Enterprise Products Partners L.P. (EPD) Q4 2013 Earnings Report, Transcript and Summary

Good morning. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the Enterprise Products Partners’ Fourth Quarter 2013 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. And now I would like to turn the call over to Mr. Randy Burkhalter. Please go ahead sir.

Thank you, Brent. Good morning everyone and welcome to the Enterprise Products Partners’ fourth quarter 2013 earnings conference call. Our speakers today will be Mike Creel, CEO of Enterprise’s General Partner; followed by Jim Teague, Chief Operating Officer; and then Randy Fowler, our Executive Vice President and CFO. Other members of our senior management team are also in attendance for the call today. During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 based on the beliefs of the company, as well as assumptions made by, and information currently available to Enterprise’s management team. Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Please refer to our latest filings with the SEC for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call. And with that, I’ll turn the call over to Mike.

Thanks Randy. 2013 was a record-setting year for Enterprise both financially and operationally and it ended with the strong fourth quarter. Our record financial performance in 2013 included records for net income of $2.6 billion, earnings per unit of $2.82 on the fully diluted basis and gross operating margin of $4.8 billion with four of our five business segments recording improved results. We benefited from record volumes in our fee-based businesses attributable to production growth and strong domestic and international demand for NGLs. In 2013, we transported a record 5 million barrels per day of NGLs, crude oil, refined products and petrochemicals, while our gas processing plants had a record 4.6 billion cubic feet a day of natural gas on a fee basis and our NGL fractionators averaged a record 726,000 barrels per day. We generated $3.8 billion of distributable cash flow and increased our cash distributions by 6.5% to $2.74 per unit with respect to 2013, while at the same time retaining $1.3 billion of distributable cash flow to reinvest in the partnership. We ended the year with the strong fourth quarter results that produced record grows operating margin of $1.3 billion with increases from our NGL Pipelines and Services, Onshore Crude Oil Pipeline and Services and Petrochemical and Refined Products Services segments. For the second consecutive quarter we had record NGL and crude oil transportation volumes, record NGL fractionation volumes and record LPG export volumes. Distributed cash flow increased 15% to $1.02 billion in the fourth quarter of 2013 from $886 million in the fourth quarter of last year, providing 1.6 times coverage of the cash distribution declared with respect to the fourth quarter of 2013. Included in distributable cash flow were proceeds from asset sales and insurance recoveries of $24 million this quarter, and $31 million in…

Thank you, Mike. I want to start off by recognizing members of our senior management team who will soon be leaving enterprise and make sure we publicly thank them for their service. As many of you know Lynn Bourdon has accepted the position of CEO at a new midstream company Enable. Lynn has been with Enterprise for over ten years where he has led a significant portion of our marketing activities including NGL’s petrochemicals, refined products and natural gas. He has done a great job for us and we wish him the best as he moves onto Enable and quite frankly we are complemented by the fact that somebody wants one of our own to run their company. Lynn and I worked together at Dell for many years, so we are close friends. Enterprise will miss him, but I’ll personally also miss him. The bright side is that when he is successful in Enable, we don’t have any other volume in our fractionators and we expect to see Enable volumes at Mont Belvieu. Terry Hurlburt has also announced that he will be retiring at the end of February. He has been with Enterprise for 33 years. Terry leads our operations, safety environmental and training groups. He’s a pro at everything he touches. He’s passionate about technology, safety and he’s very passionate about Enterprise. We can’t thank him enough for all that he’s done. I wanted to mention that Tom Zulim who headed our regulated group is on extended medical leave. We keep in touch with Tom and wish him the best as he works through his health issues that he’s been dealing with since last summer. And then finally, I wanted to mention that Rudy Nix who is somewhat of an icon here at Enterprise and leads our distribution team…

Thank you, Jim. I’d like to take a few minutes to discuss additional income items for the quarter as well as capitalization. We reported net income attributable to limited partners of $699 million and earnings per unit of $0.75 per unit on a fully diluted basis for the fourth quarter of 2013. Net income and EPU were reduced by $44 million or $0.05 per unit on a fully diluted basis for non-cash asset impairment charges. $39 million of this $44 million was on the face of the income statement while $5 million was included in equity earnings from unconsolidated affiliates. You may have noticed a new item in our reconcilement between operating income and gross operating margin on Exhibit D of our earnings release. In the fourth quarter 2013, certain shippers among Texas Express and Seaway did not utilize their minimum volume commitments. Although we receive payments of non-refundable fees totaling $4.4 million for capacity charges due to certain contractual makeup rights related to the shortfall and volume, the revenues associated with the shortfall and minimum volumes cannot be recognized as revenues in operating income and net income for Generally Accepted Accounting Principles until the earlier of the deficiency volumes being shipped, the expiration of the make-up period or the pipeline being released from its performance obligation. We consider the transportation fees earned by these pipelines important in assessing their financial performance and therefore we include the non-refundable deferred revenues associated with the make-up rights in our non-GAAP financial measures of gross operating margin and distributable cash flow. The non-refundable deferred revenues, we include in our non-GAAP measures a reconciling items and just a timing difference if you would in comparing to their corresponding GAAP measures. In 2014, we expect several of our new pipeline projects may experience months where…

Okay Brent, we are ready to take questions from our listeners.

Thank you. (Operator Instructions). Your first question comes from the line of Steven Maresca with Morgan Stanley. Please go ahead with your question. Steve J. Maresca – Morgan Stanley & Co. LLC: Hey good morning guys, nice quarter and thanks for taking my question. Jim, you mentioned in negotiation with several companies on the ethane export front, just wondering if you could just talk what’s the view from these customers in terms of their willingness to spend the necessary dollars to convert assets to use ethane, how soon we could see something happen in other vessels available to handle this?

Steve I think if you look at the spread between ethane and naphtha, they’ve got a lot of room to spend money. They all seem to be willing to do so, I mean the final analysis will see if we get a deal done. I think the biggest hurdle they had to overcome so far is that we use to dealing with just naphtha that, they look at everything relative to naphtha and really wanted to price it like that. Frankly, that doesn’t work for us. I think that finally come around. I’m looking at Bill and Lynn, they finally come around to say, they educated themselves, we have helped to educate them as to what the opportunities are in U.S. they have come around to recognizing, they are going to have to price it relative to our market and they seem comfortable. In saying all that, we hadn’t signed any deals yet. Steve J. Maresca – Morgan Stanley & Co. LLC: Okay. And then on the propane side, can you talk just a little bit about the export dynamic? Have you seen at all any slowdown in terms of customer discussions or demand for propane or butane given the shift in pricing?

Not at all. We still got people wanting to talk to us how term contracts, three to five years in term. I mean we’ve still got a lot of folks, they were in negotiations with on LPG exports and I don’t think we have seen a slowdown.

And that’s correct. We have cash was looking as lay I mean, everyday calling, received calls, just wanting looking for additional term business in 2014, 2015. We are discussing everything from one year contracts to five year contracts with multiple customers.

I think those folks recognize that this is a seasonal issue. Steve J. Maresca – Morgan Stanley & Co. LLC: Okay. And then finally from me just on the financial side maybe for Mike or Randy; latest thoughts on distribution policy, how is your coverage is extremely robust and you do have an ability to accelerate your payout beyond the year-on-year growth you have been accumulating. Are you considering doing that given the strong business performance and outlook?

Steve, we aren’t at this point, and we do discuss it from time to time, but as Randy pointed out, we have got some more in the range of $3.9 billion to $4.5 billion of CapEx for 2014. We are still in a period where it’s pretty robust. We have got our PDH plant, this is a big project consuming a lot of capital, not generating cash flow yet. So, we are going to be pretty cautious about how we go about increasing distributions. We have a long track record of doing it, but want it in a way that’s prudent and it makes the most sense for the balance sheet and for our unitholders. Steve J. Maresca – Morgan Stanley & Co. LLC: Okay, great. I appreciate the color everybody.

Your next question comes from the line of Darren Horowitz with Raymond James. Please go ahead with your question. Darren C. Horowitz – Raymond James & Associates, Inc.: Good morning guys. Jim, just two quick questions from me; the first and this goes back to the comments that you’ve made in the past. You’ve talked about shifting that processing contract mix to more fee based and less equity barrels. Obviously looking at the results, the equity NGL barrels hit a record, and with that volatility that you just talked about across ethane and propane, there is a pretty big disconnect between Conway and Belvieu pricing. So, obviously that begs the question about arbitrage opportunity, and I know that you said part of it is seasonal and I think we get that, but if you could just give us more color about the opportunity set that you see, maybe how long it could last and possibly even the magnitude of margin capture, that would be helpful?

I think we’d probably talk about that on the first quarter earnings call. We have done everything we can to move product to meet needs. In the Midwest, quite frankly we’ve got a limited toolbox. There, we don’t have pipelines to the Midwest. What we’ve looked and we do have our Hobbs fractionator, and we have diverted propane from, I mean we could have brought it down to the Gulf Coast and put it on a ship, instead we diverted it to the Midwest, but we’ve got trucks I guess moving as far as Minnesota last time I saw out of Mont Belvieu, but whatever we can do we are doing, but our toolbox is limited in the Midwest. In the Northeast, we have got our TE products pipeline, it is going full out and serving those folks, probably get slapped, but, yes, if we didn’t have the Jones Act, we could have had this thing resolved pretty easily by moving product off the Gulf Coast in the Northeast and then displacing back to the Midwest. So, we don’t have that in our toolbox Darren C. Horowitz – Raymond James & Associates, Inc.: Yes, well, if that also happened, I don’t think your marketing guys would have the opportunity set that they have had historically, and maybe going forward too, so maybe those were the folks that might think about slapping you for saying that. But shifting over to butane, just a quick question, and there has been a lot discussion obviously about possible shortage and all this focus on these light-end cracker conversions and opportunities for possibly a rise in butadiene or butylene prices, and obviously there is some export there from normal butane, and you have talked about that catching up with propane, and I’m just wondering as you look out over the next couple of years, when does it make sense to start thinking about a butane dehydrogenation facility for on-purpose butadiene or butylene or possibly the export of those exports, or is there just the ability to ramp more normal butane exports as a lot of those global arbitrage economics dictate?

I think we will export more of normal butane. As far as on-purpose butadienes, we tried, we didn’t get any traction, then for a while we thought we were, but in the final analysis, the user of butadienes got to step up in [tanker] (ph)position like the propylene users did, and so far they haven’t shown any interest in doing that. Darren C. Horowitz – Raymond James & Associates, Inc.: Do you think they were pretty close to pricing pressure to where they do? I mean doesn’t what’s happening in the butane market kind of feel like what was happening in the propane market 18 months ago?

Do you want to answer that. That was in our last call.

We are going to let Lynn answer that. This is his last call.

And if you go back again to what Jim said on the on-purpose butadiene side, there just hasn’t been enough support from the market for that. They have been able to find supplies from other sources at economics that they felt like were better than supporting an on-purpose butadiene side. On the butane supply side, which I think was the root to your question, we don’t see it exactly the same thing as the propane side, because the propane side was a lot longer in supply on a relative basis than we received the butane side. There are a few more alternatives for the butane, everything from gasoline blending. We still see a fair amount of butane going into the cracker which is producing butylenes and butadienes on that side, but we do see increasing normal butane exports. At our own facility, we’ve been exporting more normal versus what we had previously. And we’ve always been capable of exporting normal butane, but when you consume a 100,000 barrels a day or so in your own system, you tend to take care of your own means first rather than other facilities which didn’t have those same outlets, and they were forced to find another home for the normal butane, and that’s why you saw other facilities exporting more normal versus propane relative to what Enterprise has done, but our exports of normal butane are growing, and we have fair amount of demand from offshore customers who are looking for that, and our system has set up. As we go forward, we’ll see more of that. Darren C. Horowitz – Raymond James & Associates, Inc.: Thank you.

Your next question comes from the line of Matthew Phillips with Clarkson. Please go ahead with your question. Matthew J. Phillips – Clarkson Capital Markets: Thanks. Good morning everybody.

Good morning. Matthew J. Phillips – Clarkson Capital Markets: A follow-up on the propane LPG export, I mean is there any near-term room for lifters not to take cargoes I mean, I know it’s a term (inaudible) mostly, but I mean is there an inflation clause built-in if it doesn’t work or does the price get passed straight along through to the lifter?

Yes I think we had one cargo out there -- that one or two cargoes where they opted to -- in February there. Is it February?

Yes, February.

That they opted to pay the deficiency and not lift, which is fine with us. There were a couple of spot cargoes frankly we could have sold, but we opted not to because the opportunity domestically was a matter. It’s just a reflection of that, price does create, does change things. Matthew J. Phillips – Clarkson Capital Markets: Okay, that makes sense. And a follow-up on exports, there has been a lot of discussion in the media and in the industry overall of crude exports here in the U.S., is that something you view as realistic or at least in volumes enough to really matter players such as yourself?

Did you, do you say crude exports, I can’t hear you Matthew. Matthew J. Phillips – Clarkson Capital Markets: I’m sorry, yes crude exports, yes.

We’re loading out ships that are obviously going to the East Coast and up into Canada of crude right now. I think we’re going to do 2 million, 2.5 million barrels just next month. So, we think water access is important, and we know that the topic of exporting crude is a pretty hot topic right now, and personally I think you’re going to have to do something with a light end of the – with all the light crude coming on land to accommodate that. Exports create markets that enhance production and I think what we’ve seen, I’m not sure you would have had the kind of NGL production growth that we’ve seen in the U.S. If those producers didn’t have a comfortable – they have to be comfortable that there is a market for their product, it’s one heck of a bridge, and it enhances the production. So we’re pretty supportive of it. Matthew J. Phillips – Clarkson Capital Markets: If it enhances production to export it, if we continue the restriction of exports, does that imply that it will hit a wall on production at some point due to pricing?

If it implies, you will have a price delta. Matthew J. Phillips – Clarkson Capital Markets: Yes. Okay, thank you.

Your next question comes from the line of T.J. Schultz with RBC Capital Markets. Please go ahead with your question.

Hey guys, good morning. Just a general question, first on the ethane market, we’ve been drawing about 1 million barrels per month from inventory, just looking for your thoughts on the market currently and into spring and summer if you think we could accelerate withdrawals to get markets more in balance, maybe before some of the crackers go down?

I don’t think -- I think there is a plenty of ethane, we’re not putting large ethane margins to natural gas in our budget.

Okay, on ethane exports, the facility you indicated potentially in Beaumont or the Ship Channel, if you can just discuss what would push it to Beaumont or if it’s an option to export ethane from your current footprint at Oiltanking?

I think what would push it to Beaumont right now is just dock availability that we’ve done quite a bit with Oiltanking already, but have a lot of LPG needs there. We have docks available at Beaumont, and likely that would make us lean in the Beaumont direction. T.J. Schultz – RBC Capital Markets LLC: Okay, thanks. Lastly, the spread impact on Seaway, can you say again what the marketing losses were here given the spreads during the quarter, and maybe what your expectations are for spreads in 2014 or specifically for your marketing efforts next year or this year?

Yes TJ, I threw out some numbers for marketing related to spot transactions, and the numbers that go with it is they have made about $7.5 million in the fourth quarter of 2012 and lost about little under $2 million in the fourth quarter of 2013. It’s pretty simple to understand that once we put Seaway into service, that the basis differential between Cushing and the Gulf Coast narrowed substantially. We really don't see much to change that particularly with the new TransCanada line that's going into service. So, we’re opportunistic, we're looking at Seaway as an asset. They were earning steady fee-based revenues on, and just like any other asset we have it, there is an opportunity to take advantage of price differential we will do it, if they’re not there then we won’t.

Yes, this is Jim. It is not just you’ve got Seaway, you’ve got TransCanada’s pipe, but you have got a lot of pipe coming into the Houston area from West Texas. What we’re doing is we talked about it in our comments. What we think helps differentiate Seaway from others from a long-haul, long-term, is the distribution system we’re building in the Houston, Beaumont, and Texas City, Port Arthur area. So it is only natural. You get pipeline, capacity basis narrows, this just happens everywhere. T.J. Schultz – RBC Capital Markets LLC: Great thanks guys.

The next question comes from the line of John Edwards with Credit Suisse. Please go ahead with your question. John Edwards – Credit Suisse: Yes, good morning everybody. Thanks for taking my questions. Just, what was the volumes on Seaway this quarter, and then just if you could comment on the expected Seaway ramp-up as you put the expansion into service?

In the fourth quarter, the volumes on Seaway were probably just shy of 300,000 barrels a day, if I recall correctly, I don't have the number in front of me, but probably somewhere just shy of 300,000 barrels a day. We've now completed and put into service, and I believe made the first deliveries on the Jones Greek to ECHO lateral that will take all those Seaway volumes into ECHO. The Luke project is scheduled to be complete probably late second quarter, is what we’re thinking today. And as far as volumes on the Luke project and when it will come up will certainly depended on our partner Enbridge’s timing on the Flanagan south piece, which we understand won’t be long after that. And then, also our extension of the Seaway project over into the Beaumont, Port Arthur area is scheduled to probably be again in late second quarter, early third quarter. And as those pieces come into play, I think we will see Seaway ramp-up, we’ll see what the appetite is, I think our capacity at that point in time would be between [850,000] (ph) and 950,000 barrels a day, and we will just see who is going to ship. John Edwards – Credit Suisse: Ok, great, that's real helpful. And then, just with ATEX being placed into service January 1, just what kind of volume ramp are you seeing on that so far?

Yes John, now we’ve got one connection in service right now receiving volumes. We’re expecting our second one by the end of the first week in February and a third connection by the end of the February. We are flowing about 20,000 barrels today, but we've seen that as high as 40,000 barrels. John Edwards – Credit Suisse: Okay, great. Thank you very much that's all I had.

The next question comes from the line of Ted Durbin with Goldman Sachs. Please go ahead with the question. Ted Durbin – Goldman Sachs & Co.: Thanks. Actually I wanted to pick up on something that was on the press release, here you mentioned that you’re interested in growth at a reasonable price but not growth at any price, I guess I'm wondering how we should read that, is that a commentary that maybe you’re not seeing projects that are reaching the return threshold that you’re looking for, does that imply that maybe the capital budget comes down, or is this more of a commentary around the industry? Maybe just a little bit more -- just flesh that out a little bit more for us.

Yeah, Ted, we are not going throw rocks at the industry. I think it’s more of a function that we’ve been asked a lot about acquisition market. For example, are we going to be acquisitive in 2014, and I think the intent of that statement must say, we are going to stick to our knitting. We’ve got plenty of organic growth projects that have good returns that add value to our downstream assets. We are not going to try to compete on price to acquire things just for the sake of getting big. Another point that we’ve addressed in other forums is how much capital do we really need to spend on an annual basis to maintain our distribution growth, and Randy has done quite a bit of work looking at this, and in fact in one of the presentations, more recent presentations out on our website, it’s got the information and in the appendix, it’s got the calculations. But it basically shows that in order for us to continue our distribution growth, and depending on the assumptions of how we’ve funded, we need new assets of anywhere from call it $1.5 billion to $2 billion. Frankly, with some of our assumptions using distributable cash flow, it could be a little south to the $1 billion. So, just a message that, just because we are spending $4 billion a year and have for a number of years, we don’t need to do that in order to maintain our distribution growth. We are doing it because we have high quality projects that frankly if we don’t do them now, they won’t be available to us in the future. Ted Durbin – Goldman Sachs & Co.: Okay. That’s really helpful. And then maybe can you just talk to, and I know it’s somewhat of a short-term phenomenon, have you seen any pickup in any lean gas drilling in any areas, and I think maybe the Haynesville or what not given the [derivative] (ph) prices or it that sort of just (inaudible) we should just expect, because you guys had some tough quarters here in the onshore gas pipeline, but I’m just wondering if you can talk to that dynamic?

Well, really it’s too soon to say that pricing in lean gas area would pick up because of this recent uptick in natural gas prices, but as a general rule I think what this has done just like the price uptick in gas at the end of last winter is it’s given producers a good solid base to hedge for 2014 and for 2015, but I’m not sure that’s really going to change their drilling plans.

Got it. Okay, I’ll leave it at that. Thank you.

Brent, do we have any other questions?

Yes sir. Your next question comes from the line of Shneur Gershuni with UBS. Please go ahead with your question.

Hi, good morning everyone. Many of my questions have been asked and answered, but I just wanted to return to the – I think with the first question with respect to the ethane exports, I was wondering if you can sort of expand a little bit as to what the challenges are left for the customers to overcome at this point? Is there a need for long-term contract on pricing or have they kind of been educated on that, is it logistics or CapEx on their end that that’s sort of holding things in place at this stage and also wondering if you’ve had any discussions in the U.S. with utilities about using ethane and boilers as well too?

We haven’t had discussions with U.S. utilities. I think we are pretty well there with some folks. I think it really gets down to them just getting convinced and pulling the trigger, and we went down the same road with our PDH plant. At a certain point, a guy has just got to say I believe in a steps up and he does the deal, and I think we are getting to that point now with a couple of folks.

I mean, the challenges are very similar to what any – even for a domestic project, it’s being evaluated, it’s being presented against their options or their current situation, they are looking through infrastructure and their cost and making that evaluation, and from our discussions we feel that companies that we are talking to have spent – it’s not a – it’s not something that just happened in the last few months. They’ve been looking at us. We’ve actually been talking about it for close to two years very early on using the discussions stages whether or not this project would fit, whether it’s Northwest Europe petrochemicals at Asian markets, and I think we are getting close to closing or getting close to completing some of those agreements.

Okay, great. And one last follow-up question. Just with respect to the PDH facility, are we done with all the major permits that we need or is there anything else that needs to be approved and so forth?

We are not done with the permits. Our permits are, we’re actually actively working with both the EPA and State of Texas. We expect to have our permits in the March-April timeframe.

That’s great. Thank you very much guys.

Your next question comes from the line of Ross Payne with Wells Fargo. Please go ahead with your question. Ross Payne – Wells Fargo Securities LLC: Thanks. Mike and Jim, we’ve obviously had a nice uptick in NGL pricing, and propane has obviously driven a lot of that, but as a general rule, do you guys think we might see some decent year-over-year comps for the rest of the year? And then secondarily, Bluegrass and Kinder’s NGL projects have been pushed back a bit, can you speak just generally about what you’re hearing from producers up in that area and what they are thinking in terms of getting their NGLs down into the Gulf? Thanks.

Ross, I will talk about the first part and then let Jim talk about Y-Grade pipeline projects on the drawing board, but with respect to the first quarter, we’re not going to give the guidance, but a nice try, but as you can imagine, anytime we see opportunities around our system regardless of the product, we are going to try to capitalize on it. Ross Payne – Wells Fargo Securities LLC: Okay.

Ross, I don’t know what’s going to happen on Y-Grade, but you are speaking Y-Grade pipelines out of the Marcellus, Utica, and frankly, I don’t know what’s going to happen. I think they are both – every consultant I speak to says, at least one is needed, but somebody has got to step up and commit to it, and I think right now, a lot of guys frankly have expanded capacity, they’ve stepped up to in the past, and it’s kind of a hurdle to say, “Yes, I want to step up to another one, if I’ve got stranded capacity I’m paying for somewhere else.” So I think it’s a struggle. I think sooner or later, somebody is going to build one. I don’t think it’s imminent though.

And Ross, based on our experience, we had the open season for propane on ATEX, and that seems to be after ethane, the item that has the biggest issue at least on a seasonal basis, and we really had no appetite there. So it may just be a function that, yes, at some point it’s going to be a problem, but we’re just not there yet. Ross Payne – Wells Fargo Securities LLC: Okay, thanks guys very much.

Your next question comes from the line of Michael Blum with Wells Fargo. Please go ahead with your question. Michael J. Blum – Wells Fargo Securities LLC: Thanks, good morning everybody. Just one quick question and I apologize if I missed this. On your LPG export docks, at least the consultants are reporting that you’re running above nameplate capacity on that, would you expect that to continue through 2014 until the next expansion comes on?

You mean, we are able to load at a higher rate than we thought, is that what you are saying? Michael J. Blum – Wells Fargo Securities LLC: Yes.

We have kind of got used to our engineering group, and we tell them to build some - invariably, it does more than the nameplate. I don’t know what arewe running, Terry, 13,000, 14,000 barrels an hour.

And Michael, when you look at the numbers and what we said the hourly rate was going to be for LPG terminals post the next expansion, and you had to do the numbers, if you were to hit that theoretical limit, it’s 19.7 million barrels a month, and what we are saying is it’s more or like 16 million barrels, because there is operational issues.

Yes, you’ve got positioning ships and such as that, but I think right now until expansion, I think 13,000, 14,000 barrels an hour, we’re pretty comfortable with. Michael J. Blum – Wells Fargo Securities LLC: Okay, great. Thanks guys.

Thank you.

Your next question comes from the line of Chris Sighinolfi with Jefferies. Please go ahead with your question. Christopher P. Sighinolfi – Jefferies LLC: Hey good morning guys, thanks for the color. Couple of quick questions for me. With respect to Darren’s question on the NGL equity volumes, we obviously did see them ramp higher in 4Q from sort of the run rate that we had been seeing prior in the year. I was just curious, what’s driving that, is there an effort to sort of optimally run fracs 7 and 8, or is there something else going on there that you could speak to?

The equity volumes we are seeing the ramp up in are really discretionary ethane volumes. In our gas processing plants like the Yoakum, our producers have the right to let ethane recovery or ethane rejection. Obviously in today’s market, most of those producers are rejecting ethane. We have the opportunity to come in there and take that ethane, and when we look at it, we’ll look at it on a variable cost basis since we own the plant, we own the pipeline, we own the fracs, and it makes sense for us to continue to extract that ethane and make a margin on it. Now, if that ethane were to go under water like it has at certain of our plants, Pioneer up in Wyoming for example, we’ll immediately reject that ethane. So we are not exposed to that, but it shows the ramp-up in today’s market with all the ethane rejection going on, we have the opportunity to come in there and take that as equity volume if we want it, if we don’t want it, we can leave it in the gas. So I think that's what’s happened. I think the ramp up over the course of the year has been with the new Yoakum plant coming up, we’ve got much more of that opportunity than we’ve had in the past, and also late last year, we had a big contract up in the Rockies that we acquired a lot of volume that was going to the competitors’ plant, and that’s filling up our plant up in Wyoming right now. So, we’ve got a lot more opportunity to create more equity barrels, but we have no obligation to continue to produce them, so it’s really opportunistic. Christopher P. Sighinolfi – Jefferies LLC: I am understanding that and I understand that with the Yoakum early last year you guys ramped to sort of call it 120,000 barrel a day level, but then is it the Wyoming facility that really drove us in 4Q up to 145 and for modeling purposes is that what we should be seeing?

And I think Yoakum has actually been running at about 145 here lately, not 120. So it’s doing a lot better than we’ve thought, and same thing up in Wyoming, we’ve got a little bit more volume up there, and that’s mostly been rejected here until just recently we’ve had some opportunities.

The equity NGL, but I (inaudible) in Texas.

Yes. And probably, you are talking about a 50,000 barrel per day increase fourth quarter of 2013 versus fourth quarter of 2012, and probably half of it was South Texas and half of it was Rockies. Christopher P. Sighinolfi – Jefferies LLC: Okay, all right. Well, switching gears a bit. I appreciate the comments and response to Steve’s question at the beginning on distribution growth and then thinking about the response to Ted’s question about the level of CapEx needed to sort of maintain the current growth rate, I’m just curious given the opportunities that being having been and projected to be much larger than that sort of 1.5 billion to 2 billion sustainable level, what’s the variable, what sort of drivers do you guys think might shape a decision to move a bit more aggressively on distribution growth given the coverage in that opportunity set?

Yes, aggressive is probably not a good word to use for us on distribution growth, but certainly we are in a period of low interest rate environment, and so that effects our distributable cash flow, but it means we are generating a whole lot more than we might a couple of years from now, when interest rate starts to tick up. So, we are always mindful of our current economic situation and also what the outlook maybe two, three, four years down the road, but clearly as we’ve said in the past, once we have more experience and have a better understanding of where the cash flows are going to settle out and what our capital needs are, we’ll take that into consideration when we look at our distribution. And we fully understand that there are certain investors that would like for us to blow out all of our cash flow. We don’t think that's in the long-term best interest of our long-term equity holders or our debt holders. Christopher P. Sighinolfi – Jefferies LLC: All right, and I agree to what you said. One final question, Randy you mentioned that there were certain discretionary maintenance items that sort of slipped year-on-year thinking about the 2014 maintenance CapEx budget, and obviously you are still on that process, how do we think about variables that would drive you away from that $350 million number that’s out there today?

I think we are comfortable with that $350 million number. Christopher P. Sighinolfi – Jefferies LLC: Okay thanks.

I think the only point there was that we had some scheduled maintenance that didn’t get done in 2013 that fell over into 2014, so maybe 2014 is a little higher than it would have been otherwise. Christopher P. Sighinolfi – Jefferies LLC: Okay and I guess when we saw for 2013, the original budget was $350 million, it came in sort of $290 million, so just thinking about it being back up to $350 million what sort of variance we might see around this $350 million?

We are not sandbagging you. Christopher P. Sighinolfi – Jefferies LLC: Okay, thanks guys.

And so we have no further questions in the queue. I would like to turn the call back over for any closing remarks.

Okay Brent, thank you all. That wraps up our comments, so we will close the call today. We would like to thank everybody for joining us. And Brent in closing if you could give our listeners the replay information, I would appreciate it. Thank you.

Yes sir. A replay of today’s conference will be available beginning later today until February 6, 2014. To access the replay, please dial 855-859-2056 or if dialing internationally, 404-537-3406. To access the call, please enter conference ID number 36839235, thank you. This concludes today’s conference call, you may now disconnect.

Thank you.