Good day ladies and gentlemen and welcome to the Third Quarter 2012 OGE Energy Earnings conference call. My name is Jenade and I will be your operator for today. At this time, all participants are in listen-only mode. Later we will conduct a question and answer session. If at any time you require operator assistance, please press star followed by zero and we will be happy to assist you. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. Todd Tidwell. Please proceed.

Thank you, Jenade, and good morning everyone, and welcome to OGE Energy Corp.’s Third Quarter 2012 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 Keith Mitchell, President of Enogex. In terms of the call today, we will first hear from Pete, followed by an explanation from Sean of third quarter results, 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 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, that this is our best estimate today. In addition, there is a Regulation G reconciliation for EBITDA 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. For the third quarter of 2012, we reported earnings of $1.87 per share compared to $1.80 in 2011. Year-to-date earnings were $3.20 per share, ahead of last year’s $3.09 per share for the same period, and our consolidated earnings guidance for $3.40 to $3.60 per average diluted share is unchanged for 2012. We are on track and remain comfortable with our guidance. Regarding the third quarter, higher earnings were driven primarily by the solid performance at the utility. Although weather was above normal, quarter-over-quarter earnings were negatively affected by milder temperatures compared to the record summer heat in 2011. Higher earnings this year reflect the higher quality of earnings at the utility. Compared to 2011, in addition to positive weather and the AFEDC impact, 2012 earnings were based primarily on real-time cash recovery of transmission projects and other investments, customer growth, and only a slight benefit from weather. In Enogex, we are integrating the Chesapeake Energy acquisition into our operations and among other things looking to minimize the capital required to meet their production needs. As with the Cordillera acquisition, we are in the building infrastructure phase that precedes the gathering of the natural gas volumes. Volumes, while up for the year 2%, were slightly down for the quarter. Gathering revenues still increased this quarter due to higher rates. This is contrast to processing volumes of 24% in the third quarter, reflecting the completion of the South Canadian Wheeler plants, the return to service of the Cox City plant, and the liquid rich nature of the production. These higher processing volumes and gathering revenues more than offset the decline in processing margins resulting from lower commodity prices. While gathering volumes are below earlier projections, the fundamentals continue to look strong. Volumes are still growing, just…

Thank you, Pete, and good morning. For the third quarter, we reported net income of 186 million or $1.87 per share as compared to net income of 179 million or $1.80 per share in 2011. Year-to-date consolidated earnings per share were $3.20 in 2012 compared to $3.09 last year. The contribution by business unit on a comparative basis is listed on the slide. At OG&E, net income for the quarter was 167 million or $1.69 per share as compared to net income of 159 million or $1.60 per share in 2011. As Pete mentioned in his comments, the quality of our earnings is stronger in 2012 due to the real-time recovery of transmission projects and our various riders. Third quarter gross margin came in stronger as we saw an increase of 9 million or 2%. Weather, though positive compared to normal, was much less of a factor compared to 2011. I will discuss gross margin on the next slide. Now looking at some of the other key drivers, as we have mentioned on previous calls, we are focused on controlling our O&M costs which were basically flat for the quarter, and we remain on plan for the year. Depreciation was 9 million higher for the quarter, and the increase was due to additional assets being placed into service, including the Crossroads wind farm and two new transmission lines. Turning to interest expense, the increase is not due to any incremental debt at the utility this year but rather it is attributable to lower AFEDC debt associated with the investments made last year. Consistent with what we’ve provided in our earnings guidance, our income tax expense was 13 million lower in 2012 primarily due to the federal renewable energy tax credits associated with the Crossroads wind farm. These federal tax credits…

Thank you. [Operator instructions] Your first question comes from the line of Anthony Crowdell with Jefferies & Company. Please proceed. Anthony Crowdell – Jefferies & Co.: Good morning, guys. Hopefully one easy question and one maybe not easy. The first thing is, you said you’re projecting declining key pole volumes or percentage of your entire contracts. I just want to know where your targets are. Is there a target level for where you think your key pole volumes would be? And then second is you talked about Chesapeake and I guess the ramp rate is slower. I wanted to turn the topic to maybe SCOOP and what Continental was talking about on their call maybe it was a month ago, a month and a half ago, and what you think the potential is at Continental.

Okay. Hi Anthony, this is Sean. I’ll start and then we’ll turn it over to Keith, our President of Enogex. So we don’t have a target goal as far as what our fixed fee and key pole contract mix looks like. As we’ve said for many quarters now, we do see the key pole percentage declining over time. That’s driven not only by our interests but also by those of the producers. As far as the SCOOP announcement related to Continental, we’ll turn that over to Keith.

Yeah, Continental, we’ve been working very closely with them and we’ve been aware of kind of this area for a while. You probably heard their announcement. It is a very, very exciting area. They continue to grow and have very good results down there. We are in the process of a build-out into that area. We’re extending our header. We’ve even upsized the diameter of the line down there, so it’s an area that continues to develop and area that we continue to look to grow into. But this is something obviously that we’ve been working with them for quite some time. Anthony Crowdell – Jefferies & Co.: At the end of it, so when you’re fully developed or the potential for Continental, I mean, would they represent, I don’t know, 10% or 20% of Enogex’s total processing volumes of the product you guys receive? What do you think Continental could represent?

Well, I wouldn’t want to speculate on what percentage. Obviously they are growing are a customer with us, but I think that they are still trying to figure out exactly how big this area could be. Anthony Crowdell – Jefferies & Co.: Is that something we can get clarity on the fourth quarter call, or it’s just really dependent upon Continental’s drilling schedule?

Well, we learn more every day. Certainly I would expect to know more in the fourth quarter call, but there’s still a lot going on down there. There’s still acreage being acquired, so I don’t that we’ll know everything as far as how that will develop. Anthony Crowdell – Jefferies & Co.: Great. Thanks for your time, guys.

Thank you.

Your next question comes from the line of Ashar Khan with Visium. Please proceed. Ashar Khan – Visium Asset Management: Hey, how are you doing?

Hey Ashar. Ashar Khan – Visium Asset Management: Can I ask you, with nearly three quarters in and the fourth quarter is not such a big quarter respectively, where are you on the overall guidance? Can you tell us – is it midpoint, upper or lower? Can you elaborate, and if you can’t, just the reason why you can’t with the fourth quarter nearly 10, 11, 12% of the whole pie?

Yeah Ashar, I think we mentioned at the utility, we’re ahead of plan. We saw we got the little bit of that weather benefit there, and that’s why we said we’d be at the high end of that range, and obviously there’s a $0.10 range there so we’ll be at the high end there. I think overall, as Keith and Pete were talking about with respect to the volumes and the ramp-up there related to Enogex, if we see a lot more volumes come through than we were anticipating, certainly we’d be at the high end there. So we’re comfortable with where we are right now, Ashar, and we’re very comfortable we’ll be within our guidance range certainly at the high end of the utility, and we certainly are optimistic for the future.

Your next question comes from the line of Brian Russo with Ladenburg Thalmann. Please proceed. Brian Russo – Ladenburg Thalmann: Could you reiterate your comments on the processing volume ramp-up? I think you mentioned it’s slower than expected. Can you reaffirm the 2012 prior volume guidance and 2013 prior volume guidance for processing?

Yes Brian, this is Sean. It was really not the processing volumes, it was gathering volumes. We haven’t changed the processing volumes guidance, and so we originally had thought that gathering volumes would grow 10 to 12% this year, and we revised that down to 4 to 6%. And on that, I’ll turn that over to Keith to kind of talk about some of those drivers.

Sure. The biggest driver was when we raised our guidance earlier, we were anticipating—looking at the Chesapeake deal, we hadn’t closed it yet. As we got into the due diligence and prior to closing, we could see that we’d need to make some closing adjustments, and we did. So that’s really the driver as far as the gathering. There’s still a lot of rigs running in the area. The number of wells that we’re now connecting per month are, I would say, ahead of what we had anticipated. Our volumes that we anticipated at closing is very much in line with what we’re seeing, so I think that’s what it is. But we did not adjust our processing volume guidance at all, and so we feel very good about the area and the drilling, and there’s still a lot of activity out there. Brian Russo – Ladenburg Thalmann: Okay, so just to confirm, you’re still assuming 20 to 25% processing volume growth in ’12 and 15% processing volume growth in 2013?

That’s correct. Brian Russo – Ladenburg Thalmann: Okay, great. And just on the SCOOP and the Continental announcements, would the potential investments that you might make for infrastructure be incremental to what’s in your CAPEX slide?

We have some capital in there in the CAPEX for that area. If that area starts developing faster or gets more prolific, then we would adjust that accordingly, or vice versa. But there’s some in there based on what has been defined to us so far. Brian Russo – Ladenburg Thalmann: Okay. And your existing acreage dedication, say in the Grady County where it seems to be in the heart of the SCOOP, I imagine you guys have right of—do you have right of first refusal on that infrastructure build-out, or any details on any existing contracts you have with Continental?

We have a large acreage dedication with Continental, which means we will build the infrastructure needed to serve that acreage. There is some additional acreage that they continue to acquire that we will continue to talk with them about and see if that makes sense to add or not. Brian Russo – Ladenburg Thalmann: Okay. And just on a related topic, it seems like Continental was in need for infrastructure in the Bakken play. Is that a potential opportunity for Enogex going forward?

You know, we’re always looking at opportunities. I don’t know that that’s one that we would want to do, but we certainly would look at that. It’s an area that if infrastructure is needed, we’ve been working with Continental very well in a lot of areas so it’s something we’d always look at. Brian Russo – Ladenburg Thalmann: Okay, and then switching gears to the utility, should we assume going forward that your O&M expense could remain relatively flat, and that could kind of preserve your ability to earn your allowed ROE?

That’s our objective there, Brian. Brian Russo – Ladenburg Thalmann: Okay, great.

You know, you’ll have some obvious salaries and wages and things like that, but we’re continually looking for opportunities to mitigate those impacts with other savings, and our goal and objective is to earn close to that allowed return. Brian Russo – Ladenburg Thalmann: Okay. And then I may have misunderstood the comment on the transmission rate base in 2016. Could you just kind of—

’14. Brian Russo – Ladenburg Thalmann: In 2014. Would you mind just reiterating what you said earlier?

Yeah, my comments, Brian, that our transmission rate base at the end of 2014 should be about $1.5 billion, reflecting all the investment we’ve made over the last couple years, and then—you know, it’s just about 700. We’re probably halfway through, I think, on that investment with about 700 million or so spent to date and another 800 million ahead of us. Brian Russo – Ladenburg Thalmann: Okay, and what’s the transmission rate base for 2012?

About 370 million or so. And Brian, let me clarify that for a minute. That’d be the FERC portion, okay? Brian Russo – Ladenburg Thalmann: 370 million is FERC portion? Eighty-five percent?

Yeah, and so the other part of that is what would be allocated to the retail jurisdiction. So we probably—to Pete’s point, we’re about halfway through. 370 of that 700 is probably FERC; the balance is Oklahoma and Arkansas portion. Brian Russo – Ladenburg Thalmann: Okay. And then the total transmission rate base is growing to 1.5 billion in 2014?

Right.

Yes. Brian Russo – Ladenburg Thalmann: Okay, and 85% of that would be FERC?

No, probably closer to about 800 million will be FERC. Brian Russo – Ladenburg Thalmann: Eight hundred million – okay, got it, got it. Thank you very much.

Your next question comes from the line of Jay Dobson with OGE Energy. Please proceed. Jay Dobson – Wunderlich Securities: Wow, that’s a promotion!

Welcome, Jay!

Welcome aboard!

Let me ask you a couple of questions, Jay! Jay Dobson – Wunderlich Securities: I hope I have the answers! Good morning, hope you guys are well.

Doing well here. Hope you are. Jay Dobson – Wunderlich Securities: Very well, thanks. Hey Sean, could you go back through the tax rate? I didn’t know whether the 17 million you were talking about was third quarter specific or whether that was year-to-date, so just parse us through what was the renewable portion of the $12.5 million benefit in the third quarter and then sort of what other elements were in there that would have driven the tax rate.

Yeah. You know Jay, it’s almost entirely attributable to the production tax credits associated with Crossroads, and the 17 million was just there in the quarter. Jay Dobson – Wunderlich Securities: Was in the quarter – okay, got you. Perfect. And then back to sort of an earlier question, so if I do this right – and pardon me if I haven’t – it looks like OG&E is about $2.76 12-months trailing, so by saying you’ll be at the higher end, fourth quarter is going to be lower and you’re talking about some challenges in Enogex which volume growth could move that around. Is that what gives you sort of the uncertainty around still with fourth quarter remaining, just a $0.20 range on guidance?

I would have said—I guess I’d say it a little different, Jay. If I think about where we are year-to-date at the utility, we’re sitting at 2.55. We had a very strong fourth quarter last year, had some weather benefit in there too. Certainly if we made $0.19 again, we’d be above that number – you’re exactly right. But we are forecasting kind of normal weather. At Enogex and your comment about challenges, I think we are growing and the business is growing, processing volumes are growing, condensate volumes are growing. We just haven’t seen the speed or the ramp-up associated with the gathering volumes that we were anticipating, but if those volumes pick up and prices pick up, we’ll be even better. And Jay, I think the point that Keith and I have been trying to convey is—and I hate to overuse the word timing, but we know they are going to drill. What we don’t know today is, are they going to drill in the next 30 days or is it going to be 60 or 90 days out. But we are very confident they are going to drill. Jay Dobson – Wunderlich Securities: No, that is fantastic. And then just last question on the MATS compliance, I appreciate Pete, you said you’d have some results in the fourth quarter. But have you actually started the DSI and ACI testing yet?

Yes. We started beginning of October, and we’ve had some testing in the past for brief periods and it was encouraging. We said now we’ve needed to do some testing over a more continuous operating period, and so we should have that done this year. Of course, we need to get all of the analysis done and hopefully we’ll be able to report it in our results on the fourth quarter call. That impacts the capital from if we’re trying to—how effective it is, and a lot has to do with where you inject this into the process. So if we can make it—the more efficient it is, the less capital is required to comply, so we’re looking forward to getting those results. Jay Dobson – Wunderlich Securities: That’s great. And where exactly are you doing that? Is that Sooner and Muskogee, or is it just one of those plants?

Sooner. Jay Dobson – Wunderlich Securities: Awesome. Great. Thanks so much.

You’re welcome.

Your next question comes from the line of Sarah Akers with Wells Fargo. Please proceed. Sarah Akers – Wells Fargo: Hey, good morning everyone. With the focus on oil drilling in your area, do you see any opportunity to participate in any crude gathering projects, or is the existing infrastructure sufficient to support the development there?

Hey Sarah, this is Keith. We are working with some producers on that, both I would say wellhead gathering as well as gathering over to maybe some more liquid points or unconstrained points. Nothing to talk about that we’ve finalized, but we have had discussions with producers in the area.

And just as a follow-up, does the SCOOP represent kind of an opportunity to break into the oil gathering specifically?

Well, I don’t know that I can go into a lot of detail like that. I will tell you that as we go out there to buy right-of-way for well connects, we are buying multi-line right-of-ways that would include oil lines and water lines and gas lines. Whether or not we actually become the one that owns the pipe for the oil, that’s yet to be determined. Sarah Akers – Wells Fargo: Great. Thanks a lot, guys.

Your next question is a follow-up from the line of Brian Russo with Ladenburg Thalmann. Please proceed. Brian Russo – Ladenburg Thalmann: Yes, thanks for the follow-up. Just to be clear on the gathering volumes, previously you had guided 10 to 15% of gathering volume growth in ’13. Is there upside to that given the timing lag of some of the volumes you expected to see in 2012?

No, there is upside certainly there. I think we’ll firm all this up on the fourth quarter call, Brian. You know, a lot of it depends on how much they grow this year. It will be a big driver for how much incrementally they’re going to grow next year, but we do think there’s upside. Brian Russo – Ladenburg Thalmann: Okay, good. And then any read through on ArcLight’s funding this quarter? I think it was less than what you had previously projected. Just curious what the trends are in their investments.

Well, I think when we announced the Chesapeake acquisition, we were still finalizing the details of the transaction, looking at our forecast for the balance of the year, and we just said they could fund up to 60. We finalized that. We looked at our credit metrics at Enogex and determined that we really needed 90 million of contributions into the business and we each contributed 45 million of that. As far as next year, we’ll see where that ends up. Neither OGE nor ArcLight are interested in putting money in there that is not getting put to good use and making a return, so we’re pretty slow to make contributions; and really, we tackle this kind of almost on a quarterly basis and so we’ll lay all that out for you in February. Brian Russo – Thalmann Ladenburg: Okay. And then lastly, I noticed a little bit of movement on the Enogex CAPEX. Any insight there?

You know, I think that just kind of lines up nicely with what Keith was talking about with some of the timing. We’re seeing some other things develop faster, some things develop slower; but it’s really just timing and you’ll see that ’13 has kind of inched up a little bit and ’12 kind of inched down a little bit. Brian Russo – Thalmann Ladenburg: Yeah, okay. Thanks a lot.

All right, thanks Brian.

And at this time, we have no further questions. I would now like to turn the call back over to Mr. Pete Delaney for any closing remarks.

Thank you, Operator. Well, in closing I’d like to say that the management team here remains excited about the opportunities we have ahead of us at OGE Energy, and of course I want to thank our members for their hard work, commitment and thoughtfulness in capitalizing on these opportunities and in executing our plans. Thank you for joining us on the call and have a great day.

Ladies and gentlemen, that concludes today’s conference. Thank you for your participation. You may now disconnect. Have a great day.