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Atmos CEO: Gas utility M&A will continue, but we are not interested

is notinterested in getting involved in the M&A enveloping the natural gas utilityindustry, given the high price tag on recent acquisitions.

"Wehave been very consistent in emphasizing the fact that we think multiples areextremely expensive," CEOKim Cocklin told analysts during Atmos' earnings call May 5. "Younever say never but there is nothing on the block that we would be interestedin paying over and above or even close to what is going off the board today."

Beyond prices, Cocklin sees the merger process as aheadache, compared to investing in his own business.

"You have regulatory issues and complications ofdealing with what you pay over book, how you deal with goodwill, how youintegrate a culture," he said. "There is a whole host of issues,social issues and financial and operational issues, when you buy an asset."

TheDallas-based natural gas distributor is on track to invest between $1 billionand $1.1 billion in capital expenditures for 2016. Since 94% of that investmentbegins to generate returns within six months of the end of the test period, itbecomes accretive immediately, he noted.

"Wehave a wonderful asset, we have a wonderful portfolio, we're in jurisdictionswhere we want to be, we are extremely comfortable with who we are, we know whowe want to be, we have got wonderful skill sets. We don't really have to lookacross the landscape," he said during the call.

AlthoughAtmos is not planning to join the growing lineup of prospective bidders eyeingassets in the natural gas industry, Cocklin thinks the trend will continue.

"Therewill be more deals," he said. "You have got people out there thatfind gas is a very attractive story. They want to get it in their portfolio ifthey do not have it right now and natural gas obviously, it is the future forenergy in this country."

As for its investments, Atmos is not seeing the typeof regulatory and environmental opposition that pipeline builders in theNortheast have been facing.

"None of that consternation is translated intoany of the projects that we have got in the capital investment we are doing…Weare also not trying to clear new right-of-way or go through areas that…don'thave pipe in the ground right now," Cocklin said in response to an analyst'squestion about where public sentiment is heading against the backdrop of atight regulatory leash leading to delays in the Constitution and PennEastpipelines.

Constitution was deniedits water quality permit in April. Shortly before that, Kinder Morganshelved its NortheastEnergy Direct project due to insufficient contractual commitments from NewEngland customers.

Shortly after the denial of a permit for Constitution, theDelaware River Basin Commission saidthat hearings related to a review of PennEast would get pushed back until after2016.

Cocklin also alluded to the of Texas Eastern TransmissionLP's pipeline in Western Pennsylvania.

"So it's pretty much elevated the opposition, but forus, we continue to operate … under the radar," he said. "And people seethe need, and it is small pipe in most situations where we're dealing with it."