Good morning. My name is Caroline [ph], and I will be your conference operator today. At this time, I would like to welcome everyone to the OGE Energy second quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. Todd Tidwell, you may begin your conference.

Thank you. Good morning, everyone, and welcome to OGE Energy Corp's second quarter 2010 earnings call. I'm Todd Tidwell, director of investor relations. And with me today, I have Pete Delaney, chairman, president, and CEO of OGE Energy Corp; Sean Trauschke, vice president and CFO of OGE Energy Corp; and, several other members of the management chain to address any questions that you may have. In terms the call today, we will first hear from Pete, followed by an explanation of second quarter results from Sean. And finally, as always, we will answer your questions. I would like to remind you that this conference is being webcast. And you may follow along on our Web site at www.oge.com. In addition, the conference call and the company slides will be archived following the call on that Web site. Before we begin the presentation, I would like to direct your attention to the Safe Harbor statement regarding forward-looking statements. This is an SEC requirement for financial statements, and simply states that we cannot guarantee forward-looking financial results, but this is our best estimate to date. In addition, there is a Regulation G reconciliation for ongoing earnings guidance in the appendix, along with projected capital expenditures. I will now turn the call over to Pete Delaney for his opening comments. Pete?

Thank you, Todd. Good morning, and welcome to our second quarter earnings call. This morning, I'll discuss our recent accomplishments and our important initiatives, our outlook for our businesses. And Sean will review in more detail the financial results. Our second quarter results from operations were $0.78 a share, up from $0.72, compared to the second quarter of last year. And I'm pleased to report increased earnings of both utility and midstream business. Utility earnings increased primarily due to higher approved rates associated with the significant capital invested to maintain system reliability and to be able to provide additional renewal energy resources to our customers. However, the earnings impact was tempered by higher operating expenses, primarily resulting from plant maintenance. You may remember, on the first quarter earnings call, we projected higher O&M expenses for the remainder of the year. At Enogex, earnings increased 44% as we experienced record volumes in the gathering business, record volumes in the processing business as well as higher natural gas liquid prices, compared to the second quarter of last year. Gathering volumes increased more than 6%. And processing volumes grew nearly 19%, compared to last year. However, natural gas liquids sold and produced increased by almost 50% from 120 million gallons to 179 gallons during that same time, so processing margins were up $21 million, including a doubling of the fixed fee volumes further reducing the volatility of that contribution looking forward. This is all to demonstrate the continuation of robust drilling activity in the very liquids rich basins of Western Oklahoma, where we are very competitively positioned. Producers have indicated that these basins are their most profitable drilling areas, including the shale plays. Moving on to the Oklahoma economy, it continues to remain stronger than most of the country. The Oklahoma City and…

Thank you, Pete. For the second quarter, our net income was $77.23 million or $0.78 per average diluted share as compared to net income of $70.5 million or $0.72 per average diluted share in 2009. The contribution by business unit on a comparative basis is listed on the side. Before moving on to the business unit results, let me address the results of the holding company. As Pete mentioned, we wrote off expenses of $1.3 million in the Tallgrass joint venture as it no longer – it is no longer probable that the line to Hitchland will be built to 765 kV based on the recent notices to construct we received from the SPP to build that line as 345 kV. That being said, we're still interested in pursuing the construction of the 765 kV line within the Tallgrass joint venture when, and if, 765 kV is approved. Turning to our marketing business, we have a few remaining transportation agreements in our business, which, due to the lack of favorable spreads, we were unable to recover demand fees in the second quarter. The total transportation demand fees for the quarter were $2.8 million. At OG&E, net income for the quarter was $60 million or $0.61 per share as compared to net income of $56.4 million or $0.58 per share in 2009. Some of the primary factors are as follows, gross margin increased $45 million or 19% – and I'll touch on gross margin on the next slide. Operation and maintenance expense increased by $23.3 million, primarily due to higher power plant maintenance expenses and higher pension, post-retirement, and medical expenses. Also included in the increased OEM is $4.5 million of expenses that also have revenue offsets in the form of riders. On the last earnings call, we mentioned that operation…

(Operator Instructions) We'll pause just a moment to compile the Q&A roster. Your first comes from the line of David Frank [ph]. Your line is now open.

Hi. Good morning, guys.

Good morning, David.

A question, I mean it looks like you have a pretty large bump-up in CapEx forecast. And I guess what every investor is going to wonder is will the increase in CapEx net of any financing expenses to support it – will this be additive to your previous forecasted growth outlook for the company?

Sure. David, this is Sean. No, we said that if you're referring to our growth rate of 5% to 7%, we're still good with that 5% to 7%. Recall that when we originally said that 5% to 7%, we've set that off a base of $2.45. And then, we updated that off a base of $2.60. So we haven't increased that because of the base. The second point I'd make is that 5% to 7% is a long term growth rate. So you're exactly right. The CapEx has increased. But if you look at the CapEx schedule we provided you, not all of this CapEx was occurring in the first couple of years. Crossroads is. But if you look at the priority projects and some of these other projects, they're layering in over time, so you're going to see more of a steady growth.

Right. Is it safe to assume that you're better off with it than without it?

That's absolutely true.

Absolutely.

Absolutely, okay. Great. Thanks, guys.

Thank you.

Your next question comes from the line of Brian Russo. Your line is now open. Brian Russo – Ladenburg Thalmann & Co.: Just a follow-up on the previous question-and-answer about the 7% growth rate, it just seems that the CapEx on the utility side sets you up for some nice growth just on the utility side independent of where Enogex performs. But would you say there's a bias towards the top end of that 5% to 7%?

Again, Brian, that's a long term growth rate. And we're going to stick with that as the long term growth rate. And so, some years it's going to be a $0.10, some years this will be a low end. But we're comfortable with the range there. Brian Russo – Ladenburg Thalmann & Co.: Okay. You mentioned the possibility of raising equity to finance some of these incremental utility projects. Can you quantify the amount that you're considering?

Sure. So Pete mentioned that we're – with the Crossroads investment of $450 million, I think you ought to think about that in terms of a 50-50 cap structure. That is incremental to our plans. We would finance that roughly at 50-50. So $200 million to $250 million of equity would be a good range of number there. Brian Russo – Ladenburg Thalmann & Co.: Okay. And what about the longer term transmission related projects? I realized there's a 2014 timeline. But when would construction start on that? And would you need incremental external financing for it?

That will be against the point from our investing capital next year, a pretty nominal amount for those two priority projects. But we really don't get into the heavy lifting there until 2012 and '13. So hopefully, with retained earnings, we'll address that funding need. But to reiterate what Pete said, we're going to protect the balance sheet, but we don't envision significant equity needs to that. Brian Russo – Ladenburg Thalmann & Co.: Okay. And can you just comment on what you're seeing in NGO pricing? For the early year-over-year it's been up. But I've just heard that there's a lot of NGO in the surrounding base in this annum. I'm just wondering what you see the remainder of the year.

Pete, would you take that call?

Sure. Certainly, with all the producers focusing on the rich plays, NGO production has increased in a lot of areas. But we believe that our projection is that we have some of those considerations in there. Certainly, forward market would present that. So we think that we're pretty – we're okay with our projections. Brian Russo – Ladenburg Thalmann & Co.: Can you remind me of the sensitivity that you guys had previously outlined in terms of changes in commodity spreads and what the annualized net impact that has?

Yes. So what we said, Brian, was for a 10% move for the entire year, in commodity spreads was about $4 million of net income. Brian Russo – Ladenburg Thalmann & Co.: Okay. And I would imagine given your migration towards more fixed fee business, will that sensitivity decrease in '11 versus '10?

It should, yes. The offset there would be – as you recall in 2010, we had roughly 75% of our CIPO [ph] volumes were hedged. Next year, it's closer to 50%. But directionally, you're correct. Brian Russo – Ladenburg Thalmann & Co.: Okay. And then lastly, there is some recent activity in the midstream M&A environment. Specifically, I think there was a deal announced in Oklahoma. And I was just wondering if you can just comment on your ongoing initiatives to pursue strategic alternatives for Enogex.

Yes. I mean we're very much aware of that. I think you're talking about the Atlas transaction that you're referring to. Brian Russo – Ladenburg Thalmann & Co.: Yes.

On the Enbridge, on the western parts of Oklahoma, we operate in that area, so we're much aware of that. We're aware of it. And so, we're anticipating that that particularly – in the event of that situation that that may be an eventually. We are very well competitively positioned. We remain so. We are fortunate when we look organically at our position. We have significant opportunities. I mentioned in the call that these areas we operate – and Aubrey McClendon, again, just this week I think was quoted as saying. And we've heard that from Chesapeake as well as other producers that this in fact is their most profitable in the Granite Wash area because of the rich natural gas liquid production from all their positions. And Chesapeake as an example or in some very – in all the basins – in all the shale plays in the country. So that's quite a statement. Excuse me. So we do see substantial organic growth opportunities. As I said in earlier calls, we only are projecting known and committed projects that we do. So we do expect that that are forward CapEx will be increasing as we have this quarter. We have the – the Enogex folks are very busy and working very hard because of all the opportunities we have. So we are – again, have a lot of organic opportunities. If there's an acquisition, a potential that has the right value for us and works, and is complementing to our system, and can produce synergies and a higher return for our assets, then we'll take a hard look at it. But we still like our position in the big continent. And we're really excited about our potential growth opportunities that we have. Brian Russo – Ladenburg Thalmann & Co.: Okay. Great. Thank you very much.

(Operator Instructions) Your next comes from the line of Jay Dobson. Your line is now open. Jay Dobson – Wunderlich Securities, Inc.: Hi. Good morning.

Hi. Good morning, Jay. Jay Dobson – Wunderlich Securities, Inc.: Question, Sean, on the guidance, I just want to understand puts and takes as far as why it remains where it is. But I do note in the press release, you exclusively indicated it's based on weather, and took note of Pete's comment that I think last week you hit a new peak, and understanding that weather can change a lot between here and year-end. But I'm just wondering how you think about what's happening right now and what that could do to earnings.

Yes, good questions. So the issue there is – you're right. We're counting on normal weather. It's been very warm here. I think it's a different type of warm now. Just because it's in the 90s in Oklahoma, it doesn't mean it's above normal. That's expected. But it is – it's been very warm here the last couple of weeks. The first part of July, it was in the 80s. And we have a lot of rain. So the third quarter, Jay, just to put it in perspective, is between 60% and 70% of the earnings contribution for the utility for the year. So it is a big quarter. And that's the important point to take there. From a weather standpoint, it looks like it's been good for July. June was a good month. May and April were so-so. So on balance, we were a little bit ahead for the quarter. But certainly, the third quarter will turn that around either way. Jay Dobson – Wunderlich Securities, Inc.: Okay. Fair enough. And then on Enogex, I wanted a little more details on OEM. You indicated it was third party expense. And then later on in your comments, you talked a little bit about these pipeline integrity initiatives you had. Just dig down a little bit for me and tell me what's going on there, the trends for this year and next.

I think what – just to be perfectly clear, what we're doing there is we saw the opportunity that we could do some of this integrity work and some of this maintenance now – actually, earlier in the year and maybe not accelerated in from 2011 to minimize the business interruption. And that's for our customers. Jay Dobson – Wunderlich Securities, Inc.: Yes, I'm sure. Fair enough. And then Pete, back to the equity question. I know you're getting asked this all the time, but your latest thoughts. I mean obviously, you've got a number of different alternatives to consider when you think about raising $200 million or $250 million of equity, how you think about it straight common versus MLP versus any other alternatives; and understanding it's an ongoing process you're going to give in your final answer here.

Yes. I'll reiterate what I've said before about our commitment to long term value creation for shareholders and to us. That obviously translates into our lowest cost of capital. Again, those alternatives have to be consistent with our really long term financial and business strategies. I guess at this point, we're still not – we're not in a position to really discuss or comment on the process at this time just to say that we really remain committed to value accretion. And again, because of where the stock – I've said consistently over time, we don't believe our OGE stock reflects the full value of Enogex. So given that view, alternative transactions may well evolve – may well involve Enogex. But in the event – at the time – if we do come at the – a point – in the position to comment further, I'll just assure that we will communicate with you as soon as we can. Jay Dobson – Wunderlich Securities, Inc.: That's great. Thanks a lot. And Sean, just one more, on the hold co expenses, I appreciate that those expenses are going up. And so, on your slide nine, I guess it is the difference there. But does that include the write-off of $1.3 million, and then the unrecovered demand fees?

Yes it does. Jay, sorry. I'm sorry. Jay Dobson – Wunderlich Securities, Inc.: Go ahead.

It absolutely does. Essentially, we weren't anticipating that in the second quarter. And that's why the guidance has essentially moved up $0.04. Jay Dobson – Wunderlich Securities, Inc.: Perfect. Can you remind me the longer term range on hold co expenses, if we're looking out to '11 to remain at that $0.11 to $0.13 level? Or is there something than it then reverts back to a number sub $0.10?

We haven't honestly – haven't given '11 guidance. But I think we're focused on that historical range of that $0.07 to $0.09 is probably a good way to think about it. We don't anticipate, obviously, to write-off the expenses associated with Tallgrass. We're done with that. We don't anticipate another quarter where there's just actually no basis opportunity for us to recover the demand fee. Jay Dobson – Wunderlich Securities, Inc.: That's great. Thanks very much for the time.

Okay. Good luck.

And there are no further questions at this time. So I'll turn the call back over to the presenters.

Thank you, operator. In closing, I'd like to say we just remain very excited about our plans for continued growth in both businesses. We remain on track. I think that that's in spite the accomplishments of this quarter. We're on track in executing the strategy we laid out several years ago. I thank you for your continued interest in OGE Energy, and have a great day.

This concludes today's conference call. You may now disconnect.