The Williams Companies, Inc. (WMB) Q1 2012 Earnings Report, Transcript and Summary

Good day, everyone, and welcome to the Williams Companies First Quarter 2012 Earnings Release Conference Call. At this time for opening remarks and introductions, I would like to turn the call over to Mr. John Porter, head of Investor Relations. Please go ahead.

Thank you, Corina. Good morning and welcome. As always we thank you for your interest in Williams. As you know yesterday afternoon, we released our financial results and posted several important items on our website, williams.com. These items include the press release of our results, with related schedules and our analyst package, a presentation on our results and growth opportunities with related audio commentary from our President and CEO, Alan Armstrong and an update to our quarterly data book which contain the detailed information regarding various aspects of the business. This morning, Alan will make a few brief comments and then we will open the discussion up for Q&A. Rory Miller is here from our midstream business, and Randy Barnard is here from our gas pipeline business. Additionally, our CFO, Don Chappel is available to respond to any questions. In yesterday's presentation, and also in the quarterly data book, you will find an important disclaimer related to forward-looking statements. This disclaimer is important and integral to all of our remarks and you should review it. Also included in our presentation materials are various non-GAAP measures that have been reconciled back to generally accepted accounting principles. Those reconciliation schedules appear at the back of the presentation materials. So with that, I'll turn it over to Alan.

Great. Thank you, John, and good morning to everybody. Thanks for joining us. I know it's a busy day for earnings releases. Certainly, you've have all seen the strong financial results for the quarter, so this morning I hope to provide just some color around the business fundamentals that provide great transparency around the projects and the business growth that it supports our confidence in a sustainable high-growth dividend for WMB. First of all, our quarter came out to about 8% above consensus due, to I believe, a combination of mild weather and continued growth in revenues from our recent capital investments that continue to ramp up. And then as well, the high ethylene margins in the first quarter as well. I think we're higher than most people expected. So let me hit on just a few of these things real quickly. First of all, the mild weather, how that impacted us -- drove lower natural gas prices which of course improved our NGL margins despite some lower NGL prices. The very low natural gas prices actually helped prop up our key pulse margins. Secondly, and probably less obvious is the fact that we had great operating performance during the quarter. Because normally in the first quarter, we have a lot of freeze offs of production from our producers and so forth. So in this period, we did not experience very much of that at all. So we've enjoyed the mild weather in those 2 ways. Secondly, as I mentioned, the projects that we continue to bring online continue to grow our fee-based revenues and actually, in the midstream the fee-based revenues were up 19%. And really this was due to a combination of issues. First of all, as I mentioned, projects that we've been investing in over the last…

[Operator Instructions] And first, we'll go to Carl Kirst with BMO Capital Markets.

Alan, I think when we last spoke in March, I guess with the Caiman acquisition, there was hopes may be that by this time, we might have a little bit more color on the follow-on Utica joint venture. Is there anything additional you can share at this point?

No. We still are under a confidentiality agreement there and so not ready to be able to disclose that in full detail. We're certainly expecting for our May 22 Analyst Day to lay that out in some more detail. So that would be our hope for this point. I really don't see any reason that won't occur at this point. It's just a matter of finalizing some things and dotting the Is and crossing the Ts on that.

Okay, appreciate that. And just a lot of different projects kind of moving on, moving around. One of the latest is the Atlantic Access project of course kind of getting reengineered as I understand it, with respect to kind of what your customers came back to you on. It looks like a lot more paths are being, I guess, viewed access. But I wasn't sure with the Southern Pennsylvania sort of a new pipeline. It looked like it was being downsized. And I guess at the end, I'm trying to kind of figure out is this a proposal, that from a capital dollar standpoint? From investment standpoint, is this something that has, is getting larger, is getting smaller? I’m just trying to better understand the moving parts.

Yes. I'll take that and Frank Ferazzi is on the line and if there's any detailed required data into that, Frank, you can do so. I would just say that probably one of the biggest changes about the project is the fact that by doing some of it along the Leidy Line, it allows us to do it in a scalable fashion. And so growing into the increments that the market is requiring. And so that's probably one of the big changes. In terms of the southern-most route, it is really a matter of delaying that. But certainly what we are trying to do here is add flexibility. Having said all that, right now, the project as laid out is larger both in terms of capital dollars and volumes than we originally expected. And primarily that is driven by demand along the Leidy route that came in as a result of the open season. As you recall, we opened that leg up to the Northwest, that leg up to butler to the Northwest and saw some very strong demand on that leg. So we had to decide how we best serve that load in Northwest PA, particularly volumes coming down from Northern PA as well.

Great, that's perfect color. And then just one final question if I could, and this actually kind of goes to the equity volumes if you will at midstream PC [ph]. Notwithstanding sort of first quarter being -- over first quarter of last year wells, freeze-offs and the like, we were down slightly from the fourth quarter. Between the fourth quarter and the first quarter, is this sort of your kind of expected run rate for the equity volumes as pretty much everything else kind of comes in on the fee basis?

This is Rory Miller, I'll take that question. I think the levels that we're at now are pretty indicative of where we're going to be as we contract for new business. Most of it's going to be fee-based, consistent with our strategy. And frankly consistent with what most of the producers want. They need to see those margins back at the wellhead in order to keep their drilling rigs moving in the richer areas. So I think we'll be able to maintain that for the foreseeable future. At some point, it probably starts to fall off. But I think that's -- that 300 million gallon per quarter range is a pretty good spot to be thinking about our equity launch.

And next we'll go with Stephen Maresca with Morgan Stanley.

You and the Marcellus talked about gathering, getting up to gathering about 5 bcf a day by 2015. How much are you gathering now? And can you talk about just any, what needs to happen to get to that 5? And sort of any concerns you have over the big gas environment over the next couple of years impeding that?

Yes. This is Rory again, I'll take that. Just doing some quick math there. We'll probably turn volumes -- bcf, 1.1 bcf a day of current volumes gathered. And I'm including the Caiman asset in those numbers, which actually is closed tomorrow. So I maybe gun jumping just a little bit there, but just so you have some context to that question. The path to go from there to the 5 bcf a day number that we've shown in all of our materials, it's really around construction and that is not a straight-line event. I think we've been pretty candid about some of the challenges, but I think we've got the right team in place. We've got the broad resources across the organizations drawn and we continue to refine that construction effort up there. But that's kind of the critical path. The producers have a lot of the same challenges. So a lot if it is just working through the process and refining the process that would get wells drilled and connected up in the Northeast and it gets better every month. So I'm very optimistic about the progress that we're making. But that's probably one of the bigger challenges. And of course we're actively working with the regulators and the local governmental authorities that set the rules out there. And I think there's a pretty good dialogue going now and it's getting better. So it's moving in the right direction.

Okay. And you guys are moving much more towards fee revenues now. Are you seeing at all pushback from producers in well or gas or ethane price environment to not be as fee-based and want you guys to take on more risk? Or is that just not the case right now?

We have not seen that. That's probably a short answer. But I don't know that it requires much elaboration either. The -- most of the producers, when they do get a chance to recontract are interested in getting that exposure to their -- the NGLs and their gas.

Okay. And my final question, you have a mandatory Transco rate case coming in March of '13. Is there -- can you elaborate at all? Is there anything we should expect out of that materially?

Frank, you want to take that, please?

Yes, we do have as part of the settlement of our last rate case, we do have a filing requirement. Filing will actually be made in September of this year and we will file an increase. And so the commission will suspend it for 5 months until the rates will become effective March of 2013 and we're expecting a rate increase. It's difficult at this point to quantify exactly how much it's going to be.

The next we'll go to Craig Shere with Tuohy Brothers.

A couple of questions. Alan, in your recorded remarks online, you mentioned that the long-term growth was of course excluding any incremental M&A. And kind of it struck me with Laser having just closed in February and Caiman closing out tomorrow that for you to say that in your prepared remarks, well it sounded like there is more appetite despite all this activity. And I just thought you might want to flesh that out a little bit.

Well, I certainly didn't intend to comment on anything other than the fact that our previous guidance hadn't included those acquisitions and certainly this hadn't. So I would tell you for right now, I’d say we certainly feel like we have our plate full, in terms of things that are back-end loaded cash flows much like Caiman and Laser are. So I wouldn't read too much into that other than we'd be making it very clear that all that is in there is identified projects sort of few relatively small acquisitions that are just kind of bolt-on assets here and there and there. But for the most part, it's all just organic growth and that was really the purpose of my comment there.

Understood. And as a follow up, I don't know, if Alan you want to respond or Don. But with the Caiman acquisition announcement and the increase in distribution guidance, it became clear that the growth in fee-based businesses is so transparent for a number of years and so great. That for an interim period to have some of your distributions based in part of commodity-sensitive operations that are doing well, isn't such a big deal since the fee-based stuff is going to catch up to it not too long anyhow. Given the fact that you're taking out so strong results particularly on the olefins' side, what's the appetite? Because like 6 months ago, you all would have been shy about making distributions contingent on fee-based businesses. But given the backdrop of all the growth in the fee-based stuff, what's the appetite for juicing the distributions a little more if commodities continue to be favorable like that?

Craig, this is Don. I think we've put out what we think is still industry-leading distribution growth at WPZ. We don't think that there's a great incentive to do more than that. And so again to the extent that we could put out something that we think is a sustainable, higher rate of growth, we'll do that. But we're not inclined just to call -- jump the distributions on the back of high commodity prices. But we think we're building a portfolio business that will enable us to have industry-leading growth in WPZ distributions over a number of years. And as has been pointed out in the call, we think we got great visibility to it. I think another way to kind of come out the M&A comment was really we don't need any additional acquisitions in order to drive this distribution growth or the dividend growth at Williams. So this is now all within our control. And I think we're delighted by that. And we're just taking excess cash flow and plowing it right back into building this fee-based business out.

Moving on to Brad Olsen with Tudor, Pickering, Holt. Brad Olsen - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: I just had a couple of questions about the MC&O business. The olefins that are -- the MC&O business as a whole posted a really strong kind of margin expansion quarter-over-quarter as you alluded to a result of the ethylene and ethane spread. I think last quarter you mentioned that there are some legacy contracts that might limit, for the next 12 months or at least for the remainder of the year, your ability to capture the full ethane, ethylene spread. And do you have any comments on what that margin expansion or the quarter-over-quarter growth might have looked like if you didn't have those contracts in place?

This is Rory. I don't have that assessment that you just asked for. But I can give you a little color on the contracting situation, just so you maybe have a flavor of what's coming. If you look at, say, where we're at in February, about 30% of our offtake portfolio had kind of unfettered exposure to the spot market. The majority of the rest was under collared deals. So meaning it had some exposure, but the exposure was limited. We page ahead to the end of the year in December, that exposure to the -- just the pure spot market is around 55%. And then by February of 2013, that exposure goes up to 84%. So if we had a -- let's just say a steady-state situation around the crack spread, we'd expect to see that open up significantly over that period. Brad Olsen - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Okay, great. And now moving to Midstream Canada, you guys are working on that, the ethane extraction project to deliver up to 10,000 barrels a day to NOVA in Alberta. And I was wondering if you could maybe talk a little bit about how -- I know there's not really a direct linkage between the Canadian ethane environment and the U.S. ethane environment. But does the drop in ethane prices in the U.S. affect the economics of that project at all?

No, I don't think so. That project made a lot of sense, but the Canadian government also provided some subsidies that helped on that project significantly. The Boreal pipeline is I think set to start being filled in May 28 and then the ethane project I think is set to be online second quarter of 2013. And there is a floor in that contract that we think gives us the kind of earnings and performance that we're looking for, in spite of where the commodities go. Brad Olsen - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Great. And one last question, we've seen some kind of dry gas Marcellus rig count declines recently. Do you guys have any comments on that? And also as we've seen kind of weak propane demand up in the Northeast this quarter, do you see any change, just kind of preliminary change in producer attitudes as propane is a large share of kind of the liquid yield up in the Marcellus, on how they think about operating rigs in that area?

Let me take that first question. First about the -- what we're seeing in the dry gas and maybe some falling rig counts in the Marcellus. I just would say our approach has been start with the geology first. And we've tried to target the places that we think are the sweet spots in the Marcellus. It's not all created equal. But during the best parts of the Marcellus, in the dry gas windows, you're probably in the best place to drill United States of America for dry gas. So Susquehanna County probably being the #1 dry gas location. We have seen a rig or 2 come out of that area that we have access to with our system. But what the producers have been doing has been replacing less efficient rigs with more efficient rigs. And so it hasn't had any impact at all on our volume forecast. So the situation is very robust up there for us and we're very confident that, that system is going to perform. In fact, we've got the majority of that 3 bcf a day of capacity, takeaway capacity that we highlighted in the slides. We got the majority that's contracted for. There's a little bit of available capacity, hydraulically available, and we're in the process of sorting through the demand for that right now. We have more demand for it than we have space. So situation is still very robust, very, very positive. There are places in the Marcellus where it's fringier and those are not areas that we're in right now. But those fills will probably see less activity than the better areas. In terms of the propane demand, propane is a tougher commodity to predict probably right now just with the increases in supply and maybe a changing demand profile and exports and probably going to be a big part of that story going forward. We have not seen any changes in drilling in the rich gas areas particularly in the Northeast. All we've seen is more and more interest. So certainly, if propane is down, that is going to hurt a bit. But I still think it's not going to fall to the point where it greatly diminishes the drilling economics in those rich gas areas. They're some of the best in the nation right now.

And we'll now go to Sharon Lui with Wells Fargo.

You have I guess in one of the slides, a budgeted amount or percentage of projects potentially for the Utica. In terms of those types of investments, are you looking at gathering projects? Processing projects? And maybe if you could give a sense in terms of the potential timing of those investments?

Yes. Sharon, we can't really give you much in terms of timing on that. I would just tell you that the assets that we acquired or will be acquiring when we close from Caiman, those are well positioned to kind of be a first mover to attract volumes in from that. So initially probably that infrastructure would likely be more gathering that would be bringing some of those volumes over. But certainly, we'd be looking to take advantage of that first mover position we have and ultimately build the kind of infrastructure that would serve that area long term because the infrastructure that we're building for Caiman really is, to the large, very large community we already spoken for, from volumes just from that area. So we would have to be building further processing capacity for the Utica in the long term. But initially, it would just be a matter of being able to gather that into that -- those plants just as a temporary solution.

Okay, that's helpful. And I guess just following up on Carl's question about Atlantic Access. Do you have updated number for the potential CapEx? I think last time we spoke it might have been about $1.5 billion.

Sharon, this is Don. At this -- with this current proposal a top tier [ph], it's quite a bit bigger than that. We've not put a number out. I think we'll try to give you a better range at our May 22 Analyst Day. But again, it's quite a bit larger, if it went off exactly as it's currently proposed. But obviously, we have to get feedback from customers as [indiscernible] begins.

Okay. And I guess for the Constitution Pipeline, is the CapEx around $725 million?

I think we're just saying it's between $700 million and $800 million at this point, Sharon. It certainly expanded as a result of the Southwestern Energy volume. But that's about as close to target as we're going to draw on that at this point.

Okay. And I noticed for 2014, the guidance for the MC&O business actually increased a bit. Maybe if you can just touch on the reason for the increase in guidance?

Sharon, this is Don. I'd just say that we have risked that. But I think upon further study, we decided that some of the, call it probability had improved somewhat, in terms of timing, just timing of cash flows. And that really caused us to increase the 2014 guidance.

[Operator Instructions] We'll now go to Ted Durbin with Goldman Sachs.

We have heard a lot about the Marcellus here. But I'm just wondering if you can go back into your legacy areas, in the Rockies. Are you seeing with the low gas price, seeing the rigs call back? Surely, given that there's a lot of key pulse that the producers aren't really getting as much of the liquids uplift out there?

This is Rory, I'll take that call -- or that question. Yes, maybe just starting out in Southwest Wyoming. We have seen a little bit of fall off there, probably down about $100 million a day from the first of the year. And I will tell you that we've got a lot of wells tied into those gathering systems. Most of it's coming out of tight-sands production and so it's a hyperbolic decline. The builder wells are on the very flat part of the decline. And so up in Wyoming, we've seen both shale and ultra have gone down to 2 rigs each, so that's a drop of about 4 rigs in total. That $100 million a day is probably indicative of the flat production that we were seeing. And we think it'll be pretty stable because we are on those flat parts of the decline. Over in Wamsutter, we've had 4 rigs drilling over there and we've had 1 pull out. And the other 3 are from producers that are getting the benefit to those NGLs and we don't anticipate those coming out of the equation. Piceance has been down to about 5 rigs and that had been running at about 8. So there's a little bit of slowdown there. Again, the producers are seeing the benefits of the NGLs there and we're not expecting any further decline there in the Piceance. Down in Four Corners, there are lots of wells tied into that. It's pretty resilient to any kind of drastic falloff. But we are down about 40 wells per year there in the Four Corners. So it's pretty modest and I think the fall offs that we've seen they've been minor but I think those are indicative of what we'll see going forward until we get a little bit of increase in gas price.

Yes, that's really helpful. And then maybe a question for Don. In terms of the equity that you did at WMB, it looks like you entered [ph] a little more equity than you kind of have indicated for the Caiman, Dow [ph]. I think you were -- you said you're going to give out 50-50 debt and equity for the $1 billion WPZ transaction. Can you just talk about that? Is that -- or is it more sort of a defensive move or maybe is it more offensive? Are you thinking about acquisitions or whatnot down the road?

I would say that on average, our debt and equity mix will be about 50-50. But in this case, these assets were not really cash flowing and therefore didn't really support much debt. So as we looked at our credit metrics, to really do much in the way of debt would have really either caused a ratings -- a negative ratings reaction, or really put us up against being really tight for additional growth. So we felt that was the right thing to do to provide ability to continue to execute on some of the additional projects that we're currently contemplating.

Got it. And then just talking about the WMB equity again. Would you use that -- similar to this for a transaction kind of related to that. Or would you consider even just using it as an investment in WPZ? Do you have a lot of growth capital you're willing to do? And a lot of financing at the PZ level. I'm just wondering what's the best use of the cash flow? Is it WMB relative to the dividend increases?

I think to the extent that we have sustainable cash flows at Williams and kind of we laid that out in our dividend slide there in terms of the distribution from WPZ plus very strong distribution growth that MC&O after substantial coverage of both PZ and MC&O, yes, we think it's appropriate to pay dividend with the bulk of that. We see Williams’ currency as being kind of a backup currency. I think WPZ will be the primary financing vehicle for obviously, for Williams Partners. But certainly in situations like the Caiman, we're trying to do more with WPZ, may have put some stress on WPZ. We felt that having Williams step up because it was good for Williams as well as good for WPZ. So we'll use I think Williams very sparingly. That's the only acquiescence we've had in the last decade. But again if we see a situation that really is compelling, it's a tool in the toolkit and I think a real advantage that we have relative to a lot of our competitors.

Next we'll go to Tim Schneider with Citi.

It's Faisel from Citi. Could you -- I just wanted to clarify on your Utica position, how much dedicated acreage do you guys have? I see your Marcellus acreage at 1.2 million, but what's the acreage I should look out, in terms of what's dedicated for the Utica?

There's not -- we have some what I would say kind of historic acreage dedication that has Utica rights underneath it but we don't have any acreage that we've specifically done after for Utica drilling at this point. So there is some locations back from the, particularly from the Atlas dedication that had that -- had Utica acreage underlying it. But in terms of things that we specifically gone after for the Utica, we do not have any Utica at this point.

Okay, got you. And then this goes in the Rockies, I guess it's been kind of a little bit of a discovery in the Paradox basin for liquids and oil. Can you guys just remind us how you guys are positioned in that basin?

Yes, I'll take that. This is Rory. Paradox is something that I think was drawing some interest several years ago. And in fact, we built some early production systems out there. The resource is definitely in place there. Producers were working hard, including our affiliate at the time to kind of crack the code on how to commercially produce that. I think they're still working on that. So I would look at the Paradox as still a work in progress. We do have some minor facilities there in case things do take off. But I don't see that as something that we're real excited about right now. I think if I was to point to some of the exciting things that are coming out West, I'd point to the Mancos shale play down in the San Juan basin. It's like a lot of these shale plays. It's got 3 different windows, a dry gas, a condensate, wet gas window and an oil window and that's starting to attract a lot of attention. There's a very similar play in the Mancos -- in the Piceance with the same 3 types of windows and there's activity in that area as well. And although this is probably something I can't say nearly as much about, there is up in the Wamsutter area a shale play that's being tried up in that area as well. So as we're seeing these shale plays, particularly wet gas shale plays that are developing around the country, they tend to be in places where there's already production. And what we're finding is that's the case out West as well and there's activity in 3 of our 4 basis today pursuing that kind of a play. So I think we'll have some more exciting things to talk about in the next 6 to 12 months as those place get a little better understood.

Okay. And then, Alan in your prepared remarks on the podcast, I think you talked about some opportunities in your Marcellus part of the pie to take advantage of power conversions, I think. I was wondering if you can elaborate a little bit about that? Was that coal-to-gas switching? Was there something that -- something else, I'm talking about new buildup of gas plants? And what was it that was opportunity out of your under negotiation of your potential part of the pie?

Yes, probably I was talking so fast I mixed 2 things there. Certainly coming for Transco, really the 2 primary drivers for Transco right now is serving the producers' needs, getting out in the Marcellus. But as well, we've seen a lot of interest from the market and wanting access to the Marcellus as well for long-term things like power plant conversions. And so I think there's a real concern on the part of the power generation industry about making sure they've got plenty of reliable access to supply us long term. And so I think Transco is perfectly positioned to do that because it can provide access from supplies in the South and even areas obviously like the midcontinent supplies and Barnett Shale and Haynesville and so forth. They come into Transco at station 85 and as well as of course the Gulf Coast supplies. But as well, now they would have access with supplies from the North. And so the power generation -- Transco is extremely well positioned if somebody is concerned about reliability, be it its multiple loop lines right through these populated areas and access, multiple access to supply points. And so that is driving a lot of interest and demand for Transco being kind of the pipe of choice out there for the power generation conversions.

Yes. This is Randy Barnard. I was just a blurb to add, in the quarterly data book, you'll see a couple of slides in there that attempt to quantify with little more exactitude the opportunities for conversions surrounding Transco, slide 53 in particular. There goes another one in there as well.

Okay, great. And then last question from me. Also in your prepared remarks, you talked about in the under negotiation of potential category, 2 more FPSs. What's the -- I mean how do we look at converting that potential into a firm sort of project? What are the things that could happen or could go against you in order to turn that into a fixed, firm project?

I'll take that. This is Rory. I guess what I would say is that the main competition out there for that kind of a product is the producers themselves. There aren't a lot of people out there right now with that kind of product. And the big advantage is really time to first oil [ph] so it's really around the producers wanting to accelerate their cash flows. We're standing ready with the product that can do that. The producer's option is to self-develop, but they're starting from a standing soft and has a fairly significant impact on the present value of the projects. So we think the financials on the product are very compelling. We've got probably 5 or 6 of those that are in various states of discussion. And one of the nice things about these opportunities is that the producers will make a decision. When they find and make a discovery, and they're probably in the 100 million barrels plus range, with the price of oil, where it is and the prospects going forward being pretty bright for crude oil. These producers are going to make a decision and they are going to move forward. And so we're really counting on a couple of more of them deciding they'd like to accelerate that cash flow and they'd like to outsource that business. And there are a number of producers that are getting interested in that even more so. They don't really get any credit on their balance sheet for adding steel. They get credit for adding proven reserves. And so it works well for both parties. And I think the confidence that Hess and Chevron has shown us in our first sale of a GulfStar augurs well for the additional opportunities for us out there. So just in terms of timing I think over the next 12 months, I think there's a great chance that we can add another one. There's no guarantees on that, but the deal churn that we've got, I think that's a possibility.

We'll now go to Jeremy Tonet with JPMorgan. Jeremy Tonet - JP Morgan Chase & Co, Research Division: Well, Williams seems to have a very full plate of organic growth projects to drive growth going forward. I was just wondering if you guys could comment on any appetite for expanding or acquiring assets further down the NGL value chain.

Well I would say that we do see a lot of opportunity. And as Rory mentioned earlier, in the Marcellus, we certainly are very aware that in fact even though it wasn't embedded in our economics for the Caiman acquisition, we think that puts us in a great position to be a solution provider for NGL infrastructure in that area where it's so desperately needed. But certainly, the Mont-Bellevue area is pretty crowded in terms of service providers in that area. But we're getting a lot of interest from the petchem side, in terms of providing more customized infrastructure and helping to move product around. You can't really go expanding the ethylene cracking capacity in the way the ethylene volumes are growing without quite a bit of infrastructure in and around the petchem space there. And so we are very focused on that area. So I think we see a lot of opportunity at the far upstream end of the midstream infrastructure and the far downstream end of the midstream infrastructure and are looking at some very interesting projects there that take advantage of our liquids and our production, but help petchems look out for the future where their supplies are going to be coming from. So to answer your question, it's yes. But I wouldn't translate that into thinking that we're going to be into the fray, where there's plenty of players right now in particularly -- in the Bellevue area proper as the merchant during that space. So we think there's quite a crowd there already. And we wouldn't want to butt in to that space just because we don't think we'd provide the kind of margin and return that we expect from our other opportunities. Jeremy Tonet - JP Morgan Chase & Co, Research Division: That's very helpful. I was just wondering also if there were any updated thoughts on where the Confluence project stands?

Confluence is moving ahead. We, of course, we announced there that Southwestern Energy had also -- oh, sorry, Confluence, sorry, I had that confused -- we have too many projects starting with C. Confluence is a lot of interest from producers in that area. But that area is very underserved with infrastructure in Northwestern PA, both on the gathering side and particularly on the NGL extraction. And that area is very rich with gas. So we like that area. We think it's going to need some infrastructure. And while we don't have anything new to announce there, we're having a lot of discussions going on with a lot of different large players in the area that understand the need for the infrastructure and see us as well positioned to providing that.

And we have no further questions at this time. I will now turn the call back over to our speakers for any additional or closing remarks.

Okay, well great. Well, thank you. Appreciate all the great questions this morning. And we certainly are continuing to drive forward and execute. Very proud of the way our organization continues to execute in a very -- in an area that we got so much growth going on but very proud of the way we're executing on projects and continuing to run the businesses very well as we demonstrated this quarter. And so we look forward to continuing to talk to you about some more detail on these projects at our May 22 webcast. Thanks for joining us this morning.

Once again, this does conclude today's conference. We do thank you all for joining us.