Good day ladies and gentlemen and welcome to the Second Quarter 2011 OGE Energy Earnings Conference Call. My name is Keesha will be your conference operator today. At this time all participants are in listen-only mode. We will conduct a question-and-answer towards the end of this conference. (Operator Instructions) As a reminder this conference is being recorded for replay purposes. I would now like to hand the conference over to Mr. Todd Tidwell, Director of Investor Relation. Please proceed sir.

Thank you, Keesha. Good morning, everyone, and welcome to OGE Energy Corp.’s second quarter 2011 earnings call. I’m Todd Tidwell, Director of Investor Relations. And with me today I have Pete Delaney, Chairman and CEO of OGE Energy Corp.; Sean Trauschke, Vice President and CFO of OGE; and several other members of the management team to address any questions that you may have. In terms of the call today, we will first hear from Pete, followed by an explanation of second quarter results and an overview of the Oklahoma rate filing 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 website at www.oge.com. In addition, the conference call and accompanying slides will be archived following the call on that same website. 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. I will now turn the call over to Pete Delaney for his opening comments. Pete?

Thank you, Todd. Good morning, everyone and welcome to call. This quarter’s finance performance was driven extraordinary hot summer weather and to a lesser extent increased NGL pricing. As of this call we have experienced 40 days of day time highs in Oklahoma City since June 14 over 100 degrees. Normally we would have about 10 days per year over 100 degrees, so this summer is really shaping up to be one of the hottest on record in Oklahoma. Enogex is on plan to meet the financial target again by NGL prices over the prior year. Operationally we are making good progress on key initiatives in both businesses as you may recall this is the major build year for us with a record 1.4 billion capital budget. In the second quarter we reported earnings $1.04 per share compared to $0.78 in the second quarter of 2010. And so the gross margins were higher primarily for the quarter due to the hot weather I mentioned, regulatory riders associated with pre-approved utility investments and new customer growth. This higher gross margin was partially offset by higher operating expenses. We established a new all-time peak demand, last couple of days that peak demand has been about 7000 megawatts. This is an unprecedented 400 megawatt increase in our peak demand over last year’s record peak. We believe obviously, this huge increase in the peak driven by the weather as opposed to growth, that our plants will be analyzing that data. As an extreme weather condition our infrastructure systems and members are seriously challenged by report that operations have been able to meet the demand of our service with minimum disruption. You may recall from our prior quarter call, we’ve increased our spent last year as part of a mechanical integrity plan. Those investments have…

Thank you, Pete and good morning. For the second quarter, our net income was $103 million or $1.04 per average diluted share as compared to net income of $77.3 million or $0.78 per share for the second quarter of 2010. The contribution by business unit on a comparative basis is listed on the slide. Turning to OG&E, net income for the quarter was $78.6 million or $0.79 per share as compared to net income of $60 million or $0.61 per share in 2002. Gross margin increased $32.4 million or nearly 12% and I’ll touch on gross margin on the next slide. Some of the other drivers are as follows: Operation & Maintenance expense increased by $9 million of which $2.5 million was associated with riders that have revenue offsets and the remaining drivers include higher employee costs including overtime costs related to the April storms. This higher O&M costs were partially offset by lower postretirement benefit expenses due to the Retiree Medical Plan modification we discussed earlier this year. Depreciation and amortization expense increased $1.5 million, primarily due to additional assets being placed in the service. Taxes other than income increased $1.6 million, primarily as a result of higher add long taxes. Net other income increased by $3.6 million, primarily due to an increase in equity AFUDC attributed to construction costs associated with the Crossroads Wind Farm. Finally, interest expense increased $2.1 million, primarily due to an increase in interest on long term debt that was issued last summer and in May of this year. Turning to gross margin, the increase of $32.4 million compared to the same period in 2010. The main driver for the higher gross margin was the weather. It is been extremely hot so far for this summer and cooling degree days with 20% higher than…

(Operator Instructions). Your first question comes from the line of Brian Russo with Ladenburg Thalmann. Please proceed. Brian Russo – Ladenburg Thalmann: Hi, good morning.

Hi, good morning Brian. Brian Russo – Ladenburg Thalmann: It’s nice to see the Enogex CapEx starting to trend significantly higher and I’m just curious if maybe you could talk in more detail on any specific projects and I don’t know maybe the types of returns you expect? And then how does ArcLight’s current 30% ownership play into the incremental CapEx spend?

Hey Brian, it’s Pete. I’m going to turn the first part of the call over to Keith Mitchell, Enogex’s Chief Operating Officer and I think Sean will then address the ArcLight ownership percentage.

Yeah. We’ve been working hard and we have been able to expand our system. We’ve done a lot of activity in our area with the Cana Woodford primarily as well as the Granite Wash and so we’ve been continuing to get additional acreage dedications as well as keep line of sight to a lot of extra growth even where we have acreage dedications. So we do anticipate our CapEx to be continuing to grow. Brian Russo – Ladenburg Thalmann: Are these gathering in processing projects and what type of projects and type of contracts are we looking at?

Yes, it’s gathering projects with compression. Lot of compression gathering lines and then that feeds into our processing headers and as, you know, we are expanding our processing capacity. So the processing plant expansions that we are doing will also support that. Brian Russo – Ladenburg Thalmann: The process agreements that were not key poles, those are fixed fee PLP I believe?

That’s correct, its fixed fee or PLL PLP.

And Brian this is Shawn. Regarding, the contributions from ArcLight and OGE to fund this CapEx, we haven’t specified the exact funding percentage or contributions, and the way it’s work through is we’re going to analyze the timing of those cash flows and we will certainly exhaust the cash on hand that interjects. First, and then to the extent that additional capital is required from ORE and ArcLight OGE decide between and 10 and 50% of the new contribution how much will fund and then ArcLight will fund the rest will certainly provide you all of that clarity and when we release 2012 guidance, but right now what we want to do is we have committed to these projects we are going to be begun building those projects and we’ll certainly layout these funding plan and the contribution schedule once we finalize that at the end of the year. Brian Russo – Ladenburg Thalmann: Is it safe to assume that you don’t need any OGE external equity to fund this?

Well, I think at the present time I think I would argue that the using ArcLight as the funding source for equity is cheaper from OGE common stock. And so we are looking at in terms of what the cheapest source of equity for us. But, at the same time we are also focused on making sure that we continue to create shareholder value in grow our earnings. So right now, we planned to use that funding vehicle to ArcLight. Brian Russo – Ladenburg Thalmann: Okay, great. And you mentioned 5% I think gathering volume growth, year-over-year I would imagine that’s likely to accelerate next year and beyond with the committed projects?

Brian, this is Sean. Yeah, we haven’t provided any future guidance around assumption around gathering or processing volumes. Needless to say, gathering volumes were up 2% year-to-date over what was considered a pretty big year last year. And we are still expecting 5 to 7. So we are anticipating a big increase for the back half of this year and so we will certainly provide our ‘12 update around volumes and all of our other assumptions. Brian Russo – Ladenburg Thalmann: Okay. And books of NGL pricing are you seeing for the remainder of the year?

For the remainder of the year we are seeing close to $1 and that assumes that – is in recovery. Brian Russo – Ladenburg Thalmann: Okay. And then switching gears to the utility, can you just give us more detail as to where we are with the EPA and FIP as the Attorney General filed the lawsuit and is there any timing on when the judge might issue a state that kind of stop the clock?

We aren’t having – really have been we are not – there is no timeline on the suit filed by the Attorney General and again that rule push back November and everything else gone on to EPA, what we – really that’s happened. We filed our comments in mid July, we are continuing to do the work, we need to do to figure out how our path is going to move forward to address all this regulations and as you know I mentioned my comments that the new transport rule, cost state rule, we are meeting with the state today I think it is for the time of the impact of that if Oklahoma is included and so there is a lot of uncertainly yet and all implications were clear for the State of Oklahoma should that proposed rule move forward but that’s really nothing really new report. Brian Russo – Ladenburg Thalmann: Okay.

Of our standpoint. Brian Russo – Ladenburg Thalmann: And just to clarify on the guidance, on the utility side, the guidance are exceeding the high end of the utility guidance is based on year-to-date as of June 30th weather so anything in July and in the third quarter would be incremental to you guys already exceeding the high end?

Yes, Brian this is Sean. Yes that’s correct. And we’ve picked that $0.22 of additional earnings from the weather year-to-date. And we are on plan. All of our assumptions are still valid for the utility. We’ve just picked up this – picked up this whether benefit this Pete and I remarked July was a continuation of what we saw on the second quarter and even this week in August, the first week in August it’s been incredibly hard as well. So your assessment there is that this will be incremental is correct. Brian Russo – Ladenburg Thalmann: Okay. Do you guys have some rates so that hot weather in 3Q has kind of a bigger margin benefit then hot weather in 2Q?

Yes I think the way I’d say that is we have summer rates that impacts the summer more than does weather. Brian Russo – Ladenburg Thalmann: Okay. And lastly on Enogex, remind us what the original NGO assumption in your original guidance was?

$0.90 a gallon. Brian Russo – Ladenburg Thalmann: Okay. Thanks a lot guys.

All right thanks Brian.

(Operator Instructions) The next question comes from the line of Anthony Crowdell with Jefferies. Please proceed. Anthony Crowdell – Jefferies: Good morning just I guess a quick follow up on Brian with EPA rules are you sure of those you guys have two – I think – and Muskogee both of them scrubbed I guess what sort of environment controls do you have on them?

Muskogee are uncurbed. Anthony Crowdell – Jefferies: Do you have, have you used – or anything on those plants or there is no really Michigan trials – like cross five border controls?

No I think we would continue to look at what we can do to comply, but scrubbed and uncurbed and we bought further sell for coal, we have been well within the – we are able to build our admissions target one thing we have done is continued to track that and reduce our efforts from those units to make sure we comply. As you know we besides regional aids that were EPAs look at the – resource review we’ve got – so do you know Anthony there is no doubt that the actions we are going to take with regard to those coal play in terms of having two invested in we will take that – well with the pending rules. Anthony Crowdell – Jefferies: Is there any illusion to think that any of that without enclosure would not put on, would not be included in rate base, if it did seem that the right place we have to be – so what if there is any – there is some – that would not be the case?

Well, that’s not right we aren’t have the 1910. What you have asked 2007 is that correct. That’s been longer that talks about, I believe to dollar associated to federal state regulator – regulations and gives a lot of support for recovery from the regulators for that instance. So we – this issue is well understood. The commission is very much engaged and we have a statement implementation plan that – give the flexibility in regards to our coal plants. Commission is on board, I believe with that plan is stated meditation plan and favors that as well, settlement implication plans, again that something that we would be force to do and the comply with federal law. And generally the regulatory process should cover those costs. Anthony Crowdell – Jefferies: So any I just want to make sure, I guess your utility forecasted CapEx does not include any type of emission controls on these two plans, that would be incremental to what you already announced?

That’s correct. Anthony Crowdell – Jefferies: Great and the last question I know Jack, I am not sure how much is impacting on one of calls yesterday, there is a pipeline being both right now between I guess Conway and now Bellevue and I guess the intend there is maybe to lessen that differential that certainly going on there. I mean how will impact Enogex or do you not even think that the differential changes with adjusted the stand hills pipeline, with Southern hills pipeline?

Yeah, this is Keith. There is certainly is been additional reduction come on in the Bakken up in Dakota as well Rockies and then the Mid-Continent. So that’s created the need for additional capacity from Conway Kansas down to Bellevue. So we view this is a good thing those pipes people on those businesses continue to expand their capacity so that they can get down to the petrochemical markets on the Gulf Coast. Anthony Crowdell – Jefferies: Great. Thanks for your time guys.

Thank you.

And there are no further questions in queue at this time. I would now like to hand the conference back over to Pete for any closing remarks.

Thank you, operator. I want to thank everybody again for joining our call. Thank you for your continued interest in OGE Energy. And have a great day.

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