Exhibit 99.2
FINAL TRANSCRIPT
CONFERENCE CALL TRANSCRIPT
HLND - Q3 2006 HILAND PARTNERS LP AND HILAND HOLDINGS GP EARNINGS
CONFERENCE CALL
Event Date/Time: Nov. 13. 2006 / 8:00AM PT
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FINAL TRANSCRIPT
Nov. 13. 2006 / 8:00AM PT, HLND - Q3 2006 Hiland Partners LP and Hiland Holdings
GP Earnings Conference Call
CORPORATE PARTICIPANTS
Ken Maples
Hiland Partners LP - Chief Financial Officer, Vice President, Finance,
Secretary and Director
Randy Moeder
Hiland Partners LP - Chief Executive Officer, President and Director
CONFERENCE CALL PARTICIPANTS
Ron Londe
A.G. Edwards & Sons, Incorporated - Analyst
Michael Blum
Wachovia Securities - Analyst
Mark Easterbrook
RBC Capital Markets - Analyst
Ted Gardner
Raymond James - Analyst
PRESENTATION
- --------------------------------------------------------------------------------
Operator
Good day, ladies and gentlemen, and welcome to the third quarter 2006 Hiland
Partners LP and Hiland Holdings GP earnings conference call.
[OPERATOR INSTRUCTIONS]
I would now like to turn our presentation over to your host for today's call,
Mr. Ken Maples, CFO. Please proceed, sir.
- --------------------------------------------------------------------------------
Ken Maples - Hiland Partners LP - Chief Financial Officer, Vice President,
Finance, Secretary and Director
Thank you. Good morning. We appreciate you joining us for Hiland Partners and
Hiland Holdings GP's conference call to review the financial and operating
results for the third quarter of '06. If you'd like to be on our list to receive
future press releases via e-mail distribution or fax mode or if you experienced
a technical problem and did not receive your copy of the press release on
Friday, please call our investor relations department. And the number is
1-888-286-8010. A replay of the webcast will be available later this morning.
The access details are provided in the press release.
With me this morning is Randy Moeder, our President and CEO. Please note that
information reported in this call speaks only as of today, November 13th,
therefore, time-sensitive information may no longer be accurate as of the date
of any replay. Our discussion today may contain forward-looking information that
is based upon management's beliefs and assumptions and are also made based upon
information that's currently available to management.
Although the company believes that the expectations reflected in such
forward-looking statements are reasonable, we can provide no assurance that such
expectations will prove to have been correct. Such statements are subject to
certain risks, uncertainties and assumptions. If one or more of those certain
risks materialize or should the underlying assumptions prove incorrect, actual
results may vary materially from those expected. These risks as well as others
are discussed in greater detail in the partnership's annual report or form 10(k)
and other documents filed from time to time with the SEC.
Please note on this call we use the terms EBITDA and total segment margin. These
are non-GAAP financial measures. And we have provided reconciliations to its
most directly comparable GAAP measure in our press release.
With that, I will turn it over to Randy at this time.
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FINAL TRANSCRIPT
Nov. 13. 2006 / 8:00AM PT, HLND - Q3 2006 Hiland Partners LP and Hiland Holdings
GP Earnings Conference Call
- --------------------------------------------------------------------------------
Randy Moeder - Hiland Partners LP - Chief Executive Officer, President
and Director
Thanks, Ken. I will begin the call with some advanced comments regarding the
current disclosure of our third quarter results and our operating performance.
Ken will review our financial results before we address your questions. Our
formal comments should last approximately 15 minutes.
Because we completed our initial public offering in mid-February 2005,
disclosures contained in Friday's press release, this call and the form 10(q),
which we'll issue later today include information pertaining to periods prior to
the initial offering. Friday Hiland reported third quarter results. For the
third quarter, total revenues were $56 million, and EBITDA was $11.8 million.
Ken will review these numbers in further detail, but I can say that we are very
pleased with these results.
Our results of operations principally benefited from several key drivers:
natural gas liquids prices were favorable. In addition, we have seen a
substantial increase in company-wide natural gas and natural gas liquids
production in the third quarter of 2006 compared to the third quarter of 2005.
This increase is directly related to throughput - increased throughput volumes
at the gas plants and higher natural gas liquids recoveries at our processing
facilities.
At the end of the third quarter, our mid-stream segment was comprised of 13
natural gas gathering systems with approximately 1,800 miles of gas gathering
pipelines, five natural gas processing plants, three natural gas treating
facilities and three natural gas liquid fractionation facilities. Hiland's
mid-stream segment assets are located predominantly in the mid-continent and
Rocky Mountain regions.
During the third quarter of 2006, our average daily residue gas sales were
approximately 70,000 MMBTUs per day. Our average gathered volumes were
approximated 129,000 MMBTU per day. And our average daily natural gas liquid
sales were approximately 3,300 barrels per day.
During the third quarter of 2005, our average daily residue gas sales were
approximately 47,000 MMBTUs per day. And our average daily natural gas liquid
sales were approximately 1,900 barrels per day.
Looking at our current business environment, we continue to see very active
drilling near our existing Oklahoma facilities. Three active rigs are currently
drilling near our Eagle Chief system, and two rigs are actively drilling near
our Matli system. The climate is favorable for increased throughput at both of
these facilities.
On our Eagle Chief system, since the first of the year 36 wells have been
connected to the system. We are also proceeding with our announced plans to
expand the capacity of the system. The work necessary to complete the expansion
process should be finished by the end of the fourth quarter.
On our Matli system, since the first of the year we have connected seven new
wells to the system. We have previously announced the construction of a 25
million cubic foot per day natural gas processing plant along our existing Matli
system. This plant is being constructed in order to allow for continued growth
at this system. The new plant will be utilized to process our existing supply of
gas at our Matli system as well as provide additional plant processing capacity
as the system throughput increases. We expect this plant to be completed and
operational by December 1st.
At our Badlands facility, we are in the process of constructing a 40 million
cubic feet per day nitrogen rejection plant and expanding our existing Badlands
field gathering infrastructure. As we have previously announced, the partnership
has entered into a new 15-year definitive gas purchase agreement with
Continental Resources, an affiliate of our general partner, under which the
partnership will gather, treat and process additional natural gas which is
produced as a byproduct of Continental Resources secondary oil recovery
operations.
In return, the partnership will receive 50% of the proceeds attributable to
residue gas and natural gas liquid sales as well as certain fixed fees
associated with gathering and treating the gas, including a $0.60 gathering fee
per MCF on the first 36 BCF of natural gas gathered. We currently expect this
facility to be operational by the end of the first quarter of next year.
In late October we also completed our project to expand our Badlands gas
gathering system to connect 12 existing wells located in North and South Dakota.
Our Bakken gas plant and gas gathering system continues to grow. There are
currently 10 rigs actively drilling for producers who have dedicated their
acreage to this facility. We continue to lay lines to newly drilled wells in the
area. Since the first of the year, 62 wells have been connected to the system.
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FINAL TRANSCRIPT
Nov. 13. 2006 / 8:00AM PT, HLND - Q3 2006 Hiland Partners LP and Hiland Holdings
GP Earnings Conference Call
Current inlet volumes in our system have exceeded 19,000 MCF per day from the
210 wells connected to the gathering system. Tailgate residue sales from this
facility are approaching 19,000 MMBTUs per day. And natural gas liquid sales
have exceeded 2,000 barrels per day.
We are continuing with our previously announced plans to expand this facility.
The expansion of our field gathering and compression facilities should be
completed by the end of the year. By the end of the first quarter of next year,
the rail spur to move natural gas liquids out of the area should be fully
operational. And our frac train expansion project should be complete.
Exploration activity, natural gas prices and natural gas liquids prices remain
very favorable at this location.
On May 1st of this year we closed on our purchase of the Kinta assets from
Enogex. These assets consist of five gathering systems, all of which are located
in the Eastern Oklahoma Arkoma Basin. Since we signed a definitive agreement to
purchase these assets, we have connected 20 wells to the system.
We are proceeding with our plans to expand our field compression facilities and
to construct four treating facilities. The construction of the compression
facilities should be completed by the end of this year, and all of the treating
facilities should be completed and be operational by the end of the first
quarter of next year.
With that, I'll turn it over to Ken Maples, our Vice President and Chief
Financial Officer.
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Ken Maples - Hiland Partners LP - Chief Financial Officer, Vice President,
Finance, Secretary and Director
Thanks, Randy. We'll first cover the results of Hiland Partners LP. Our
financial results for the quarter ended in the nine months ended September 30,
2006 include the acquisition of the Bakken gathering system that was effective
on September 1, 2005 and the acquisition of the Kinta area gathering assets that
was effective May 1 of '06. As a result, our results of operations are not
comparable on a period-to-period basis.
EBITDA for the three months ended September 30, 2006 was $11.8 million compared
to $6.3 million for the three months ended September 30, 2005. This is an
increase of approximately 88%. Total segment margin for the same comparative
period was $17.7 million for the third quarter '06 compared to $8.6 million for
the third quarter '05, an increase of 105%. Again, these increases are primarily
attributable to the inclusion of results of operations from the acquisition of
the Bakken gathering system that was effective September 1, 2005 and the
acquisition of the Kinta area assets effective May 1, 2006.
Our average realized natural gas sales prices were $5.98 per MMBTU for the third
quarter of '06. This is compared to $7.28 per MMBTU for the third quarter of
'05. That's a decrease of $1.30 per MMBTU.
Cash received from our counter party on our cash flow swap contracts for natural
gas derivative transactions for the third quarter of '06 totaled $1.4 million.
This gain increased average realized natural gas sales prices to $5.98 per MMBTU
from $5.76 per MMBTU, an increase of $0.22 per MMBTU. We had no derivative
transactions during the third quarter of 2005.
Our average realized natural gas sales prices - NGL sales prices, excuse me -
were $1.09 per gallon for both quarters of '06 and '05. Our net income per
limited partner unit for the third quarter of '06 was $0.33 per unit. This is
based on limited partners interest in net income of $3,026,000 and a weighted
average limited partners units outstanding of 9,237,000 units.
EBITDA for the nine-month period September 30, 2006 was $30.9 million compared
to $14.2 million for the nine months ended September 30, 2005, an increase of
117%. Total segment margin for the same comparative period was $45.5 million for
'06 compared to $20.8 million for '05, an increase of 119%. Again, these
increases are attributable to our Bakken gathering system and our acquisition of
the Kinta area assets.
Average realized natural gas prices were $6.30 per MMBTU for the nine months
ended September 30, 2006. This compared to $6.35 for the nine months ended
September 30, 2005, a decrease of a nickel per MMBTU. As stated earlier, cash
received from our counterparty on our cash flow swap contracts that began May 1,
2006 for our natural gas derivative transactions - it totaled $2.4 million for
the nine months ended September 30, 2006. This gain increased our average
realized natural gas sales prices to $6.30 per MMBTU from $6.16 per MMBTU, an
increase of $0.14 per MMBTU.
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FINAL TRANSCRIPT
Nov. 13. 2006 / 8:00AM PT, HLND - Q3 2006 Hiland Partners LP and Hiland Holdings
GP Earnings Conference Call
Again, we had no derivative transactions during the nine months ended September
30, 2005. Our average realized NGL sales prices were $1.06 per gallon for the
nine months ended September 30, 2006. This compares to $0.95 per gallon for the
nine months ended September 30, 2005, an increase of $0.11 per gallon.
Our net income per limited partner unit for the nine months ended September 30,
2006 was $1.07 per unit. This is based on limited partners interest in net
income of $9,517,000 with a weighted average limited partner units outstanding
of 8,866,000 units.
Our maintenance capital expenditures for the third quarter and for the
nine-month period were approximately $1 million and $2.7 million respectively.
The distribution declared for the third quarter increased to $0.70 per unit.
That's an annualized rate of $2.80 per unit from $0.675 per unit, an annualized
rate of $2.70 per unit. We will make this distribution tomorrow on November 14,
2006.
Our coverage on all units for the third quarter of 2006 was approximately 1.2
times. The timing and amounts of future distributions are at the discretion of
our board of directors.
At the end of the third quarter, we had $134.1 million of debt outstanding under
our credit facility. This is a $200 million credit facility, which leaves us
approximately $66 million of availability.
Now, to the results for Hiland Holdings GP. We closed our successful completion
of HPGP's initial public offering on September 25, 2006. Therefore, it was only
public for six days out of the quarter. Net income per limited partner unit for
this six-day period was approximately $0.01 per unit. This is based on limited
partners interest in net income of $131,000 and weighted average limited partner
units outstanding of 21,612,000 units.
HPGP share of distributions, including distributions on its 5.4 million limited
partner units, its 2% general partner interest, and the incentive distribution
rights was approximately $4.6 million for the third quarter. Of this amount,
approximately $4.3 million relates to periods prior to the closing of the
initial public offering and will be distributed to the contributing parties.
HPGP declared quarterly distributions on the partnership units of $0.2025 per
unit, an annualized rate of $0.81 per unit. This distribution will be prorated
for that six-day period that HPGP was public. This equates to $0.0132 per unit
or approximately $300,000. And we will pay this distribution with the fourth
quarter distribution, which we expect to be on or about February 19, 2007.
So at this point this concludes our formal remarks. I'll turn it back over to
the operator to open it up for questions.
QUESTION AND ANSWER
- --------------------------------------------------------------------------------
Operator
[OPERATOR INSTRUCTIONS]
Our first question will be from the line of Ron Londe of A.G. Edwards. Please
proceed.
- --------------------------------------------------------------------------------
Ron Londe - A.G. Edwards & Sons, Incorporated - Analyst
Thank you. I'm just curious. Have you begun hedging any of your natural gas
liquids volumes yet?
- --------------------------------------------------------------------------------
Unidentified Company Representative
No, there's been no hedges put in place yet for natural gas liquid.
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FINAL TRANSCRIPT
Nov. 13. 2006 / 8:00AM PT, HLND - Q3 2006 Hiland Partners LP and Hiland Holdings
GP Earnings Conference Call
- --------------------------------------------------------------------------------
Ron Londe - A.G. Edwards & Sons, Incorporated - Analyst
No hedges yet. What's your strategy there?
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Unidentified Company Representative
I think that it's going to be looked at more closely probably in the first
quarter of next year coming out of the winter months to see what we do on the
hedging predominantly in the Rocky Mountain region.
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Ron Londe - A.G. Edwards & Sons, Incorporated - Analyst
Okay. From the standpoint of looking toward next year, there are some people out
there that think that the discount on Rocky Mountain gas is going to be very
wide next summer. Can you give us some insight into what you're looking for,
what your strategy might be in that environment?
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Unidentified Company Representative
Well, as you know, we previously put in hedging positions for a lot of our
Bakken gas. We agree that you're seeing some additional spread that's taking
place today in Rocky Mountains versus in other areas. And we will revisit even
our hedging strategy on additional gas we tie in at Bakken and at other
facilities between now and the first of next year. And we would expect that we
would be recommending to our board that we put additional hedge positions on for
those additional volumes and even would ask the board to consider hedge
positions for the calendar year 2009.
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Ron Londe - A.G. Edwards & Sons, Incorporated - Analyst
How much is hedged now and what price?
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Ken Maples - Hiland Partners LP - Chief Financial Officer, Vice President,
Finance, Secretary and Director
Yes, we have - for 2007 we have up in the Rocky Mountains we've got 135,000
MMBTUs a month hedged at an average price of approximately $8.03 per MMBTU.
- --------------------------------------------------------------------------------
Randy Moeder - Hiland Partners LP - Chief Executive Officer, President and
Director
I can tell you that we've looked at kind of the forward strip and the hedging
and the basis differentials. And they're still good - you can get some very
attractive prices hedged for next year on out even through 2009. So people may
be predicting that, but as we sit here today, the basis differentials and the
NYMEX prices don't reflect that that's the case.
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Ron Londe - A.G. Edwards & Sons, Incorporated - Analyst
Where are you currently in your production in Bakken or your volumes in Bakken?
And where do you think you can go?
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Unidentified Company Representative
At Bakken, we - our inlet volumes have approached 20 million a day on an inlet
basis. We're expanding our field gathering and compression facilities. Hope to
have that up and done by year-end. And we think that we could see inlet volumes
approaching 24 million a day by year-end '07. And then that would extrapolate to
a corresponding increase in the residue gas and natural gas liquids volumes.
- --------------------------------------------------------------------------------
Ron Londe - A.G. Edwards & Sons, Incorporated - Analyst
That's all I have for now.
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FINAL TRANSCRIPT
Nov. 13. 2006 / 8:00AM PT, HLND - Q3 2006 Hiland Partners LP and Hiland Holdings
GP Earnings Conference Call
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Unidentified Company Representative
Thank you, Ron.
- --------------------------------------------------------------------------------
Operator
We have a question from the line of Michael Blum of Wachovia Securities next.
Please proceed.
- --------------------------------------------------------------------------------
Michael Blum - Wachovia Securities - Analyst
Thanks. Good morning, everyone.
- --------------------------------------------------------------------------------
Unidentified Company Representative
Good morning.
- --------------------------------------------------------------------------------
Michael Blum - Wachovia Securities - Analyst
Just a couple of questions. One is can you just talk about the Kinta
acquisition. Is that essentially running in line with your expectations when you
bought it? And if you'd care to break it out for the quarter, that'd be great,
too.
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Unidentified Company Representative
Well, I can tell you that we're happy with the way that asset's performing. One
thing that we knew we were going to have to do when we bought the facility is
realign compression. They had two stage compression handling one stage service,
three stage compression handling two stage service. So we had inefficient
operations, excess fuel consumption.
And so, as we previously announced, we're moving those facilities around, and
we're also building new compression facilities to handle increased volumes. And
so, as those facilities come on, currently we project that to be done by
December 1. We'll have some pent up volumes that will be coming to the market.
What we have now in some areas is where typically pipeline pressure is maybe 50
pounds, because of the higher - the new wells we've tied, volumes or pressures
are exceeding 100 pounds. And so, we do expect a bump in volumes when we get
those facilities up and going. But all in all, we've been pleased with the
operations down there.
We're moving ahead with the construction of our treating facilities. And there
are four separate facilities being built. Those are being phased in in the first
quarter kind of systematically. So we'll have four of them come on at separate
times throughout the first quarter. And so, I guess I would say overall we're
happy with the way the operations are down there, still very active growing.
We've been very well received by producers. And November 1 we just got through
our transition agreement with Enogex, as you recall. We had to essentially
compensate them for a range of services for the first six months after we
acquired the assets. And now that we've essentially - we're up and running on
our own, that we will no longer have the expense associated with that. And so,
that's nice to kind of get through that process, too.
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Michael Blum - Wachovia Securities - Analyst
Okay, great. Just the other question is a little technical. But I guess, Ken,
can you just help me out with the G&A for the general partner? I realize this
quarter's a little bit squirrelly. But the difference between the G&A on the GP
and the LP was very small. So I'm just wondering.
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FINAL TRANSCRIPT
Nov. 13. 2006 / 8:00AM PT, HLND - Q3 2006 Hiland Partners LP and Hiland Holdings
GP Earnings Conference Call
- --------------------------------------------------------------------------------
Ken Maples - Hiland Partners LP - Chief Financial Officer, Vice President,
Finance, Secretary and Director
Right. I mean, we only really had - you only had six days that the GP was
public. And so, really we only had about $14,000 worth of costs that came in
since we were public. So it was pretty small. Now, going forward we'll, of
course, have additional costs there that once you get a full quarter it'll start
to make a little more sense. I think we had initially estimated in our
prospectus $750,000 of G&A costs at the HPGP level. And so, we don't - somewhere
in that $750,000 to $1 million range is kind of where I think the numbers will
shake out for the year.
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Michael Blum - Wachovia Securities - Analyst
Okay, great. Thank you.
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Unidentified Company Representative
Okay.
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Operator
Our next question is from the line of Mark Easterbrook of RBC Capital Markets.
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Mark Easterbrook - RBC Capital Markets - Analyst
Hi, guys.
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Unidentified Company Representative
Hey, Mark.
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Unidentified Company Representative
Hey.
- --------------------------------------------------------------------------------
Mark Easterbrook - RBC Capital Markets - Analyst
Just a quick question, a bunch of them actually. The rail spur -- can you give
us a quick update on that, how that's proceeding?
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Unidentified Company Representative
Sure. The rail spur is partially operational today. We have the ability to truck
in propane and move it out. We've had delay on the pipeline from the plants to
the spur. Right of way acquisition has been somewhat difficult. The gathering
and compression processing segment of Bakken is generally in rural areas.
As we move towards the east from that location, you start to get into
residential or not highly residential, but you do start having to deal with some
home owners. And so, that has delayed the pipeline process. We do finally have
all the right of way agreements necessary to get that pipe in the ground to the
facility. And that will be constructed here. The concern is with the winter
months is the timing on that.
So we can truck to the facility. And we do expect to have the pipeline to the
facility by the end of the first quarter at that point in time that we'll be
fully operational and be able to move the product to wherever we'd like.
We also will have the unloading facilities at the plant to unload the Badlands
product to fractionate it further and then move it to the rail spur. And so, all
of that should be completed by the end of the first quarter.
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FINAL TRANSCRIPT
Nov. 13. 2006 / 8:00AM PT, HLND - Q3 2006 Hiland Partners LP and Hiland Holdings
GP Earnings Conference Call
- --------------------------------------------------------------------------------
Mark Easterbrook - RBC Capital Markets - Analyst
Okay. And then maybe you had said it, but did you ask about a CapEx number for
'07 yet?
- --------------------------------------------------------------------------------
Unidentified Company Representative
We have not. I think that within the next few months we'll be giving guidance
for '07 across the board. We just - we've got a lot of projects on the books.
We've announced about - if you look at the treating facilities as a separate
project, we've got - we have roughly 12 projects that we've announced. Only one
of those is going today. And that's our Badlands expansion to South Dakota.
And so, in the next few months we'll get through some of the, some of the
projects, and we'll have a better feel for timing. And I think, as we've advised
earlier, it can be difficult at times because a lot of the projects aren't
necessarily within our control. We rely upon power companies. We rely upon
railroads.
We rely upon pipelines that we move the gas to. And so, while they make
commitments about timing, oftentimes those tend to be slow. And so, we'd like to
kind of get those and hammer these projects out so that we have a very good feel
for the actual timing.
- --------------------------------------------------------------------------------
Mark Easterbrook - RBC Capital Markets - Analyst
Okay. I mean, are there any delays on any projects yet? Or you're just
[inaudible]?
- --------------------------------------------------------------------------------
Unidentified Company Representative
Well, I mean, I think if you - there have been some delays. I mean, the - for
instance the Matli processing plant - we had expected that to be up and running
September 1. And we had done everything we needed to do to have the plant up and
running. Unfortunately as the plant was being hauled to the location, the truck
that was hauling the plant rolled over.
And so, the plant was hauled back. We got it refixed, and it's going to be back
out at the location ready to run December 1. And so, we have had delays. We've
had delays on the rail spur because of the railroad. We've had some delays
because of power, not significant delays, but they are delays relative to what
we kind of had told the market we hoped to have these projects completed by.
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Mark Easterbrook - RBC Capital Markets - Analyst
And then last question - I don't know. I mean, El Paso announced that one of its
pipelines is down for a while cutting about 250 million a day in Wyoming. Does
that have any impact on you guys?
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Unidentified Company Representative
Not at all. We're moving our production out of our Worland plant. We sell those
volumes on a firm basis. And so, we've got that locked in, and we've seen no
impact on that.
- --------------------------------------------------------------------------------
Mark Easterbrook - RBC Capital Markets - Analyst
Okay. Thanks, guys.
- --------------------------------------------------------------------------------
Unidentified Company Representative
Thank you.
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FINAL TRANSCRIPT
Nov. 13. 2006 / 8:00AM PT, HLND - Q3 2006 Hiland Partners LP and Hiland Holdings
GP Earnings Conference Call
- --------------------------------------------------------------------------------
Unidentified Company Representative
[inaudible-microphone inaccessible]
[OPERATOR INSTRUCTIONS]
Our next question is from the line of Ted Gardner of Raymond James. Please
proceed.
- --------------------------------------------------------------------------------
Ted Gardner - Raymond James - Analyst
Thanks. Morning, guys.
- --------------------------------------------------------------------------------
Unidentified Company Representative
Good morning.
- --------------------------------------------------------------------------------
Ted Gardner - Raymond James - Analyst
This is a piggyback question on Michael and Mark's questions. On the rail spur,
have you guys seen any real impact on NGL realizations yet just with being able
to truck into that facility? Or are you really not going to see anything until
the pipe is done?
- --------------------------------------------------------------------------------
Unidentified Company Representative
I think that we're going to see the bulk of it when the pipe's done. And I think
it just happens to be that because the time of year we're looking at that
typically you see propane prices strengthen in the winter months.
- --------------------------------------------------------------------------------
Ted Gardner - Raymond James - Analyst
Right.
- --------------------------------------------------------------------------------
Unidentified Company Representative
And so, the price differential that you'd otherwise realize in the spring and
summer and fall, now that's - Rocky Mountain's prices are going to be comparable
to other areas. And so, we will not see the biggest impact of price upgrade
until we get the pipe in the ground.
- --------------------------------------------------------------------------------
Ted Gardner - Raymond James - Analyst
Okay. What kind of impact do you think there will be once it's done, on a per
gallon-type basis?
- --------------------------------------------------------------------------------
Unidentified Company Representative
We'd expect on an annualized basis that you could just see approaching $0.15 a
gallon upgrade on the product based on historical indexes. Now prices go up, but
just on a relative basis, we think it could be as much as $0.15 per gallon.
- --------------------------------------------------------------------------------
Ted Gardner - Raymond James - Analyst
Okay. And then just to piggyback on the Kinta question, when you guys acquired
this, you made note that the [Woodford Shale] could ultimately creep into this.
I just wondered what that's looking like at this point or if maybe when we had
the downturn in natural gas prices that that might have impacted anything at
all, as far as that goes.
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FINAL TRANSCRIPT
Nov. 13. 2006 / 8:00AM PT, HLND - Q3 2006 Hiland Partners LP and Hiland Holdings
GP Earnings Conference Call
- --------------------------------------------------------------------------------
Unidentified Company Representative
Well, it hasn't impacted our expectations. We have talked to producers who have
leased acreage for drilling in the Woodford Shale but on top of our facility.
And so, I expect that to occur. One of the problems you have is just the
availability of rigs. And some of the bigger producers are ramping up their rig
count. And we still expect that that is going to expand and grow and ultimately
we'll see impacts on that on our existing Kinta assets.
- --------------------------------------------------------------------------------
Ted Gardner - Raymond James - Analyst
Any timeframe you expect? Is it still a year or two out, do you think?
- --------------------------------------------------------------------------------
Unidentified Company Representative
No, I mean, we certainly should see the impact of that next year.
- --------------------------------------------------------------------------------
Ted Gardner - Raymond James - Analyst
Okay. Thanks, guys.
- --------------------------------------------------------------------------------
Unidentified Company Representative
Okay. Thank you.
- --------------------------------------------------------------------------------
Operator
We have a question now from the line of Ron Londe of A.G. Edwards. Please
proceed.
- --------------------------------------------------------------------------------
Ron Londe - A.G. Edwards & Sons, Incorporated - Analyst
Sure. There's been a couple of producers that have talked about shutting in some
gas production. I was wondering if you've received any notice of some of your
gas being shut in or what your take on that is.
- --------------------------------------------------------------------------------
Unidentified Company Representative
Well, I am aware of at least one producer put out a global notice shutting their
gas in. That shut-in did not impact any of our facilities. And I'm also aware
that one of the large producers that put that notice out only shut their gas in
for a day or two. And so, I'm not aware of any long-term significant shut-ins
that have occurred. And I'm not aware of any producers behind our system that
are saying that they intend to do that.
- --------------------------------------------------------------------------------
Ron Londe - A.G. Edwards & Sons, Incorporated - Analyst
From the standpoint of acquisition activity, do you see that picking up, or is
there anything out there available right now?
- --------------------------------------------------------------------------------
Unidentified Company Representative
There are a couple of deals in the market right now. But I can tell you it seems
that the activity in general is slower than it was last year at this time. I
think its price volatility and everything it's kind of made a big separation
between buyers and sellers on what they're willing to pay. But we have hopes
that there are some assets that generally are near our facilities that look like
they're going to be available later this year or first of next year. And we're
certainly pursuing those opportunities.
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FINAL TRANSCRIPT
Nov. 13. 2006 / 8:00AM PT, HLND - Q3 2006 Hiland Partners LP and Hiland Holdings
GP Earnings Conference Call
- --------------------------------------------------------------------------------
Ron Londe - A.G. Edwards & Sons, Incorporated - Analyst
Okay, thank you.
- --------------------------------------------------------------------------------
Unidentified Company Representative
Thank you.
[OPERATOR INSTRUCTIONS]
- --------------------------------------------------------------------------------
Randy Moeder - Hiland Partners LP - Chief Executive Officer, President and
Director
Okay, well, Ken and I would like to thank everybody for participating today.
Just as a final note, we will be presenting later this week at the MLP
conference in Dallas with RBC. And so, there'll be some maybe a better update on
projects and things of that nature. It'll be available via our Web site and, I
believe, also through an RBC channel. So just to pass that on. Thanks, everyone.
- --------------------------------------------------------------------------------
Operator
Ladies and gentlemen, thank you for your participation in today's conference.
This concludes our presentation. You may now disconnect. Good day.
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