Good day, ladies and gentlemen, and welcome to the First Quarter 2011 Regency Earning (sic) [Energy] Partners LP Earnings Conference Call. My name is Jeremy, and I'll be your operator for today. [Operator Instructions] I would now like to turn the conference over to your host for today, Ms. Shannon Ming, Senior Vice President of Finance and Investor Relations. Please proceed.

Good morning, everyone, and welcome to today's call. Today, we will cover Regency's performance for the first quarter of 2011, as well as review industry trends and fundamentals. Presenting on today's call will be Mike Bradley, President and Chief Executive Officer; and Tom Long, our Chief Financial Officer. Following our prepared remarks, Regency will open the call to participants for questions. You may access the earnings release and presentation used on today's call through Regency's website at regencyenergy.com. Today's call is being recorded and is also being broadcast live over the Internet on the Regency corporate website. An archive of the webcast and presentation will be available on the website following today's call. Slide 2 of the presentation describes our use of forward-looking statements and lists some of the risk factors that may affect actual results. Also included in the presentation today are various GAAP measures that have been reconciled back to GAAP. I would also like to note that we will be filing our Form 10-Q after the market closes today. With that, I will turn the call over to Mike Bradley, our President and CEO.

Thanks, Shannon, and good morning, everyone, and thank you for joining us today. First, I'd like to start off the call talking about our recent LDH acquisition and the growth project associated with this joint venture that we announced today, which we are very excited about. Following that, then I will discuss our first quarter results. We have high expectations for Regency going forward and, with our expanding portfolio of services, believe that we are very well positioned to meet our goals of increasing distribution and achieving investment grade metrics. Regency's portfolio of assets, our supportive general partner, diverse business mix and continued focus on capital management puts us in an excellent position for growth going forward. Our focus on increasing our distributions and achieving investment-grade metrics was further illustrated earlier this week with the announcement that we have completed the formation of the LDH joint venture with Energy Transfer Partners, which was purchased for approximately $1.9 billion in cash before purchase price adjustments of approximately $48 million. We are very excited to have completed this joint venture, which will be called Lonestar NGL LLC or the Lone Star joint venture going forward. This acquisition supports our goals of expanding and enhancing our portfolio by establishing an NGL platform, which immediately gives us a strong competitive position in the Natural Gas Liquids business that would be very difficult to build organically due to the strategic location of many of the assets. In addition, with this acquisition, we expand our ability to provide full service capabilities for our producers in the midstream space. To recap, Lone Star is a Natural Gas Liquids, Storage, Fractionation and Transportation business. The storage assets are primarily located in Mont Belvieu, Texas, one of the largest NGL storage, distribution and training complexes in North America. The…

All right. Thanks, Mike, and good morning, everyone. I'll start off with the consolidated operating results. For the first quarter of 2011, Regency recorded net income of $14 million compared to a net loss of $612,000 for the first quarter of 2010. The increase was primarily driven by a $16 million increase in income from unconsolidated subsidiaries from the acquisition of a 49.9% interest in the MEP joint venture in May of 2010 and a full quarter of operations of the Haynesville Expansion Project. Also, we had a $13 million increase in total segment margin, primarily from the addition of the Contract Treating business, which was acquired in September of 2010 and the Contract Compression margin, which was primarily due to increased revenue generating horsepower provided to third parties. These items were partially offset by a $15 million increase in depreciation and amortization expense resulting from the fair value adjustment upon the acquisition of Regency's general partner by Energy Transfer Equity in May of 2010. Now moving on to the Gathering and Processing segment. For the first quarter, adjusted margins decreased from $55 million for Q1 2010 to $52 million in Q1 2011. This decrease was primarily due to the lower hedge deck that Mike had mentioned earlier. Volumes remained flat at 1 million MMBTus per day comparing Q1 2010 to Q1 2011. We did see a large increase in volumes in South Texas, which was offset by decline at our Elm Grove and Dubberly facilities where margins are less than $0.10 per MMbtu and also at our FrontStreet facility, which is a cost of service contract, whereby volumes do not impact margins. However, NGL production increased 22% to approximately 28,000 barrels a day in Q1 2011 from approximately 23,000 barrels a day in Q1 2010. This increase in NGL…

[Operator Instructions] And our first question comes from Michael Blum with Wells Fargo.

Just a couple of questions from me. Number one, on the Haynesville JV, should -- are there any growth -- is there any growth you're looking for in that business? Do you see any growth projects on the horizon and any change in volumes there?

Michael, this is Jim Holotik. Yes, we are consistently looking for growth in that area. We think we're positioned well in the Haynesville formation drilling. We're situated in the fairway where we've seen continued drilling. Also, there's producers that are continuing to drill in some of the Bossier formations in that area which we were bringing into this Haynesville -- into our rig system, our Haynesville joint venture system.

Okay. And then the second question on just in terms of the benefits you'll see from the shared services, O&M and G&A. Any chance you'll quantify that or give us a little more detail to get an extent of the magnitude of how meaningful that could be?

Yes, and I think, Michael, that at this point, we really started rolling in the shared services the first of the year and we're in that transition period right now. We do expect to see considerable savings on both the G&A and operating right now. I think as the year progresses, we'll give you a little more color on that. But so far, we are seeing some big benefits, but you have to realize at that point in time we're in transition, so we're still, we still have people staffed at Regency until we complete that transition.

Okay. And then the last question is just on Lone Star, the $1.5 billion of potential projects, obviously, some of that has already been accounted for with your announcement this morning. But I was just curious in terms of you mentioned processing as one of the potential areas of expansion. Can you talk a little bit about where you're thinking about that processing would be and how meaningful that would be?

Yes, I think one of the processing opportunities that we're looking at, Michael, is associated with the Op-Gas [ph] Refinery business. We see some additional opportunities there that we're looking at.

And our next question comes from Bradley Olsen with Tudor Pickering Holt and Company.

I have a couple questions about the Lone Star JV and the announced fractionation expansion. You guys mentioned in your press release that there are 10-year contracts supporting. And I didn't understand from the press release, are they supporting the proposed frac expansion? Or are they supporting the Gathering and Processing assets, which would be feeding into that?

I think they will be supporting these NGLs and the frac both through long-term tapering that's through the fractionator.

And do you guys envision those contracts as being a kind of frac or pay structure? Or are they a fee-based volume metric? How -- have you discussed with customers how that might look?

Well, they're fee-based, but firm contracts.

Okay. So firm in the sense that there's a take-or-pay component.

Yes.

Okay, great. And you mentioned that the economics of the proposed fractionation expansion would be attractive. Does that assume a certain amount of, I guess, floating margin or margin that's left in the spot market? Or is that assuming that it's a fully contracted facility?

It's the margin or the return on the project and the accretion based on the firm fees to the fractionators. It does not include any marketing uplift.

Okay, great. And then just one final follow-up. When you guys purchased the Louis Dreyfus assets alongside Energy Transfer, it seemed as though the ability of Energy Transfer to attract Gathering and Processing volumes, it seemed like they pulled off several deals right after that. And it seems that the customer interest in your facility at Louis Dreyfus is already pretty strong. Could you maybe just qualitatively maybe provide just a couple comments around what does the addition of kind of integrated fractionation offer customers of your facility that maybe they wouldn't have had before? Or how does it increase the netbacks to the E&P customers that you guys are servicing?

I think from my perspective, one is, we are seeing some of the same benefits and opportunities that Energy Transfer's seeing around their assets in terms of offering a full service Gathering, Processing and fractionation. We do expect to bring barrels to this fractionator as well and we've got projects we're working on that would continue to enhance that, so very similar.

[Operator Instructions] At this time, there are no further questions. I would like to hand the call over to Mike Bradley.

Okay. Well, great, everyone, and we really appreciate you joining us today. In conclusion, number one, we're very excited about the Lone Star Joint Venture. This is a very significant acquisition and joint venture that, as we stated, gives us an immediate position as a major player in the NGL business. I think with the fractionation project, the additional projects I mentioned, we are well-positioned for growth. In addition to that, our assets in South Texas and West Texas provide us additional opportunities to expand our system really across all of our business segments, so we're very excited about what we're seeing there as well. We believe Regency is in an excellent position. We'll continue our strong focus on executing on our business and operational objectives and not only to achieve growth, but also to be certain that we are delivering continued, increasing value to our unit holders going forward. So with that, thank you again, 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.