The Williams Companies, Inc. (WMB) Q4 2014 Earnings Report, Transcript and Summary

Good day everyone and welcome to the Williams Partners LP Year-End Earnings 2014 Conference Call. [Operator Instructions] 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, sir.

Thank you, Tanisha. Good morning and thank you for your interest in Williams, and Williams Partners. Yesterday afternoon, we released our financial results and posted several important items on our website www.williams.com. These items include yesterday's press releases and related investor materials including the slide deck that our President and CEO, Alan Armstrong will speak to you momentarily. Our CFO, Don Chappel is available to respond to questions and we also have the five leaders of Williams operating areas with us. Walter Bennett leads the West; John Dearborn leads NGL & Petchem services; Rory Miller leads our Atlantic Gulf; Bob Purgason leads Access Midstream, and Jim Scheel leads Northeast Gathering & Processing. In our presentation materials 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 we’ve reconciled to Generally Accepted Accounting Principles. Those reconciliation schedules appear at the back of the presentation materials. With that, I'll turn it over to Alan Armstrong.

Great, thank you very much John, and good morning everyone. Thank you for joining us here for our Q4 and full year 2014 earnings call today. To begin with, I'd like to welcome a couple of new members of our leadership team and they are joining us today as John just mentioned by phone. First is Bob Purgason, who became Senior Vice President of our Access operating area in January, and just to remind you, Bob has been COO at Access since 2010 and before that he was here at Williams for about 19 years until 2006. So, the organization here at Williams is very excited to have Bob back and really looking forward to a lot of the leadership he is brining. Additionally, Walter Bennett is here with us, and Walter previously led the Western operations for Access, and in January he began leading Williams' Western operations post Allison Bridges' retirement. And of course that includes our Northwest pipeline area and all of our big gathering and processing out in the Rockies as well as we've added to that now the Niobrara area in Wyoming that ACMP had this built, and our team, the Williams team had collaborated to help bring that business up as well. So, we're really excited to have Walter's very strong operating background and strong technical expertise brought to our team out there in the west. Additionally, I would just tell you, there are a lot of great leaders that have come in from ACMP, and they really are contributing a lot to our organization and help us lead through this tremendous growth period that we've got going on here at Williams. So, really nice to see the teams come in together so nicely and so quickly. Moving on here to slide 2, and you'll see a lot of the major topics listed here on this slide that will hit on this short presentation, but this is the place I'd like to spend a little more time discussing the drivers of our new guidance and really the significant derisking that has occurred as we have dramatically lowered our planned commodity margins. We've lowered our fee-based volume assumptions, and we've got more conservative on our Geismar ramp-up schedule. So, here first on the commodity price deck, our new price deck is centered on a $55 WTI and $3 Henry Hub gas price, and we've tried to be conservative with the price decks that are largely below the forward curves for products like propane and natural gasoline, where we're along the commodity and below the forward curve where we are short like our natural gas and ethane. We believe this is certainly one of the most conservative decks being used amongst our peers in the industry, and overall this resulted in a 44% reduction in our planned commodity margins and commodity positions at WPZ, and this now represent only about -- this commodity price only about 12% of our gross margin is now exposed directly to the commodities. On the gathering volume side, we've assumed reduced activity on the assets with unprotected volume exposure. So, in those areas, we're directly exposed to volumes and in many case we're ahead of what the producers have publicly communicated to investors. In other words, we're trying to get ahead of the lowering of rig counts and making sure that we've got a good handle on what we expect, and in many cases where that hasn’t been publicly tried to get ahead of that with our own estimations. And fortunately though, I would tell you these impacts are only limited to a handful of our assets, and in the context of the new larger enterprise, the impacts we think are certainly manageable. So for example, our Northeast volumes are currently tracking ahead of our revised plan for 2015. On the Geismar ramp schedule, we have incorporated a much lower utilization of the facility over the first three months of the year, and this is going to allow for safe controlled ramp-up to full production. We’ve spent a considerable amount of time doing it safely and ensuring a very high quality asset, and we certainly don't want to try to make any shortcuts here at the last minute on that. So, very proud of the team there continuing to be very focused on safe and making sure when we do get up to full capacity that we've got a safe and durable asset there. A couple of offsets to the impacts of these more conservative assumptions do exist in our plan. First of all, the early in service for Transco projects on the mainline portion of the Leidy Southeast expansion and the Virginia Southside expansion, and I'll hit on more of this in just a little bit, so I won't spend any time there. And then finally, on the next, on the cost cuts, we do have some offset to some of the negative variances as we’ve stepped up our focus on really rightsizing our cost structure to match the reduced levels of activities in few of the regions. And so, while we've not specifically called out that number, I would emphasize that this can and will be a moving target depending on the ultimate levels of activity, and the production around our assets. But we certainly see an opportunity to offset some slower growth, and take advantage of the lower energy prices and materials in our own business because we certainly are exposed to energy and materials in our own business and a lot of those prices have come down. So in general, we're taking advantage of this low commodity market to position ourselves for a very strong consistent performance. And with many of the potential upsides that have been taken out of our guidance now, we still see a lot of those upsides out there, but we pulled a lot of that out of our guidance, and so as those occur, they will result in upsides to our guidance. But despite the significant derisking, WPZ still has one of the highest distribution growths amongst our peers, and this is driven now by approximately $4.5 billion of adjusted EBITDA in 2015 which is further driven by fee-based revenues which make up about 88% of our gross margin. And then, we expect our EBITDA to continue to grow to about $6 billion on the backs of over $9 billion of fee based projects as we look forward to 2017. Moving on to slide 3, we can see here the key drivers of the fourth quarter and the comparisons to the fourth quarter of '13 along some of the mixed results that generated headwinds for us in the fourth quarter. So, this was certainly another very busy quarter for us as we undertook the commissioning of three very large assets. These assets are now ramping up to our expectations here in the first quarter and will be big contributors to our growth for the balance of 2015 and beyond. So, first now to hit on the WMB highlight, WMB received $515 million of distributions up from WPZ and ACMP and this was a 16% increase up $70 million. The higher distribution was supported by 30% increase in the fourth quarter adjusted segment profit in DD&A which was up $216 million to now $944 million there in the fourth quarter. So this large increase was certainly driven by the additional ACMP interest that we acquired in the third quarter of '14 and as well the associated consolidation of those interests. WPZ had mixed results for the quarter. We had some real positives and some real challenges as well. Ongoing mature businesses continued to perform as expected; however, we did have some delays and higher expenses in bringing on Geismar and along with lower commodity prices caused the quarter to come in lower than we had planned. So, now looking into each segment, the Atlantic-Gulf, strong underlying performance in Transco in the Western Gulf, but this was offset by some producer startups on the Keathley Canyon and Gulfstar facilities. These projects are now online and ramping up nicely here in the first quarter and really pleased to be serving our customers out there both the Anadarko's Lucius facility and the Hess' operated Tubular Bells facility up there. On the NGL & Petchem side, Geismar being offline versus an expected mid fourth quarter startup plus some LCM inventory adjustments that marks most of the products that we have for linepack and operating inventories back to a much lower market and so this is nothing new in terms of how we account for our inventories, but the sever downward move in NGLs caused a much larger than normal swing in this inventory valuation. We also saw some high expenses for the quarter associated with commissioning and repairs through our Geismar facility. In the Northeast we continue to ride the wave of strong growth in the Marcellus volumes with a 26% increase on a quarter-to-quarter basis and 28% increase in a full-year '13 to '14 comparison. However we did not hit our expected numbers in OVM due to a delay in bringing on some of the major well pads that producers were bringing on right at the end of the year, but we do continue and enjoy tremendous growth in this area and our current production levels in the Northeast segment as I mentioned earlier are ahead of a more conservative plan now for 2015. Southwest, the West really performed largely in line with what we've expected with the exception of the commodity prices which certainly clipped our NGL margins in the area. And this area has really held up fairly well despite of lack of drilling and as always our Northwest pipeline asset remained quite steady and in 2015 our plan has less than 15% of the company's gross margin in the west coming from commodity exposed contract. So, in the past as you know the west has always been an area of big commodity exposure to us and to some of our big processing facilities out there and because of the continued growth in our fee based business as well as the large decline in NGL margins now only have about a percent of that gross margin, actually a little less than that out West. So, lot less volatility as we go into 2015 at West. So overall, a noisy quarter for WTZ given several one-time and discrete events, but our underlying fundamentals are very strong they give us complements in our 2015 plan and certainly now on the ACMP side, ACMP produced another very impressive quarter. Fee based revenues were up 48% to $593 million and this was driven by a lot of new capital investments that delivered record gross gathering volumes of 6.5 Bcf a day, so tremendous accomplishment by the ACMP team there in the fourth quarter as well. Moving on to slide 4, talk about some of the milestones and the recent accomplishments here, that certainly give us a lot of confidence in our plan going forward. First of all as I mentioned Gulfstar won the typical startup issues I would tell you for the producers bringing on a lot of new big wells on to that platform, but it is looking like some ultimate upside to our original expected flow rates from the facility and so we're really pleased to see the way that's going and very excited about that investment. On the Transco side, another winner and another big increase in peak volumes on the nation's largest and fastest growing pipeline. With this year's peak a day here in January beating last year's record by 8% despite a very, very cold winter in January 2014. So, really just a lot of continued growth is driving that on the Transco system and that team continues to do a great job keeping up with all that growth. ACMP as I mentioned also hit another record volumes and this really a major contributor to this was the gathering volumes in the Utica and those fed into the 49% UEO processing JV there in Eastern Ohio and the latest train to come on line was the new Leesville plant. So, continued great exposure there to the growth in the Utica and really excited to see the way those volumes continue to perform. More recently, the big addition to our discovery partnership, the Keathley Canyon connector received first production from Anadarko at their Lucius platform and now as we move into March we expect to begin receiving much larger gas volumes from Hadrian field and so again, another huge accomplishment brining on that major facility out in over 7000 feet of water. Our Geismar restart has certainly been long awaited and we're excited to be where we are on that finally and it is, we are in the process of getting that lined out and we expect to continue to ramp up here in the end of February and our plan does really expect consistent full rate production until the very end of march and so we've derisked that as well and we currently are working to improve the ultimate efficiency of several of the heat exchanger systems before we can reach back for full production. But all the systems in the base plant have been activated and we've been able to fund that up to about 70% of load there on the base plant. So, we're very confident and where we are today on that it's really just a matter of getting those exchangers being able to operate up to their peak efficiencies. Our combined access and Williams operating teams came together on the new Bucking Horse plant in Wyoming right during the dead of winter and so, while we don’t expect this plant to generate a significant amount of cash flow, here in the near future, it was very important for our teams to get this plant online for the benefit of our new largest customer Chesapeake and it also demonstrated the clear benefits of integration between both Access and Williams personnel into one new organization out there. So hats off to that team that worked through the pretty touch winter up there to get that plant started up. Many of our recent expansions have involved along with other facilities modifications to the Transco mainline and so, this allows us to facilitate moving gas from the Marcellus and the Utica from the North to the South. And so, with two kind of projects in common here on this was first Virginia Southside which started up in December '14, the mainline portion did, not yet the lateral but the mainline portion started up much earlier than expected and that full facility of the lateral will come on in the third quarter of 2015. And then the same story on Leidy Southeast which in March of this year will bring on the mainline portion of the Leidy Southeast project and that also beats our expectations for that project as well. And together these projects will yield $50 million to $75 million of incremental operating profit in 2015. These are all fully contract and that's been approved by the FERC. So we are ready to put these into service and of course bringing on all this incremental operating profit wasn’t expected originally in those investments really gives a very nice boost to our original expected returns for those projects. And then finally, our Rockaway Beach lateral is expected to start up in either late March or early April and the team has been working hard to hold the schedule despite as a lot of you all know a very wet and cold weather there in the New York area. But really excited to finally bring that project to closure and being able to serve our big customer of their national grid. Moving on to slide 5, this slide really just provides a real quick snapshot of the different types of cash flow that make up our $6 billion of gross margin. And just to make a few points here, first it shows that now only 3% of WPZ's risk remains tied to the NGL margin commodities and the spread on NGLs and only 9% is tied to our olefins margin in both our Geismar and Canadian facilities. So, meaning 88% of our cash flows are now from fee based revenues here in 2015 and including nearly two-thirds of those that are under contract that have demand payments, cost of service with minimum volume commitment. So as we can see on the next slide our future growth is even less dependent on commodities as we move to slide 6 here, and this really shows that 99% of our $9.3 billion of growth capital that's in guidance are tied to fee based projects. So this slide really gets to the heart of our lower risk and growth strategy for the next few years. And as you can see the vast majority of this is tied to, even the fee based projects the vast majority is tied to the kind of business that are either on our gas pipeline system or in the ACMP area where we have a lot of protection from volume risk. And so lot of confidence and certainty from our perspective about how we go forward. So, while certainly commodity prices are and remain important to our business specifically here for the near term cash flows and coverage they really are not the driver of our growth. Our business strategy is built around natural gas volume growth and the demand for associated large scale infrastructure that are going to be required to build out as the natural gas and natural gas products markets continue to build on the back of a very low priced commodity. And as a result we're confident in our ability to deliver one of the highest rates of distribution growth amongst our large cap peers, despite the lower expected commodity prices that are not built into our plan. Moving on to slide on to slide 7, this slide just drills down into the known projects over this longer period. And so, I'm not going to go through each of these facilities, but one of things that I think we have not spoken very much about but is pretty impressive is the amount of exposure that we have to the LNG export facilities and in fact the Transco has connections that allow it to receive or deliver gas. But nearly every LNG import/export facility in the Gulf Coast and the eastern seaboard other than the Everett facility in Boston. Those LNG facilities include Cheniere's Sabine Pass, Exxon's Golden Pass, trunk lines like trialed [ph] Sempra's Cameron LNG, the Elba Island LNG and the Toe Point LNG [ph]. And as you know, we've talked in the past about our access to our Gulf Trace Project being a 1.2 Bcf a day commitment to Cheniere's Sabine Pass facility that's fully contracted and will start up in early 2017. But we also recently concluded an open season in December of '14 for the Gulf market expansion and this is designed to provide an additional 1.4 Bcf a day of firm transportation from station 65 going back to the West to points on the mainline in Louisiana and Texas and great progress there and we're in the process of negotiating the firm commitments from our shippers and that came out of the open season and it is anticipated that this could possible 1.4 Bcf a day of capacity could be in service as early as late 2018, so just continued tremendous growth on the Transco system, both on the market side and supply side. Moving to slide 8 here for the conclusion, certainly we're very pleased to have the PZ/ACMP merger closed and remain more excited than ever really, we continue to see tremendous benefits from the combined strength of this new MLP and we think it is the MLP to be exposed to amongst the large caps if you like the prospects of overall market growth of both natural gas and natural gas derivatives because clearly our strategy is very tightly focused on this opportunity. As we look to the PZ distribution growth, all of the issues I've gone through the day really drive to this and the revised outlook for PZ and WMB result in a new guidance of 7% to 11% annual distribution growth at WPZ through the '17 period with the midpoint of 9% and this really reflects the strength and the quality of our underlying assets with a growing coverage ratio of greater than 1.05 once we get through this first quarter and '15 ramp up period. So, not only do we think we have good growth there, but we are continuing to build coverage through period and so we're really excited that despite these much lower and a very relevant to our peers at very conservative price that we continue to be even at the lower growth rate at the low end commodity prices we're still at the high end of our large cap MLP peers. And so, even though this is slightly below the plan that we articulated at the time of the ACMP and WPZ merger, these level of growth in cash and coverage are indicative of the best-in-class large cap MLP. As we look at the WMB dividend growth we have also slightly slowed down our targeted levels of growth for WMB and this of course is driven by the lower price environment that we've forecast with a range now of 10% to 15% growth largely to match the underlying growth of cash flows coming up from the MLP. So just to highlight the stability of this business plan even under the low price commodity case we can grow WPZ at the 7% we talked about and continue to move over 1.0 coverage there at the low price and at WMB at 10% with additional layers of coverage index of 1.0 at WMB as well. So, we really like our position now with the distribution and coverage and we certainly like the underlying fundamentals that underpin that. So, overall we're very confident in this business plan. We think it's realistic. We think it allows us to continue to provide tremendous total shareholder return whichever commodity price environment develops as we go forward and in fact across all scenarios we have the best-in-class growth at WPZ and a top-tier growth at WMB with growieng levels of coverage across both entities. So, this continually building list of investment opportunities are very tightly aligned with our strategy. They give us great confidence in our future and continue to give us a very high quality long lived cash flows that we think are some of the highest quality in the industry and this is coming from our continually, very competitively advantaged assets. And so with that, I thank you for joining us and we'll turn it over for questions that you might have. Operator?

[Operator Instructions] Our first question will come from Carl Kirst with BMO Capital Markets. Please go ahead, your line is open.

Thank you. Good morning everybody. I'll start maybe with the growth projects, and I'm just curious in the current market as you look to Canada, one of the things we were looking at was the PDH facility, I didn’t know if you'll be at the weaker Canadian dollar and perhaps some of the activity coming out of that area might be tempering down the investment costs, and perhaps you know, keeping that potential growth project still in advanced stages, as well as in third quarter, you guys were certainly opening up the possibility of Appalachian Connector, I didn’t know if we could get an update on that as well?

Yes sure. First on PDH, you are correct Carl, the fundamentals are actually improving there as we are seeing some, the signs of lower-cost coming in for equipment and vendors as we go out and are in the process of really tightening up our estimates on that. And additionally, that project is really built around the benefits of the logistics of taking low-cost propane right there in Canada and converting it eventually into polypropylene by our partner and being able to serve markets. So, we're basically just cutting down on a lot of rail logistics, and those things continue to improve. Propane prices continue to be a huge spread to Mont Belvieu, propane prices up there and we think that's going to continue for some time because there's not really any logistical answers coming out that will improve that any time soon. And so, we really like how that continues to unfold as well. And really just a matter at this point of getting contracts finalized with our downstream partner there that pulls a lot of that risk off of our shoulders from a commodity spread standpoint, but we really do like the fundamentals and they are certainly improving for that project. On the Appalachian Connector project, we are certainly still excited. We think the strengths of our market pool and the demand of our market, they are along the mainline is a real positive for us. There has, as you know, there's been some turnover in some of the properties upstream, and certainly with the lower gas prices, people are looking for creative solutions out of that area, and so we're certainly working with a lot of those customers both on the market side and the upstream side to try to bring those two together in a way that they can firmly support our project. And so, we're feeling pretty good about that, but it is -- certainly everybody is kind of, anybody in the energy industry right now is reeling a little bit in trying to get their forward-looking perspectives tend down before they make any major commitments, and so obviously that's where we stand on that today.

Do you get a sense, and that's kind of where I was going to, do you get a sense that even as these continue to percolate, they've both been pushed back to the back half of the year if they do come together or how would you think about timing?

Well, I would say on the PDH project, it really is just we're going to be very, very careful. That's a big investment for us. We want to make absolutely certain that we've been, that we know exactly what our numbers, we get as many bids and estimates, solid estimates that are well engineered in the door, so the PDH project is more, just of us moving along at a pace that is focused on making sure we can execute on the project effectively rather than being in a rush on it. And so, that one is more driven by our own efforts and getting the contracts finalized than it is anything in the broader macro industry at this point. On the Appalachian Connector piece, I think that answers have got to come a little quicker on that, and so I think we'll be pressing in the next quarter to decide one way or the other on where we go with that, but in any way, shape, or form, I think we're going to position ourselves to benefit both our assets in the area, both our wholly-owned and some of our equity investments in making sure that we get good market attachment to those assets and as well making sure that we get the investments that are due to us for the downstream mainline expansions for that gas as well. So pretty excited about it, but we're not going to push a rope on that. We've got plenty of great investment opportunities, and we're not going to step up and take risk on that.

Yeah, I appreciate that. One final one just for Don, just very quickly, I appreciate the WPZ equity as far as obviously retaining investment grade. Don, do you have any planned equity issuances in '16 and '17 at PZ in the kind of base case budget?

Good morning Carl. The PZ equity issuances in '16, '17 at this point is de minimus. So, it gives us capacity to really take on some additional opportunities since we see exciting opportunities develop.

Thank you, guys.

Thank you.

And our next question comes from Ted Durbin with Goldman Sachs. Please go ahead, your line is open.

Thanks. First one for me is just on the balance of distribution growth, dividend growth coverage keeping PZ flat here it looks like in 2015, I guess how are you thinking about the right level there, especially given that you have a much higher mix of fee based cash flow?

Ted, this is Don, I'll just note that we felt we want to go in with a fairly conservative plan here in light of what happened in the marketplace. So rather than continue to boost the dividend or distribution during the year we set forth a plan that we'd hold it steady. And obviously if we see things develop to the upside we could change that, but we felt that we'd set a plan here that was more conservative and one that hopefully investors will agree that is conservative as well.

Okay, great. Next one from me is just on Geismar, can you maybe quantify a little bit more closely how many pounds of ethylene are you actually planning to sell in 2015 or some sense of utilization rate you're looking for as we ramp up through the year/

Well, as I said really, you can call it about anyway you want to, but we are expecting very little here in the first quarter and then we would be at our typical run rates on Geismar for the balance of the year. And so that would be up against the expanded capacity and somewhere around 98% to 98.5% of that expanded capacity.

Got it, very helpful, thanks. And then last one for me, it looks like you're no longer giving guidance by segment here. I guess I'm just wondering if you can give us any sense of versus the old guidance that you used to have of the different WPZ segments, how much plus or minus are we against those or will we start to get some more color there in terms of how the actual operating areas are performing?

Ted, this is Don, I'm sorry again, given as much changes we have here we took a little different approach this quarter. I would say that as we approach our Analyst Day we'll look at providing some additional information about, I'll note for you that we did take volumes down fairly substantially up in the Northeast at OVM as well as Marcellus, but some volume reduction from our prior growth expectations that is in the West. So hopefully that helps.

That's helpful. I'll leave it at that. Thank you.

Thanks.

And our next question comes from Abhi Rajendran with Credit Suisse. Please go ahead, your line is open.

Hi, good morning guys.

Good morning.

Just a quick question on the dividend illustration and outlook over the next couple years, obviously on the cash tax rate line, you're not paying anything for the next couple years. I think previously you talked about that kind of eventually rising up to maybe the high single digit, low double-digit sort of percentage, how should we think about that kind of looking beyond 2017 and then what that might mean for maybe long-term growth covers, et cetera.

Yeah Abhi, this is Don again. You know we had a couple of things change here since our third quarter guidance on this matter and cash tax rates are down substantially. A couple of key points there, one was the bonus depreciation, which again lowered our cash tax rates nicely and then as well the fact that income was lower also it kind of extended in the chart, the period of time although which some of these deductions will be realized. So, I think you can see there the cash tax rate is about zero through 2017 and in our footnote on that schedule you can see that we've disclosed '18 and '19 we estimated about 4% currently and obviously things will move around a bit, but as we continue to add projects or potentially even M&A that will have the tendency to push the cash tax rate down in '18 and '19 as well as perhaps periods beyond that. So again, some good news on the cash tax front.

Hey got it and since you mentioned M&A, what are your thoughts on the M&A environment and possibilities? Are you continuing to look or are things sort of put on the back burner a little bit, you know, you guys deferred the drop of the NGL Petchem projects from WMB until bit later down the line. How are you thinking about that whole dynamic?

Yeah, sure, this is Alan. Thanks for the question. You know, I would just say we have a lot of acquisition opportunities that are where we have a preferential position to acquire and those are right down our alley and our knowledge base. So we wouldn't be taking a lot of risk where we are already know the area, know the asset, know the investments and so I would say those are probably first on the list for our capacity in that space. And but you know, we're going to be pretty prudent frankly and we like where we're positioned right now and think that as the cash flows really start to come through and people really see the strength of these investment opportunities we think we're going to be very well positioned to take on some of those transactions. So, I would say that's first, but I think one thing you can, we've certainly been consistent on as we stuck with our strategy very tightly on the acquisition front and have stuck to things that are very consistent with our strategy and so you should think about that as we go forward the same thing.

Got it, thanks very much for the color.

Our next question comes from Jeremy Tonet with JPMorgan. Please go ahead, your line is open.

Hi good morning.

Good morning.

Good morning.

I know things have been changing really quick here, but I was wondering if you might be able to expand a bit more upon conversations you are having with your producer customers as far as their drilling activities in 2015 and if there's any way we can think about quantifying the risk of throughput through the legacy WPZ G&P assets that's a low end of guidance and that certain volume assumptions are different than the high-end or any help there will be great?

Well, just to kind of put that in context for you from where we were in the previous guidance period, we pulled well over $100 million out on that from those fee-based volumes and so we have dramatically reduced that and I would tell you the areas that are hardest hit and we think are going to be hardest hit and I would tell you we've been more conservative than some of the input we've had from some of our producers in many areas, but the areas that have been hardest hit were areas that were enjoying a big lift from liquids. And I think the gas market overall particularly the demand side probably doesn't appreciate all the nice benefit of continued supply that has come on the backs of high-priced liquids margins and with those pulled out of the space right now you know, we think that is going to dramatically retard drilling. And so if you're, I would say conservative and may be even bearish relevant to our peers about where we think liquids prices will be for the year then that also has you not being very bullish on people drilling for rich gas. And so I would say those are the areas that from our perspective are most affected not so much the dry gas, but really the richer gas areas are the ones we'd really pulled back our assumptions on.

That makes sense. Thank you and just one last question on constitution if you could provide any updates there as far as how that's progressing?

Sure, Rory, you want to take that one?

Yeah, this is Rory. Jeremy, we've had some pretty good news in the fourth quarter. This is probably fairly well known, but just as kind of a recap, December 2 the FERC issued a certificate of public convenience necessity authorizing the constitution pipeline project. So that's a big milestone for the project. And then later on that same month on December 24, the New York DEC issued a notice of complete application on the project and sent out three public hearings that took place in that second week of January and they've set a deadline of February 27, 2015 to get all of the written comments and on the action that they are considering. So, we've been working very closely with the New York DEC, that's probably the next hurdle that we need to clear, but they're asking a lot of questions. I think they are very intent on doing their due diligence on the project and they've been very inquisitive, but we've been working very hard and very steadily to get them the answers that they need and put them in a position to issue that permit hopefully in a few months after the, month or two after the close of the comment period.

Great, thanks for that.

Our next question comes from Brad Olsen from TPH. Please go ahead, your line is open.

Hey, good morning guys.

Good morning.

I had a really kind of a financial structuring question, we've obviously seen Kinder Morgan take the step of getting rid of their MLP entirely and as you look out with the ACMP deal now closed and you guys have provided what I think is very conservative guidance versus you know, what market expectations are and you're still building coverage even in this conservative $45 scenario that you painted and yet, we still see WPZ trading a couple hundred basis points in several cases wider in terms of yield than a lot of the big cap MLP peers that its comped against. And so, I guess you guys have provided some interesting color in previous presentations in terms of kind of where you expect on a yield basis WPZ to trade based on its growth rate. It seems like that discount is persisting and I was wondering if you had thoughts on a) any kind of further steps that you can take to close that discount and b) if you still find that WPZ is not an effective financing vehicle or is just simply too expensive of a financing vehicle would you consider simplifying your structure and eliminating the MLP or folding it into WMB?

Yeah, I would just tell you. I think that's certainly a tool for us in the future, I think though right now right we've got a great plan in front of us and we do believe that as these big projects come on and really begin to generate kind of tremendous cash flow that they've got that we're going to see the market reprice that the WPZ currency. And so, we think that is yet to come and certainly with Geismar continuing to be down and the big Gulfstar and Keathley Canyon, Rockaway Lateral all these big projects really starting to kick up here for the balance of the year. We think that's going to give the market a lot of confidence. So I would say you know, we certainly understand that the benefits of that as a tool for the future, but I think right now we've got to execute on what we have and let the market retune itself before we make any further decision on that.

Got it, thanks for that color, just one follow-up, as you look out into potentially heating up M&A market in light of the market dislocations that we've seen recently and you think about potential opportunities in the M&A market, would you be willing to contemplate using WMB as a consolidation vehicle given the fact that you've spent the better part of the last year getting WMB into a fairly streamlined General Partner HoldCo or would you be willing to wait for WPZ's evaluation to get more competitive in terms of an M&A currency before attempting to do anything?

Well, I would just say I think both of them are fairly undervalued right now from our perspective and so I think I'm able to get them both in position, but I think it certainly would depend on the transaction as we move to that point then it will certainly depend on the transaction as to which one would be the more appropriate currency for that. So, it's nice to have both of them frankly because there are times when the co-op currency would be a much more favored currency than an NLP currency. And so we think it's important to have both of them right now and we like having both those tools.

Great, thanks a lot for the color Alan.

Thank you.

Our next question comes from Shneur Gershuni with UBS. Please go ahead, your line is open.

Hi, good morning guys. Just a quick follow up to actually to the discussion you just had with Brad, when you were thinking about it taken or whether it’s a tool in your chest further down the road, is it fair to assume that given the fact that you're effectively based on an earlier comment not a taxpayer at WMB through 2017 that it pretty much wouldn't make sense to even consider it until you actually become a taxpayer, is that sort of the way we should be thinking about that as kind of the first step in terms of whether you would consider taking it at all?

Shneur this is Don. I think the tool is one that we'll continue to look at and yes, we're not a taxpayer for many years. However, there are other attributes to the option, but again I think as Alan mentioned earlier we think execution is likely to cause WPZ to trade at a level that is appropriate given its opportunity set, the growth set and we think the relatively low long term risk that natural gas growth demand drives. So again, we'll just put that on the shelf. It is something we'll continue to study, but we think that execution is job number one and yes, taxes are something that would not be all that valuable for quite a few years.

Great thanks. Okay, so just moving on to some of the questions that I had, first there's been quite a few announcements by many of the processors around the country of significant cost saving initiatives, some headcount reductions and so forth and I realized at the time of the merger you were very adamant about no headcount reductions, if anything you were looking to hire people and so forth. But I think more kind of in a different commodity environment today, I wonder if that thought process has changed at all and you are pursuing some sort of cost reduction strategies? Sort of I was wondering if you can sort of comment against what you're doing versus what the rest of the industry is doing?

Yeah, great question and we certainly are going to put a lot of pressure on costs and we do think that we've got a lot of room to do that and so certainly using the buying kind of into these lower material costs, costs on things like lube oil which as you can imagine is with as many spending parts as we have in our businesses is a big number for us. And so, we certainly are going to go after cost on that side. On the headcount front, I would say there are certainly a lot of those opportunities coming to us as we merge a lot of support functions. But I would say we still really need continue to preserve our strength on the operating and technical side because we do have a lot of growth on that front, but it is shifting around and we will need to shift some of those resources around to be focused on where the opportunities lie, but I would tell you we still are looking for great talent in the technical and operating side and we do see some opportunities on the support function side as we continue to consolidate the organization. So we are pursuing them aggressively I guess is the best way to say that and we do think that's quite a bit of opportunity around that.

Okay, and then a question about the dividend policy, last night you’ve effectively tempered the growth you said it in your prepared remarks reflecting the current commodity environment, is it also fair to say that this is somewhat of an affirmation that's no longer going to be kind of an idea or waiver type strategy in terms of how you sort of structure the PZ distribution and the Williams dividend policy or is it really just about the current commodity environment?

Shneur, we believe that WPZ is sufficiently strong to carry itself without requiring any IDRs. We initially designed it very stout coverage. Fortunately we have that stout coverage designed in and we used it, but nonetheless as you can see here we're building coverage back again in a way that we do not expect WPZ to need that reverse. And as Alan pointed out with 88% in fee-based gross margin with 30% of that coming from interstate pipes and another 27%, coming from ACMP and its cost of service contracts and MDC's, we have nearly 60% of our gross margin coming from either interstate pipe or cost of service MDC type revenue. So very low risk we think on relative basis cash flows, so again we don’t see a need for IDRs, we don’t think either the market puts enough value on those to make it worthwhile.

Okay, that's fair enough and one final question just with respect to Geismar, I was just wondering if you walk us through where you are with ethylene production today and sort of the confidence that you know, it will be at full runway in the first quarter kind of like what are the hiccups or challenges that you're dealing with today that you need to get complete so that you can actually be at full run rate by the first quarter?

Yeah, well, I am going to have John Dearborn provide you a little more detail here, but I would just say in general as we started up the plant we hit a – we started seeing some inefficiencies and some fouling in our heat exchangers that are critical to reaching peak efficiency in a plant like that. And so rather than continue to be dogged with that, we chose to take those heat exchangers off line, stop sales on ethylene out of the plant for a while and get those heat exchangers cleaned out adequately to make sure that we could get back to absolutely full efficiency on the plant. So, and not continuing to try to run through that as we pull through startups. So that's really what's going on, that's not a big issue, it's just a matter of getting some of the residual fouling that had been sitting in those heat exchangers and getting then tuned up. But we have gotten the plant up and running. We've had all the systems up and running. We just weren’t hitting the efficiencies that we wanted to and so we're back getting that tuned up. And then the next step would be to bring on the larger expansion as well and so we think we've got that part of the plant ready to go as well and so that's what we'll be doing here for the next three weeks or so is tackling both those issues, but things are going well on that front and we're pleased with the way the work is going. John, have you anything to add?

Yeah, obviously Alan is very well informed on this issue of how Geismar is going. I think we should keep him well informed that way. The only think I would add is as we look forward, it's our intension that we bring the plant back notionally to the base capacity level that 1.3 billion pound rate and at that rate which as you heard Alan say earlier we've demonstrated now 70% of that rate already operating with nine furnaces, then we'll line up plants and will be absolutely certain that the plant is running stably and then we'll take the next steps to ramp up to the full capacity getting up into that high 90s operating rate against the full capacity over the subsequent few weeks. So that's the way we had it planned out and we're making very good progress of getting this heat exchanger cleaned and expect to turn the plant back over to operations next week and in a few days after that be back in the pipeline.

Perfect. Thanks a lot guys, I really appreciate the color.

Thanks.

And our next question comes from Christine Cho with Barclays. Please go ahead, your line is open.

Good morning. I was just curious, you guys in the press release talk about the deferral over the planned drop down of the remaining NGL and Petchem projects. When are you thinking that that's going to be deferred, do you have a sense of an idea when that's going to be?

Christine, this is Don. You know, we didn't put a date on it, so it's not embedded in any of the guidance that you see here; however, I think I'll just say we'll be opportunistic about that, so we'll look to do that when we think WPZ has the financial capacity to do that in a real value creating kind of way with that capacity or with a combination of some debt and equity when the equity is trading in a way that we think is more appropriate. So right now I'll just say we'll be opportunistic and we'll deal with that as we see the right facts and circumstances line up.

Okay, and then my next question is a bit of an operational one. You know in a prior response to a question you talk about how you stripped out $100 million of margin tied to areas where there is obviously rich related drilling. If I am to think about kind of the Marcellus and you know, you've previously talked about Oak Grove coming on at the end of this year, is there really a reason for that to come on by this year? Can we defer that, I mean it doesn’t sound like Fort Beeler is going to be fully utilized this year, so can you just kind of migrate whenever volumes are dedicated to Oak Grove to Fort Beeler in the meantime?

Christine, actually Oak Grove is PXD 1 [ph] is up and running already and recall that that is where our de-ethanizer is and so we have both the processing train there and the de-ethanizer there at the Oak Grove facility. So for operational reasons it's good for us to have that up and running. I would tell you that again even though we pulled the upsides in the step that's not fully contracted out of our guidance on our forecast, there are a couple of very sizable packages of gas out there that we are extremely well positioned to capture, because we do have that capacity available. And so, I'm not going to get into specific customer names there, but I would just tell you we're extremely well-positioned to capture those because we do have that capacity available and so we're excited to have that Oak Grove capacity ready and available to serve those customers and we think we're going to build and capture that. There's quite a bit of gas that is just sitting there not flowing today because producers have had troubles bringing pads up. And so, I think as those come on and as we have an opportunity to capture some of that other gas out there we're going to be really glad we have that capacity available.

Okay, so no changes to at least a second chain of Oak Grove then the timing of that then?

That's right.

Okay, and then my last question is you know, we've always talked about potential to convert Geismar into fee-based with the customer. Given all the changes that have happened in the last couple of months, has this thinking changed or is the challenge really finding a counterparty to do it with?

No, I certainly don't think it has changed and we are certainly looking to really think about that from a shareholder value standpoint. Certainly if we were just looking at the PV or the cash flows as we think that having the commodity risks, especially as it covers our ethane processing risk, we think that absolute PV of those cash flows is probably better providing the commodity risk. However, given the beta and the volatility that that brings in from an investor perspective, we think there's some value to be had by lowering our risk. And so, it's a matter of finding that right trade-off. And as we said, as I said earlier the fact that we've got a much lower assumption and expectation right now on the commodity margin actually gives us a little more room to go do a transaction like that and so we certainly are very interested in that. And I would tell you that while they seem separate, the ability to bridge between somebody's needs on Geismar 2 and perhaps their more current needs from available production at Geismar 1 starts become the opportunity there. So we're still very interested in doing that and we think the current margin environment gives us a little more room to do that because we wouldn’t be coming out and having to lower our guidance so much if we weren’t able to convert that into fee-based.

Great, thank you so much.

Our next question comes from Brian Lasky with Morgan Stanley. Please go ahead, your line is open.

Good morning. Just want to back in on Christine's question a little bit, you guys seen the appetite among producers potentially to convert to fee-based contract as they are looking to print more barrels and show more growth, is that something that they’re potentially open to in this tough environment for the right price level?

I would just say that a lot of our business has converted to fee base. And so really the place that we have remaining exposure on a key pole basis as I mentioned is about a little less than 15% out West of our total gross margins out there. And so, I would say it continues to be an opportunity, but we structurally I would just tell you there are ways for us to keep the risk and for them to report the barrels. And so, that I would say we figured out and we’ve done a lot of that in the past for the producers report the barrels as an owned equity barrels, but we don’t have to really change the equity ownership of those barrels. And so, that’s always a discussion that we’re always interested in, I’ll tell you that we on the processing side we have over the years tried to contract for fee base when the margins are high. And take on the key pole when margins are really low and so, but just because we certainly believe in that cyclicality of the processing margin. And so, I don’t know that we’re really changed the perspective so much on that front.

Got it and just on the Access business seemed like quarter-over-quarter a little bit more flat this quarter. Can you maybe just kind of talk about the trajectory you see going forward there and kind of what puts and takes are you seeing?

Bob, can you take that one please?

Yeah, certainly Alan and Brian glad to look at, I think we didn’t feel we felt like we had a really good quarter actually and are seeing good volume growth in our Northeast areas, Utica very strong, still strong volumes in Marcellus, Eagle Ford volume is still growing as Alan noted, Niobrara coming up although whilst picking that up here in process. So, we feel very good about our performance coming out no integration impacts from that. And in fact or looking for the kind of growth that you saw in detail as Access standalone continuing and in fact accelerating with the Williams team.

All right, thanks Bob, that’s helpful. And then finally Don, I was just wondering if you could maybe just speak to the kind of leverage capacity you think you have at the MB level, I mean in order to stay aren’t you rated up there? I mean then would you guys have any appetite potentially fund some projects of that level?

Brian, I think at this point in time we don’t have much in the way of debt capacity to volumes level. So, obviously as cash flows build and for past margins improve or build into that capacity. But today it wouldn’t be here that we have that capacity to do much of anything in the very near future.

Okay thank you very much guys.

Thanks.

Our next question comes from Craig Shere with Tuohy Brothers. Please go ahead, your line is open.

Good morning guys, thanks for fitting me in.

Good morning, Craig.

Alan in response to Brian’s question about processing contracts you expressed the long-term contrarian view where you see the cyclicality continuing. On that note, in contrast to going to fee based to Geismar would you have the appetite for increasing the commodity exposure on the midstream processing to kind of neutralize some of your exposures on both ethane and also take advantage of that long-term cyclicality you are describing?

Yeah, great question Craig and I would just say that we certainly are not in the Olefin business for the sake of being in Olefin business and we see it’s a nice extension of our midstream business in a way to push through into those markets and keep those markets open. On the tail end and certainly we are working to try to be neutral on that ethane to ethylene spread we’re actually a little bit short ethane right now. If we were to turn on all of our ethane recovery capacity, obviously we’re very short right now, because we’re not recovering ethane anywhere. But if we wanted to turn on our ethane, if we were at full ethane production against the contracts we have we still would be a little bit short ethane. So trying to get neutral on that, but another way of getting neutral on that would be to and we’re into some T based contracts on the ethylene side and therefore reduce our length on ethylene and reduce and improve our balance between ethane and ethylene. So, I would say that’s more likely the way we would approach that.

Great that’s helpful and on the commodity deck for guidance on obviously very conservative. But the one area I had a question on and I understand that you don’t really have a long-term ethane markets that are useful. But if I’m not mistaken recent ethane-ethylene crack spreads are perhaps few cents below the full-year guidance if I’m not mistaken. Can you provide some color around Olefin’s margin expectations and market drivers you see as Geismar achieves more capacity?

Yeah, sure. Well, first of all, just want to tell you that on the ethylene side, remember that that is at a $55 oil price. And so, we think that ethylene price is very commensurate with a $55 oil price that we have in there. Also you obviously have to pay attention to the spread and not just the absolute price that we have in there would it sounds like you are focused on Craig. But the other thing that I think it’s missed sometimes in this is that we are actually at the netted price and remember that we produce in the Mississippi river market. And so while we certainly sell and exchange a lot of our product in the Mont Belvieu as well, we do have exposure to the Mississippi river market, which has been extremely short and there’s actually a lot of derivative production that’s been down in the area due to shortages. And so, you have to take that into consideration when you look at our proposed ethylene spread. And so, I think we feel pretty good as you look into the 2016 and 2017 timeframe you can see our ethylene price coming up, but you can also see that the ethane price is coming up right along with that as well. And so really again need to look at the spread I would say I’m pretty bullish. The ethylene market as we look out in next couple of years, because the growth that I think we're going to see in the economies and the lack of near-term productive capacity coming up, it’s pretty hard to argue there isn’t going to be quite a bit of pressure on those Olefin markets to the upside and lot of demand coming to that. So that’s what I would have to offer for you. I think we feel pretty good about where we’re positioned there and John is a great student of that space as well and I’ll John provide any additional comment you want to make.

And I, only one few other things to add up, first the lower prices are certainly expected to stimulate some demand, but also we’ve been looking at some recent reports that would say that we’re seeing slowing exports and increasing local demand here in North America for ethylene and ethylene to reproduce. And certainly the ethylene derivative market remained quite strong. The second point I would add for consideration here is that if you look at ethylene inventories, there are pretty much all time low levels to estimated to be about six days worth of production in inventory at this point in time. But remember that all those six days are not available to take advantage of a production mishap and nearly no one forecast production mishaps. So we think there are probably only about maybe three or four days worth of usable inventory they’re ready to make up for some production shortfalls. And certainly coming into the year we see a couple of crackers that are down now though we have a light turnaround season this year. And then lastly, I'd turn your attention a little bit further to the Louisiana market, today with the Evangeline pipeline shutdown and suffered some from reliability issues at the moment, the spot price premium between Texas and the Louisiana is in the $0.08 to $0.10 down range. I think as we bring our facility back in operations that will likely return to more normal levels, but we’re very well aware on some derivative capacity there on the river that is underserved, because of the combined outage of both Edmonton and Evangeline. So I think as Alan expressed and as I would confirm here we are generally positive as our guidance would suggest, so thanks for the question.

Very helpful, thank you.

Our next question comes from Sharon Lui with Wells Fargo. Please go ahead, your line is open.

Hi, good morning.

Good morning.

Just a follow-up question on ACMP, maybe if you could provide some color on the organic growth opportunities and what type of CapEx is embedded in your guidance relative to the historical levels for the G&P business?

Bob, you want to take that?

Sure, yeah Sharon, it's nice to hear from you. In terms of just looking at going forward you'll notice we had a good strong capital year this year and we’ve given I believe a three-year look out here in the new numbers. And if you compare those to our past guidance you’ll see some strength in capital over our older forecast just in terms of our thinking that there are still new opportunities coming. These assets have not been worked hard and we are seeing the kind of backfill that we’ve always talked into our capital not just dropping off the ledge when we finish this first round build out that arguably happened this year. So we still see good capital investment opportunity and as you know that drives earnings given our business model.

But has that been, I guess the shift or change in producer's willingness to commit to like a contract under cost of service under the current commodity environment?

Well, these are not new contracts these are continuing to build on the footprint that we have already established. And are continuing to build out in these core areas like Utica and the strength that we’re seeing there in the Eagle Ford where, yes drilling softer, but there’s still good strong drilling going on and really just filling out our existing portfolio.

Okay, great. And I guess just one question with regards to liquidity at WPZ, so post the merger, does the partnership have access to both credit facilities or is there plans to, I guess renegotiate with the bankers for one larger facility?

Sharon, we put a new larger facility in place effective as of the date of the merger as well as a supplemental liquidity facility. So we have abundant liquidity.

Okay, and has the pricing terms changed?

The pricing terms are more in line with WPZs pricing given its historic WPZs pricing in light of the fact that we have a mid-BBB investment grade ratings. So the ACMP pricing really moved to the WPZ level of pricing and it felt a little better than it was in our prior facility.

Great. Thank you.

Our next question comes from Eric Genco with Citi. Please go ahead, your line is open.

Hi, I just wanted to follow up a little bit on Craig’s question. When we look at the spot prices for ethylene, if I will get sort of the Bloomberg today, it looks like for Mont Belvieu you’re looking at $34.75 per pound. Is that the right number to be looking at and what is that now for the Mississippi River market today roughly?

Yeah, thanks for the question. Unfortunately, there’s not an awful lot of transactions happening on the Mississippi River. The few recent transactions that we saw came out to be plus about between $0.08 and $0.10 to that number that you see at Mont Belvieu. And as I mentioned in my commentary just a moment ago, at least I would believe that as we bring our plants back into service here through this early part of this year, we would probably see that differential climb to more normal levels. And those more normal levels range between $0.01 and $0.03, so if you are looking forward and it would be reasonable to expect those kind of differentials, but certainly and once again, we feel that there’s a pent-up demand over on the river that’s been lagging by our outage and the reliability of the pipelines getting ethylene to that market in recent past.

Okay that’s helpful, but the $34.75 that’s a good number that’s kind of the good number for ethylene pricing in Mont Belvieu as of right now?

It’s a good number whether all transactions happen at that level they’ll probably happen around that number, so yeah it’s a good number you are looking at.

And just, I mean just kind of to remind me, I should have this somewhere, but I just don’t it top of my head. If Geismar is running at say 95%, 98% or whatever the target is, what percentage of, I guess U.S. ethylene capacity would that be like? How much more is coming back onto the market?

Yeah, it’s around, it’s just under 4%.

4% okay.

Yeah, right in that range, right.

Right and then my second question just switching gears I guess to Atlantic Gulf and I'm sorry if you touched on this, it looked like the other segment costs jumped pretty significantly there. I can understand that there’s going to be some, perhaps some startup costs associated with Gulfstar, I was hoping you could quantify that a little bit more? And then just try to understand if that’s what it is at Gulfstar, are there any revenues or any revenues whatsoever in the quarter from Gulfstar, inventory and charge or anything like that?

Well yeah, there were revenues in the quarter from Gulfstar. I think we had $19 million of new Gulfstar fees. We actually collected quite a bit more than that in really the second half of 2014. So we have the cash in, but based on the revenue recognition model that we’re using we kind of have to dose out those collected dollars based on the forecasted throughput through the facility. So our cash numbers are actually are far in excess of the $19 million that we took to earnings. But that will continue to grow and we are collecting a base fee or demand fee under that contract. And then there’s a usage fee as well as those barrels and those MMBTs of gas total across the facility. So that’s a fairly significant impact on revenues in the quarter. Also our Transco transportation revenues were up, fee-based revenues were up about $15 million. And there was some IT volumes and some short-term firm deals and as well as some seasonal volumes that we saw pushing that number up.

Okay, but is there something that kind of caused the, I mean is it really Gulfstar startup or how much of this is one-time to go from sort of 3Q number of $133 million above the some of the cash cost to say $160 million?

Yeah that the quarter I would say is not really indicative of the year. So if you look at the year in total on the expense side we were right on our target, but if you look quarter-to-quarter, it looks pretty extreme. I’ll tell you what happened though if you remember the polar vortex that we went through Q1 of 2014, it was kind of an all hands on deck period for Transco we were sudden new records seemed like almost every day. It was a pretty severe environment and we saw almost all of our expenditures that we could push got pushed into the second, third, and fourth quarters. So just it was a game of catch-up all year and we just wound up loading a lot of those expenses into the fourth quarter. If you look at the year’s total, it’s pretty much right on.

All right this was helpful, thank you very much.

Yep.

And our last question comes from Timm Schneider with Evercore ISI. Please go ahead your line is open.

Hey guys just real quick, and first of all I appreciate all the color you gave on the ethylene markets that was super helpful. I think it is funny as your call was going on Axio filed for Private Letter Ruling for their MLPs, so you already got someone for your fee base Geismar ethylene I guess. I mean, so I just want to switch over real quick then to the Northeast. Can you just give us a little bit more color on what the exit rate maybe was at OEM? And then secondly, have any of the producers up there actually pushed back to you and kind of had some look, can you give us a break on any of these rates that you guys are charging us in exchange for it will keep the volume going?

Timm, sorry Jim Scheel, you want to take that please?

Sure, you know as we spoke last time we were pretty bullish about ending the year around 400. That didn’t happen. We had a couple issues associated with some pretty significant CRPs that had some operational issues associated with producers actually having a much richer liquids content. So we’ll expect that volume to show up later in the year as we install the equipment necessary to handle that quality issue that we faced at the end of the year. So we ended just over 300. We have been talking to our producers and as has already been talked about it, that number of different times we have a much different expectation for growth around OVM, but it is continued growth, it’s just at a slower rate. We have had discussions with producers about renegotiation of agreements and that’s not to go not without opportunities for us to improve on the base agreements that we had achieved with Cayman and negotiate some better terms. But at this point, those are just preliminary discussions and we have not made any commitments to make any changes, but obviously if we can create a win-win position with our producers we will be open to those discussions.

All right, super outlook, thank you guys.

Thanks.

And it appears we have no further questions at this time. So I would like to turn the program back over our speakers for any additional or closing remarks.

Okay, great well thank you all very much, very excited about our future and really like how we've repositioned ourselves here and derisked our forecast substantially and yet still tremendous growth in distribution. And we think, best months it appears, considering our conservative forecast. So, thank you very much for joining us and we look forward to talking to you in the future.

That does conclude today’s program. You may disconnect at anytime.