Good morning. And welcome to the Northwest Natural Gas Second Quarter Results Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference to Bob Hess, Director of Investor Relations. Please go ahead.

Thank you, Sachi. Good morning, everybody, and welcome to our Second Quarter and Year-to-Date Results Call for 2014. As a reminder, some of the things that will be said this morning contain forward-looking statements. They are based on management's assumptions, which may or may not come true, and you should refer to the language at the end of our press release for the appropriate cautionary statements and also our SEC filings for additional information. We expect to file our 10-Q later today. As previously mentioned, this teleconference is being recorded and will be available on our website following the call. Please note that these conference calls are designed for the financial community. If you are an individual investor and have questions, please contact me directly at area code 503-220-2388. Media please contact, Kim Heiting, directly at area code 503-220-2366. Speaking this morning are Gregg Kantor, President and Chief Executive Officer; and Steve Feltz, Senior Vice President and Chief Financial Officer. Gregg and Steve have some opening remarks and then will be ready to answer your questions. Also joining us today are other members of our executive team, who are available to help answer any questions you may have. With that, let me turn it over to Gregg for his opening remarks.

Thanks Bob. Good morning, everyone, and welcome to our second quarter earnings call. I'll begin today with highlights from the period then turn it over to Steve to cover the financial details. I'll end the call with an update on our regulatory agenda and growth initiatives. Second quarter results were down year-over-year, but still positive for the utility, reflecting continued improvement in customer growth and progress on other company initiatives. For example, in the period we received approval of a new labor contract that we had been negotiating since last fall. The new agreement will be in place until November of 2019, with the net cost impact of about 4% in the first full year. Given comparative market data we believe this was a fair outcome for our employees and for the company. Another big milestone in the quarter was the receipt of the final settlement payments from insurance carriers related to our environmental claims which now total $102 million in 2014. Adding amounts from previous settlements our total insurance recovery for environmental clean-up activities is now approximately $150 million, in our view a very positive outcome. Also in the quarter, we saw continued improvement in our customer growth rate, which increased to 1.4% from 1% a year-ago and 0.9% two years go. Year-to-date, median home prices in the Portland area increased nearly 9% compared to 2013 and in June home sales increased just over 4% compared to the same time, last year. Housing market activity also continues to improve in our Washington service area. In Clark County, home sales were up above 3% compared to 2013, and closed sales, this June was stronger than any June since 2006, all positive indications that the slow but steady housing sector recovery remains on track. Overall, we're pleased with our utility performance in the quarter and year-to-date. On the non-utility side of the business, storage continues to struggle due to current market conditions which Steve will touch on in more detail. However, despite those headwinds we continue to make progress on our other growth initiatives which I'll cover after Steve provides the financial results. Steve?

Thank you, Gregg, and good morning, everyone. As a reminder, a significant portion of our business is seasonal and results for the second quarter typically reflect lower earnings due to decreased customer use for heating requirements in the spring and summer months. For the second quarter, we recorded consolidated net income of $1.1 million or $0.04 a share, compared to $2.1 million or $0.08 per share last year. Our utility segment contributed net income of $2.2 million in the quarter as compared to $700,000 last year, while our gas storage segment recorded a net loss of $1.2 million as compared to net income of $1.5 million a year-ago. The utility increase was driven by customer growth and rate based investments in gas reserves, pipeline integrity and environmental water treatment plan. These gains were partially offset by a decrease in other income caused by lower interests on regulatory deferred balances, those lower regulatory balances reflect the $102 million of proceeds from environmental insurance recovery in the first-half of this year. From an operational standpoint, our utility continues to perform well. Total gas deliveries to utility customers in the quarter were down 2% but margins were up 8% to $70 million on a $5.1 million increase from co-residential and commercial customers. And a $200,000 increase from industrial customers. Weather in the quarter was 10% warmer than last year and 23% warmer than normal. However, our weather normalization and revenue decoupling mechanisms in Oregon largely protected retail margins from volume losses due to weather and energy conservation. With respect to our gas storage segment we reported a $2.6 million decrease in net income for the quarter compared to last year. This decrease was due to a decline in operating revenues of $2.7 million, and an increase in operating expenses of $1.4 million. The…

Thanks, Steve. As you know, a significant priority for us this year is to work through the remaining regulatory issues carried over from our 2012 Oregon rate case. Those dockets involving an environmental earnings test and the review of our interstate storage revenue sharing arrangement are nearing completion, and we expect them to be resolved this year in 2014. We have also been working through the pension docket with the PUC and many other parties. And because that docket deals with complex issues that involve all the investor-owned utilities in Oregon, it's moving – it’s been moving at a slower pace than originally anticipated. The Commission recently announced it would be extending that proceeding into next year, and we now expect a final decision in the first-half of 2015. Another important priority for this year is to determine whether or not we will be moving forward with an expansion at our Mist storage facility in Oregon. As you know, for the past year we've been working with Portland General Electric to explore how a Mist expansion could provide a flexible, on-demand fuel source for their gas plants at Port Westward, plants designed to integrate wind resources into their system supply. We continue to work with PGE to refine project cost estimates, and we still expect to have a decision this year on whether we will proceed with the project. Last quarter, we also told you about a modification we made to our gas reserves agreement with Encana Oil and Gas, a change that was triggered by Encana's sale of its interest in the Jonah Field. Under our original agreement with Encana, we made a total investment of $178 million. That investment will continue to earn a rate of return and provide long-term gas price protection for our utility customers. While…

Thank you. We will now begin the question and answer session. (Operator Instructions) The first question is from Spencer Joyce of Hilliard Lyons. Please go ahead. Spencer Joyce – Hilliard Lyons: Good morning, guys, thanks for taking my call.

Hi, Spencer, good morning. Spencer Joyce – Hilliard Lyons: I want to start out with the Storage segment first. The $2.7 million or so decline in revenue that we saw year-over-year in Q2 is a pretty good chunk of change. And my question is, what kind of run rate should we be thinking about for the decline or the impact that those renegotiations may have over, say the next rolling three quarters or so?

Spencer, let me give that to David Anderson. David is overseeing the storage operations with Dave Weber, who's the President of the company. Spencer Joyce – Hilliard Lyons: Okay.

David, you want to take that?

Yes. Good morning, Spencer. Yes. As you've probably seen spreads in the market are down, and there's a couple reasons for that, I mean, we still, especially on the California market, you're still seeing abundant gas supplies. And so, frankly, it's a buyers' market for storage right now. But we also had very large withdrawals. So the front-end of the curve is very high. So if you think about the summer/winter spread, it's fairly low right now and there is not a lot of volatility in the market. So for the 2014-2015 year, which starts in April, the contracting levels were lower, and you're seeing that in the results on the current period. Now, frankly, that summer/winter spread should improve in the following year, assuming you don't have withdrawals, et cetera. So the 2015-2016 year should be a little bit better. But it's still a very low storage market overall. We have the majority of the facility contracted out, but not all of its contracted out. So we're not locking in all of the low prices at this point in time. But it is a difficult storage market right now and we're trying to make the best of it to the best ability we can. Spencer Joyce – Hilliard Lyons: So the renegotiations that may have driven some of the revenue decline this quarter, what's the term on that? Is that a one-year or is that kind of locked in, two to three years?

No, actually, Spencer, I'm glad you asked that. Most of our contracts right now are short-term in nature, and it's reflecting what we believe are very low prices. We do have a couple contracts that are longer-term in nature that were done historically at higher prices. But right now, most of our re-contracting is on a year-to-year basis. Spencer Joyce – Hilliard Lyons: Okay. So you say short-term, I mean, we should be thinking about four quarters or so, or one storage season?

Yes. And I think for the rest of the year, that we're going to see a little bit. Now, again, not all of the facility is contracted out. So we have the ability to work with our optimizer to take advantage of situations when they occur. But this trend, assuming the 2014-2015 trend does not continue, 2015-2016 should be a better year overall. Spencer Joyce – Hilliard Lyons: Okay. Go ahead.

Spencer, I was just going to add that. We had expected prices to be softer. As we kind of entered the year, we'd seen the market had dropped from last year and where it had been the last couple years. But we expected some of the revenue shortfall. I would just also add that, we had some repair costs that we mentioned on the call, and that's really more of the surprise in the quarter for the storage segment. Spencer Joyce – Hilliard Lyons: Yes. I'm glad you mentioned those repair costs, because I wanted to jump over to those secondly. Just given the magnitude there, I have to think there was at least one, maybe two major items that maybe kind of flirted with being capital improvements. Can you talk about what kind of or what portion of that million dollars is maybe really repeatable repairs spend that we may be seeing now that the assets have started to age a little bit and what portion of that you may kind of write-off as on time?

Well, I think what I would describe it as is this is really the first time we had to do any repairs at the facility. So really, a little bit of maintenance and repairs at the facility. I think you're right, we are looking at are there some other things we need to do at the facility to improve or enhance the performance of the facility, which could be some capital expenditures. But we're still in the process of doing that right now. But there clearly were some kind of that first-time repair or maintenance cost that we incurred in this quarter. Spencer Joyce – Hilliard Lyons: Okay. And one more just kind of housekeeping item, you all mentioned the potential four-year spends for the gas reserves. Do you have the number handy there for the updated CapEx budget for 2014, maybe excluding the gas reserve investment?

Well, we have said that capital for the utility is going to be in the $120 million to $130 million range. Beyond that, we're really not investing much in the nonutility part of the business. We are looking at what we might – would be doing at Gill Ranch. But the big driver is north Mist, we're continuing to move forward with PGE. We don't expect that to be much, if anything, this year but in the out years, that's where we would be spending if they like to go forward. Spencer Joyce – Hilliard Lyons: Okay. Thanks, guys. That's all I had.

Thanks, Spencer.

The next question is from Gabe Moreen of Bank of America Merrill Lynch. Please go ahead. Gabe Moreen – Bank of America Merrill Lynch: Hey, good morning, everyone. Question is on the gas reserve side just in terms of the new owner of Jonah and your visibility in terms of their drilling program. And I think if I parsed Gregg's words correctly, it sounds like you participated in some, but not all of the opportunities. So I'm curious why you didn't go for all the opportunities, if I understand you correctly. And then just, I guess, as you're thinking assuming the Commission's okay with what you're doing, as you're thinking about 2015 spend, whether you have visibility on that.

Well, the way it works is they have – the new owner has the right to drill in those fields. And then where we have interest, they ask us to consent and to participate. And we get to look at the wells, look at the sections they're in, look at the geology, and decide whether we're going to participate or not. We clearly, on behalf of our customers, make that decision, and we want to make it based on the best information we have and make that decision on wells that we think have the lowest cost to produce natural gas at. And so we're making those decisions based on a variety of criteria, and we're going to pick the best wells to offer to our customer. So there are – it is possible we will not take every opportunity, every well that's offered to us. 2015 – the new entity is just getting started. And we've met with them and, obviously talked to them about the drilling program for this year. I think they don't really yet have complete clarity on what they're going to be drilling next year. We're going to probably work with them later in the year and we may have some more information for you in the fourth quarter, third or fourth quarter going forward. But right now, there's just not a clear drilling plan for next year that we know that we'll participate in yet, so still to come. Gabe Moreen – Bank of America Merrill Lynch: Got it. Thanks, Gregg. And I guess related to that as a follow-up, how does that, I guess lack of visibility translate into what you're doing around the IRP and what you're asking the Commission for right now. I mean, are you having discussions about kind of boosting the supply coming from owned reserves, and how does that play into that, I guess?

Really a separate track. So we are having discussions with them about these new wells at Jonah and how we're going to proceed with them. And that is the filing that I referred to at the end of August that we'll be making. The other track is in our IRP, and that is to analyze what percentage of our gas supply on an annual basis or long term, should be in gas reserves. That analysis is being done as part of the IRP, will be filed at the end of August as well. And that goes beyond Jonah. That really is looking at potential other gas reserves beyond what we've got in our supply to-date or could bring into the supply from the Jonah Field. So that will be a bigger discussion and broader analysis of opportunities beyond Jonah. Gabe Moreen – Bank of America Merrill Lynch: Got it, okay. And then just last one for me on SB 844, is there any sense you can give us sort of a ballpark of what – quantity of expenditures you're kind of looking at, I mean and talking about with the Commission in terms of some of these projects?

Yes, too early right now. But I think once we get to the final rules, I said one of the issues being discussed is what is the cap on our expenditures. And once we get some definitive answer on the cap, I think we will be able to give a little more transparency about what's the maximum extent possible that we could be starting programs for reducing carbon emissions. So I think that's to come, but a little bit too early right now. Gabe Moreen – Bank of America Merrill Lynch: Got it. Okay, thanks. Right, [ph] thank you, everyone.

(Operator Instructions)

Okay. It doesn’t look like we have any more questions. Thanks, everybody, for joining us in August, and enjoy the rest of your summer.

The conference has now concluded. Thank you for attending today's presentation. You may disconnect.