it may make sort of an overlap, but when you mentioned the 100,000 to 200,000 acres, I guess I was trying to figure out because we have those geotechnical and legal issues to work through, are those -- is any one single issue creating an upper or lower bound? Meaning, do you -- we know we have at least 100,000 acres that might be prospective, but maybe there's 200,000 acres that legally we think is free and clear, and it is the geotechnical work more so than the legal, for instance, that's going to be the primary factor in that delta or vice versa? I don't know if there's any more color on that.

The answer is no.

Okay. And then maybe just one other -- to follow-up on the environmental -- on the pipeline side and just trying to kind of get a sense of the $19 million, perhaps, in total because there was a couple of other issues wrapped up in that. What was just related to the -- what you might call embedded personnel -- not the environment, not the feberance but just sort of the embedded piece maybe that we should look at as far as recurring?

Carl, I'm not following your question. Talking about the core environmental reserve adjustment?

Exactly, the $11 million of the $19 million, and I'm just trying to figure out how much of return beyond the $11 million might we see in third quarter of next year?

I will say it's in the $4 million range effects.

And our next question will come from the line of Craig Shere with Tuohy Brothers.

Just wondering in what counties do your potential Ohio Utica mineral rights cover?

I can't give that to you over the phone and follow-up with Randy Hulen. We can you a little bit more of the geographical sense on when the storage assets lie.

Okay, I can follow-up.

Thank you. Yes, just do that offline.

And our next question will come from the line of Andy Levi with Caris. Andrew Levi - Caris & Company, Inc., Research Division: Just kind of a follow-up to the last question. Can you give us some idea -- the middle of the state where most of the acreage is at State of Ohio, I should say, [indiscernible] Appalachia, Ohio, Flordia, broad geographic locations?

I would say -- yes, it tends to be midwestern part of Ohio to the Eastern border is what -- where these facilities are. We can make available the Columbia Gas Transmission map and on that map, you will see storage fields, compressors stations and the like, and that will give you a sense -- a general sense of where our facilities are. That's readily available. But as I mentioned in our clear [ph] of questions, I would caution you not to extrapolate too much at this point because it would be pure extrapolation and involve a lot of speculation. But we can clearly -- we can show you where the facilities are situated. Andrew Levi - Caris & Company, Inc., Research Division: And I guess I'm sorry because I'm on a train, but I guess you said they're basically located or focused on where your storage facilities are? Is that kind of the way to look at it?

That's correct, yes. If you look at where our storage fields are sited, that typically is where the lease is up. That's where the leases are, in fact.

And our next question will come from the line of Faisel Khan with Citi.

On this -- on the specific storage fields in Ohio, are you -- I mean, if it is still possible to lease acreage on top of those storage fields or do you have to keep those storage fields sort of separate from -- if acreage have to be kind of away from those storage fields, so you don't have to [indiscernible] reservoirs of some of those fields?

Yes, you're getting way beyond my area of expertise, but one of the key considerations when you do your work around those, the assessment is we have to protect the integrity of the lease operations. That's first and foremost because you go through the geotechnical analysis, the operating analysis, maintain the integrity of the [indiscernible]. Andrew Levi - Caris & Company, Inc., Research Division: Okay. Can you remind us a little bit of what exactly you guys did in the Marcellus? I know you leased some amount of acreage there from mineral rights or from leases you had in that particular area. Can you remind on what -- the negotiation you had with the -- with developers and the producers in that area, what came out of that facility, can I get an idea?

Yes. We... Andrew Levi - Caris & Company, Inc., Research Division: Kind of what take place going forward?

Yes, we leased about 135,000 acres. Typically, the transactions involved an upfront bonus payment and we retained a 1/16 royalty, if you will, in production. In some cases, we may have had rights to proceeds from liquids, a portion of proceeds. So that was the general structure of these arrangements and the counter-parties involved, Chesapeake, CNX and Range. Andrew Levi - Caris & Company, Inc., Research Division: And what would you say the contribution to earnings is from those leases that you guys put in place a while ago?

Ballpark, royalty and any proceeds, roughly $10 million pretax. This has been what I said a while earlier in the call, our intent and interest is investing in facilities downstream. We considered these leases as being alignment of interest so that we could again reap the ability to invest downstream as opposed to the primary interest in creating a revenue stream. It's a nice thing to have, but our intent was to align ourselves with CNX, Chesapeake and Range in the Marcellus region. Andrew Levi - Caris & Company, Inc., Research Division: Okay. And I guess you've mentioned that you have a map on the storage fields that we've seen some of that, but from what your understanding is of what producers have put out there in terms of what's in the so-called liquids-rich sort of region of the Utica? I mean, do you have an idea of kind of this storage fields sit in that window or is it mostly in the drag-us window?

We're assessing that and, again, I alluded to this earlier, the producers are still in the midst of delineating that region and I think we've seen some notional delineation, but I think what's notable is the level of drilling activity in Ohio has still been very, very small. There have been only a dozen or so wells, that many drilled in Ohio, and it hasn't been expansive in terms of geographical coverage. From our perspective, we are very, very early in the stages of -- to understand what we've got.

And our next question will come from the line of Gabriele Sorbara with Caris & Co. Gabriele Sorbara - Caris & Company, Inc., Research Division: Just another Utica question, I realize it does is very early in determining the acreage, that perspective for the play but can you provide some thoughts on maybe how you guys plan on getting this -- creating value from this asset? I realize you hired some new key people. Did they play a role in kind of determining your options in the Utica?

Absolutely. It's going to be Jamie Stayton and his midstream team, coupled with legal and geotechnical advisors that will, number one, identify what we have and develop the strategy to best optimize position, and then begin to plan in executing the strategy. Gabriele Sorbara - Caris & Company, Inc., Research Division: Would you ever consider bringing in the rig? Or is it something you would farm out to JV ultimately.

Just general business philosophy is that we are -- we're not a commodity business, we're a fee-for-infrastructure, investment-driven company, so we don't anticipate participating in production and commodity sorts of activities.

Ladies and gentlemen, this concludes our question-and-answer portion of today's call. I would now like to turn the call back over to Bob Skaggs for closing remarks.

Thank you all for your interest and your support. We'd certainly appreciate and we look forward to chatting with you in the not-too-distant future. Have a good day and good weekend. Thanks.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day, everyone.