Boardwalk Pipeline Benefits from Rocky Winter in First-Quarter 2014, Maintains Capex Outlook for Full Year

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Researched by Industrial Info Resources (Sugar Land, Texas)--Boardwalk Pipeline Partners LP (NYSE:BWP) (Houston, Texas), a midstream master limited partnership that services the natural gas and liquids markets, saw generally positive results in the first quarter of 2014, as new projects and a very chilly winter offset the effects of contract-related setbacks. Net income was reported to be $110.2 million for the quarter, an 8.68% increase from first-quarter 2014.

Total operating revenues stood at $356.9 million for the quarter, an 8.65% increase from the same period in 2013. Harsher-than expected winter weather drove much of the quarter's gains, as did revenues from recently completed growth projects. Several contract expirations, however, reduced transportation revenues, while some other contracts were renewed at lower rates. Boardwalk also incurred $10 million in net capitalized costs after it was unable to reach an agreement for commitments from potential customers on the Bluegrass Pipeline project.

Stan Horton, the president, director and chief executive officer of Boardwalk, said in a conference call that the company is "no longer making capital investments in the Bluegrass pipeline, [but] we will continue to consider all of our options."

Growth capital expenditures were reported to be $50.1 million for the quarter, while maintenance capital expenditures stood at $16 million. In the first quarter of 2013, growth and maintenance capital expenditures were reported to be $63.1 million and $7.5 million, respectively.

Industrial Info is tracking $1.3 billion in active projects involving Boardwalk, including the construction of a $130 million natural gas pipeline in Mississippi, as well as the construction of two $70 million natural gas compressor stations. The 28-mile, 24-inch-diameter transmission pipeline, which will run from Hattiesburg to the Mississippi-Alabama border near Mobile, Alabama, is expected to transport up to 510 million standard cubic feet per day of natural gas. All three projects are expected to be completed in the fourth quarter of this year.

"As you know, across North America, we experienced a very cold and sustained winter," Horton said in the conference call. "I am proud that we were able to meet peak loads across our system without any significant problems. In fact, we set records for storage withdrawals across our systems, as well as record deliveries on many parts of our systems."

Boardwalk executives are maintaining their outlook for 2014 capital expenditures, which are expected to total $330 million for growth projects and $90 million for maintenance projects.

A Boardwalk subsidiary recently awarded the engineering, procurement and construction (EPC) contract for the company's $500 million natural gas liquid (NGL) fractionation plant near Sulphur, Louisiana. The fractionator will be capable of producing up to 200,000 barrels per day (BBL/d) of NGLs. For more information, see April 18, 2014, article - Boardwalk Selects EPC Firm for Louisiana NGL Fractionation Project.

"We're engaged in discussions with customers looking to build large-scale ethane crackers in Louisiana," Horton said. "Discussions such as these reinforce our bullish point of view on demand for liquid services in Louisiana. We recently executed long-term firm agreements with one of these for ethane and ethylene transportation services, contingent on their ethane cracker receiving a final investment decision. In order to meet these new firm commitments, we would expand capacity at our Sulphur hub, and this would further advance our strategy to diversify within the midstream sector and enable us to realize some of the growth potential we anticipated when we acquired Boardwalk Louisiana Midstream."

Boardwalk is a subsidiary of Loews Corporation (NYSE:L) (New York, New York).

For more information, visit Industrial Info's North American Oil and Gas Transmission Project Database.

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