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Executives

Richard A. Robert – Executive Vice President, Chief Financial Officer

Analysts

Vanguard Natural Resources, LLC (VNR) Citi North American Credit Conference Call November 14, 2012 2:00 PM ET

Richard A. Robert

Hello everyone, thanks for showing up for this presentation. I have got a brief slide presentation to start with. I won’t go through it in a lot of detail because I imagine that (inaudible) and I will talk about lot of these points in more detail in our fireside chat.

So let me start by just giving you kind of an overview of where we started, who we are? We are an oil and gas production company, we are commonly referred to as an MLP, although we are structured as an LLC, which makes us a little bit different than your typical MLP, we don’t have a general partner, we don’t have incentive distribution rights, our governance is more like a SEACOR, where we have a Board of Directors that is elected every year, so I would like to thank our structures a little bit more investor friendly than you would typically find in the typical MLP universe.

We started back in 2006. At the end of 2006, went public in October of 2007. Over that and relatively smaller that time, more employees and got $240 million enterprise value. We’ve grown a little bit since then about $2.4 billion of acquisitions and what we are very excited about is that, we think we’ve done, we’ve had that growth we’ve done that growth at very profitable way. That is obviously shown, our distribution growth get 41% since going public, and we’ve done it without a lot of leverage, we’ve done it kind of in a consistent manner over the years and you will see that growth has been relatively consistent. Exponential here in the last couple of years but and obviously something that we think is prelude the things to come.

From an asset mix standpoint, we are relatively balanced on a reserve basis. If you include the Barrett transaction that’s been announced, but not closed, we are at about 40% liquid, 61% gas on a reserve basis, our production is obviously shown to have increased considerably. Not including the Barrett transaction, since we haven’t closed it, we are anticipating production at about 24,000 barrels a day of equivalent. The Barrett transaction has changed that profile quite a bit, something that we are very excited about for next year, because we do anticipate closing that transaction at the end of the year.

We are diversified. When we went public, we were all gas, all Appalachia, one basin, one commodity. Today we operate out of seven basins, I think it is now with the Barrett transaction it will be about nine basins, again split in a variety of different areas, while gas will become a bigger component of our reserve mix and production mix. It’s still with current pricing it’s still fairly small amount of our revenue, we are anticipating some of the neighborhood of 60% of our production to be gas, but it only accounts for probably 25% to 30% of our revenue.

Coal is the still the driver in terms of revenue growth. The way we spend company makes, the way we spend capital makes us different than your typical SEACOR resource player. Typical resource players, we’re drilling the big shale well spent a lot of capital. And they typically outspend their cash flow year in and year out that’s where we come in. We have still that gap for them.

They are awarded for just having production. They are expected to increase production. So having a stable production profile isn’t what they are looking for, so selling material assets allow them to generate the capital to go out and find that new resource play. We on the other hand, spend a fairly small amount of our capital growing new wells.

We do have an inventory per locations that we use to maintain our cash flow year in and year out. Our growth is through acquisition, it is not through the drill bed.

And so we’re typical resource player might outspend their cash flow by a significant margin. We only spend historically 15% to 20% of our cash flow. That is less than their typical upstream MLP, we actually spend less than a number of our peers, which we think is an advantage in that, we don’t have to spend as much capital because we have nice good rates of returns on oil prospects and don’t have to spend quite as much money to generate good rates of return.

As I mentioned, our strategy is growth through acquisitions. Is that a viable strategy and I say emphatically, yes. There is a tremendous amount of assets out there that fit the MLP structure that are stable production, long reserve lives, low decline properties. There is just an incredible number of those out there in fact people have estimated theirs as much as $1.5 trillion of those types of assets out there and with only 10 upstream MLPs right now that is plenty to go around. So we need to penetrate a very small amount of that market to be very successful.

And we have been successful. If you look at our track record, as a smaller company, we started small. We are focused on smaller transactions because that is where we could, that is what we could finance at that time. But even despite the financial crisis, class and commodity prices, we were still able to consistently grow every year. Now what you’ll see in this graph is that we kind of had a shift in and what we thought was important in terms of the commodity mix. When we started as I said we were Gas Company focused in one area. We decided that after a couple of more gas transactions, gas was trading in the $8 to $9 range oil was trading in at a much lower level I can’t remember exactly what it was at that time probably 60/50.

We decided that oil had better prospects than gas. And so in 2010 and 2011, we focused our efforts on oil transaction. About 10 of the next 11 transactions we completed were oily in nature. Fortunately for us that was the right direction to go. Since then we have changed our view point, we think now is not a bad time to be buying gas assets.

We think gas is at a very attractive level. We think it’s hopefully bottom to up for the near-term. And we are allowed we can pick up a lot of reserves, a lot of good cash flow and now have to pay for any of the potential drilling future undeveloped acreage. It just its part of the deal because its fund economic today.

Most of the gas, conventional gas plays out there and not economic gas at today’s evaluations and so we can pick up a lot of reserves and a lot of upside without having to pay for today.

Let’s talk about the last two acquisitions that we completed this year. Well, this is one we completed, next one is the one we’ve announced and yet to complete. (inaudible) transaction we brought for assets in Woodford and Fayetteville shale’s from Antero. This was a 400 bcf transaction that we booked. I can tell you the retailers are (inaudible) and showed a lot more reserves than that. But again we only booked, but we expect it to be able to prosecute over the next five years. The rule that you can’t book reserves or yet to impair reserves if you don’t anticipate selling them or drilling them within five year period.

Well there is a lot of locations that were on the drilling reports, the reserve reports but we only booked 180 locations. So if gas gets to about $4.55 level there is about another 1100 locations that are approved locations it would be economical at that level.

So that’s kind of example of where, you’re only paying for a certain amount of reserves. You’re paying based on existing production. You’ve got a lot of potential if things improve down the road.

And we do think things will improve down the road. But it’s going to take a lot of time. We think it’s going to take a number of years. Demand have to catch up to this play that’s out there.

Demand creation is going to be created via an improved economy and industrial demand going up. It’s going to be so the Petro-Can is building new world class crackers everyone has been talking about. It’s going to be new gas fire generation with pricing coal, it’s going to be infrastructure on freeways, allowing trucks to convert to natural gas, it’s going to be fleets converting to natural gas and it’s going to be Chimera, this is the one project that has been approved and expectation of LNG it’s going to have a big impact as well; all those things are going to take a number of years. So when we did this acquisition, we wanted to ensure that we were betting on commodity prices improving anytime soon.

So we took a hedge book, this Entera have done a very good job hedging their production and they had a hedge book that lasted three years at about $6.38 on average. While we didn’t think we’re going to be able to replace a $6.38 hedge in three years time. So we were looking at a big cash flow cliff, if we were leftovers in place. We were attempting to leave those in place, because that would have been very nice cash flow for the next three years.

But what we didn’t said, as we extended those for two years, made them five year hedges, and we increased the amount of production to be hedged to about a 100% of what we expected to be produced. And that cost, that required us to lower that price down to about $5.04.

So we’re in good shape through the first half of 2017 and improved that gas production profile, our hedge profile considerably and we are hopeful that by the second half of 2017, some of that demand will have been created, we will better supply-demand situation and we’ll be able to re-hedge at a $5 level, that wasn’t that process there.

On to the latest transaction that we announced last week, the Barrett Corp was looking to generate some capital, they had some holes in their drilling hedges. So we were able to do a transaction with them, we’ve announced its $335 million, 300 bcf, we were planning on booking, 80% of that is PDP and comes in this three different areas, the Wind River and Powder River, in Wyoming that will become operated Vanguard properties and see out space in which they will continue to operate, because they will continue to have a very large interest in that area. They only sold us a small portion their interest and that’s important because we were able to structure this creatively because they were only selling a small part of their interest.

These assets exhibited a decline rate that was higher than what we typically like in MLP structure, so we were looking for creative ways to mitigate that. What we came with was an increase in working interest percentage each year. So if we go from 18% in the first year, to 21%, to 24%, to 26% each succeeding year. And when you include a Contango price curve that we were able to hedge, each of the sets of year with that higher price, we keep our cash flows flat without spending any money, which is obviously a nice benefit in this industry. So it was a creative way to manage an asset that at first class, was not necessarily something that we were interested in and we turned into something that look very attractive, as a result of the hedging strategy, as well as this working interest increased over time.

Capital structure is very important. We are very, we take our leverage rate seriously. We think that lower leverage is better. Historically, we have financed 58% of the transactions we’ve done via equity. We think that’s a number that is something that we should continue to repeat. We will lever to get transactions done, we’ll see that historically, we do lever and then we will delever over time via the equity markets. You will see we consistently issue equity every year, two or three deals is typical and I don’t see that changing anytime soon.

We are new to the bond market. As we are looking at larger transactions, it became apparent to us that the bond market was something that we needed to tap and we did our first bond offering in April and we’ve already done a track on in October, another $200 million track on. So at $550 million bond, it’s relatively liquid at this point.

The transactions we’ve done has show that we continue to have good asset coverage, obviously that’s important to our bond investors, the transactions we have done create a lot of value and we think if you look at even at a distress type case with asset coverage of about 1.2 times, it’s still relatively robust even in a distress case type scenario. I won’t go into these too much, but you can see from historical standpoint, we have operated relatively low leverage in that less than three times, that is our long-term goal, it was operated less than three times.

And our debt metrics, getting our initial rating as a relatively oily company at that time, prior to these two gas transactions, some of our debt metrics, we are little higher than what’s on the rating agencies would have light, but clearly getting these two gas transactions done and proved reserves metrics considerably, and as a result we’ve been having some constructive conversations with the rating agencies and hope to convince them that where we have an upgrade.

In summary I think we have a good asset base, geographically diverse cash flow comes from lot of different areas now.

Now we have a relatively experienced management team and that’s one of the benefits of our growth as we’ve been able to hire a lot of good people to help us continue this growth in a profitable manner and I can tell you we are very aligned as well are present. We generate more income from our distributions than we do from our salaries. So we are definitely motivated to make sure that we manage this profitably going forward.

With that I will sit down and will start our conversations.

Unidentified Analyst

Okay. (inaudible) pick up and talk a little bit more about the Bill Barrett acquisition, you mentioned that the decline rate was slightly higher than you normally comfortable with. Can you kind of give us some guidelines on that and then what your current portfolio decline rate is?

Richard A. Robert

Sure. Barrett they try to fill fair amount of capital over the last few years and clearly little well of higher decline rates than we like to see and so we were seeing something in the 18 type percent range And that is more than we like to see, our typical decline on a PDP basis is probably 15% but then when you add the drilling component that we can do to mitigate that our overall decline rate is probably in the 7% to 8% range on a company wide basis.

And so this will allow the decline rate occur, but because of the increased pricing and the increased working interest that cash flow shouldn’t change, but of course in the next four years. And then our plan is by 2016, we will prosecute a drilling plan that will continue to keep that cash flow and hopefully that gas prices will be at level that will allow that to happen.

Unidentified Analyst

After your two gas acquisitions, where should we think your production mix should go to for like 2013?

Richard A. Robert

2013 we’re anticipating asset any new acquisitions.

Unidentified Analyst

Of course

Richard A. Robert

Obviously we hope it will happen. Based on the existing deals it’s going to be probably in the 60% range on nat gas, probably about 30% oil and 10% NGL. That translates into a revenue stream that looks something before hedging that looks something like 25% nat gas, 75% oil and 10% NGL..

Unidentified Analyst

Where do you price your NGL of Conway?

Richard A. Robert

No, nothing Conway unfortunately we’re in good situation there the NGLs we have are priced (inaudible).

Unidentified Analyst

Okay. What are your thoughts clearly the next 12 months on commodity price standpoint for natural gas and oil?

Richard A. Robert

Well, as I mentioned, I’m not a big believer in improvement in the gas price. I think there’s so much supply out there that will come on as soon as there is any increase in price you will see, wells that have been dwelt come back to life, and there will be a lot more activity. You will see the rig counts are going up again. And I just think there is too much supply. So I believe the gas prices will be range bound for a long time, a number of years. And as the coal to gas switching that everyone hears about once you get over 350 that diminishes considerably.

So until they actually have new gas fired generation that requires the gas and all these other demand components, there’s just not a lot of reason for gas to go up in my mind.

On the oil side, it’s going to be economy driven to a large extent. It’s going to be infrastructure driven as well. I mean when you see infrastructure being put in place that allows sales to get to the right sport, you are going to see an improvement in the price. Because right now there are constrained areas and you are seeing differentials widen when those constraints occur. Fortunately in the Bakken for example wells in the area where we operate, we saw significant sliding of differentials over December month. And historically you see a $10 differential to WCI we were seeing $32 at the worst.

Now producers obviously got tied to that differentials so, they found rail supply, they found rail capacity, and now they are moving rails to the West Coast and the East Coast and that differentials now zero to $5. So it’s made a tremendous impact.

So if you find alternatives, you will see an improvement in price. That’s going to happen as through expands it as production capabilities, right now it’s a 130,000 barrels receiving from Conway to the Gulf Coast that’s first increased to 400,000 barrels. That’s going to relieve Conway and not Conway if rather (inaudible) and it’s going to help to build those wells where they need to go and you are going to hopefully see an improvement in price.

Unidentified Analyst

Okay, just going back to the acquisitions and you’ve expanded into two new areas with the Bill Barrett acquisition, are there other regions that you are interested in expanding into or do you think your acquisition strategy will be more focused on bolt-ons and the basins you are in?

Richard A. Robert

Well bolt-ons are nice, because you already have the infrastructure in place and typically you are going to be more competitive on acquisitions in areas that you already operate, just clearly synergies when that occurs, but that’s it’s not going to preclude us from looking at that new area, I mean this area is a good example where we are operating now in five basins that we didn’t operate before. So it’s going to be an opportunity driven, there is a lot of basins that have mature production. So that’s where we’re going to look, I hope you’ll see us going into a new basin for a very small transaction, but you’ll see us do a small transaction in our existing basin, because again those built on still work very well.

Unidentified Analyst

And then with the acquisition, what’s your percentage of operated versus non-operated?

Richard A. Robert

Prior to the Barrett transaction about 75% of our cash flow which is how we evaluate everything, we’re focused on our cash flow, we operate about 75% of our cash flow. After the Barrett transaction probably won’t change very much beyond.

Unidentified Analyst

Okay. And then you talked about going public in 2006 and during your first higher bond issuance this year, where do you think you will go in the next five years? How do you think you will look different versus now?

Richard A. Robert

I think we will look a lot bigger. Very encouraged about the deal flow that we’re seeing, I believe with the little bit of scale now sellers are seeing it similar bit differently and we are gaining a reputation of being a buyer that comes to close in table with put the cash, the bond markets obviously can help us look at larger transactions.

I just think there is a tremendous amount of capital that needs to be spread by the SEACOR to develop these resource play and some of that capital has to come from divesting material assets and there are just a lot of material assets out there that fit very well in the fee structure. So I believe all of the upstream MLPs will do exceedingly well over the next five years.

Unidentified Analyst

Okay. Switching gears a little bit talking about the election last week, how do you think the reelection of Obama impact the E&P sector?

Richard A. Robert

Well, certainly the current administration has not been very supportive off field in general, I think in a way that could help us via pricing. I think there will be more regulation, it will become more difficult or more expensive to grow, so prices will have to be higher to encourage people to drill. The more you tax spend, the higher the IRR has to be, obviously to make it worthwhile to produce more. So there was a potential that less supply will be effective. If policies don’t change and if taxes as I mentioned increase on these producers, I think there is a very good potential that you’ll see commodity prices increase.

Unidentified Analyst

Okay. As we think about 2013 and your maintenance CapEx where do you see that moving toward?

Richard A. Robert

Now I think we’re actually in the middle of doing our 2013 capital budget. It does it has to be fluid because we have to relook at it every time we do an acquisition. We have to look at the opportunities that how it’s changed. And we divert capital from one area to another depending on kind of what the economics are. So it’s very preliminarily we anticipated spending an incremental $25 million after the Woodford area. There is some non-operated activity going on in the Fayetteville area. So when you add it altogether, I am thinking we will probably be in the $65 million range somewhere around 20% of EBITDA is what I’m anticipating.

Unidentified Analyst

Okay.

Richard A. Robert

Before the Barrett transaction.

Unidentified Analyst

Okay.

Richard A. Robert

Okay. That was before the Barrett transaction. The beautiful thing about the Barrett transaction is we’re anticipating seeing no capital. So actually as a percentage of EBITDA that number will go down.

Unidentified Analyst

Okay. Just again going back to your growth strategy and acquisition, I think, think about 2013 have you given any thoughts about how much you’d like to spend on acquisition a ballpark figure or anything like that?

Richard A. Robert

Well, it is opportunity driven, so it’s very difficult to say exactly what you’re going to be able to spend. I can tell you at the beginning of the year when we met with the rating agency they asked us that same question and certainly investors typically asked that question.

And my standard response is we’ll be disappointed if we didn’t do at least $400 million worth of deal. Today, we are sitting at similarly close to Barrett transaction, we’re seeing about $800 million. So we’ve exceeded our promise on all of our expectations that we told people. So I would anticipate that number is only going to go up. Assuming the capital continues to be available and that’s the big assumption because that is the only thing that I really believe can hamper our growth going forward is capital availability.

The MLP Sector is still largely retail oriented and there has been an approval fruition of new MLPs. And we’re all competing for those retail dollars. And until the institutions decide to want to play or if the Limco model works and it’s an accepted structure that could have tremendous impact. I mean, I’m really hopeful that will prove to be a successful structure and something that we can use sometime in the future.

Unidentified Analyst

I am sure they are capable.

Richard A. Robert

Yeah.

Unidentified Analyst

I was just trying to loss my (inaudible). I am going to open it up to the floor if there is any question here?

Question-and-Answer Session

Unidentified Analyst

Richard, you addressed the kind of mechanics question, but if they get something to the intangible drilling costs, does that matter that much, I mean is that economically you matter?

Richard A. Robert

Well, that matters to our investors. It doesn’t necessarily matter to the partnership, because we will be paying anymore in terms of taxes, but clearly our tax yield would be affected. Now we spend less capital than most of our peers. So probably it affects our investors less than most, but yeah, I mean if you have to spread out that projection over the number of years.

The tax yield will come down from a current levels and the investor will be expected to pay more, currently, my understanding is that the administration is proposed that it only affects the [super majors] the top five ENP companies out there. So I am still hopeful that will. I do believe it’s going to happen. I do believe that that has to occur for political reasons, but right now it looks like it may just affect the top five guys.

Unidentified Analyst

Can you remind us again, when you left on borrowing base redetermination was there will be and have you had conversations about where that potentially will go with that the Barrett acquisition?

Richard A. Robert

Yeah, we announced in our third quarter Q and press release that we did have our borrowing redetermination, it was reset at a $1 billion, an increase of about $40 million from $960 million or actually it was $940 million, so it’s a $60 million increase, but then we did that $200 million add on, and so presented to the credit facility, we reduced availability by $40 million, $0.20 on the dollars or so, our current growing capacity is $960 million. We do obviously intend to do an interim borrowing base redetermination as a result of this fair transactions and any others we do before at the end of the year. So we do anticipate some increases in our liquidity at the end of the year as a result of that in interim redetermination.

Unidentified Analyst

And then we talked about the differentials that you are seeing in the Bakken. What type of differentials are you seeing in some of your other basins?

Richard A. Robert

Permian was another area that didn’t widen out as well. We had obviously in a significant increase in production in the Permian in general and you saw differentials going from about $3 to $9, which as a percentage is quite high. We’ve seen that come back down a little bit. When you have those issues produces find other ways to move their barrels into other areas so how those differentials start coming in a little bit. But we are fortunately also have benefit of some [ROS] pricing in some of our barrels that helps to offset some of bad differentials in other areas, we do produce out of Mississippi as well as the Gulf Coast area not as many barrels, but it’s still helps the overall average. But those are the main oil production areas.

Unidentified Analyst

What percentage is based up of [ROS]?

Richard A. Robert

Not a large percentage maybe, probably, I would guess somewhere in the middle 10% to 15% of oil production.

Unidentified Analyst

Okay. (Inaudible) any NGL hedges that you see synergy there I mean you don’t have a lot of exposure to NGL.

Richard A. Robert

Yeah we do have a lot of exposure. And clearly we have distribution coverage to avoid issues when there are [sprained]. But this last transaction, the Barrett transaction does have a component of NGL production about 20% of the production is NGL and so somewhere in the neighborhood of 1200 barrels a day. And so we are looking at doing a one year hedge. At some think we are hedging in some of the markets (inaudible).

Now I think the market likes to see the hedges in place to ensure that we have skip all the – we evaluated, we modeled the transaction with a fairly conservative EU NGL prices were going to be anyway. So we’re not just hedging that market isn’t that liquid. So a year is what we are looking at and we’ll look at the – I mean probably two thirds of barrels hedge into 2013.

Unidentified Analyst

Okay. And then I think one last question, with ROE expenses, what type of efficiencies can you put in place to help bring those down?

Richard A. Robert

Well, we’re probably looking at our cost structure looking at ways to make sure that we’re getting value for the dollars we’re spending in the field. REO efficiencies, labor is a big part of that obviously. You know we expect a lot out of our guys. Well buying gas assets helps a lot frankly. But make sure how we on a (inaudible) basis look considerably better because gas assets tend to cost less to operate.

So less moving parts and so we look at it month-in, month-out we expect the super tenants to be play out one more thing is going and we’re pretty consistent actually. And we run at levels that we expect to run at. I think we’re not significantly different than anyone else that’s operating. We are not seeing a tremendous increase in LOE cost wherever operate in some, we feel pretty comfortable about where we are.

Unidentified Analyst

Okay. Are there any other questions in the room? Just a quick question on hedging, if you could just dive a little bit more into your general overall strategy for how you look at going forward?

Richard A. Robert

Sure. I mean hedging is a critical part of our strategy, I mean, we have to create stable cash flow to pay a stable distribution, and so most of the hedging occurs upon execution of an acquisition. The first thing to note is that, we don’t wait until we close the transaction to hedges, we actually put the hedges in place, when we signed the purchase of the sale agreement, because that’s the point in time where we are agreeing to pay a certain amount for those assets, we need to make sure that we are going to generate a margins that we expect and commodity prices are volatile, I mean, they can change considerably in six weeks, typically when you start a PSA, it often takes six weeks to close it, because you do a variety of due diligence during that period.

Well things can, commodity prices can change considerably in six weeks and so we don’t wait; those concessions that the banks made a couple of years ago, that has really helped make us feel more comfortable when we evaluate transactions. Clearly, if we don’t close the transaction, we have to take those hedges off, but when you think about why transactions don’t close, typically because commodity prices have changed and the value isn’t there anymore, while we have eliminated that issue and so we’ve closed every transaction that we’ve entered into it.

And on the gas side, as I mentioned, we wanted certainties, so we used fixed-price swaps across the entire structure. On the oil side, we do have some more sensitivity to pricing, we employ callers, three way callers in times to improve some of the floor pricing that we have, but it’s important to note that what we present in our presentation as far as our hedge profile, it is the floor prices.

We don’t use the average or middle of the range it’s the floor and it’s 2012 the floor was about 89.50, 2013, the floor was 92 and the floor in 2014 is almost 93, so it improves each year with this kind of a nice situation when you consider that, it wasn’t very backward and it markets for long time, and there is probably a week that doesn’t go by that we look for opportunities that there is significant shifts in commodity pricing that creates some optionality that people are willing to pay for and puts more on, we look for ways to improve our pricing every chance we get, I guess that there is probably not a week to go slide, that we don’t look at, how it maximized value and now we employ outside service as well, now bringing this idea.

They are margin in the market, every minute of everyday, so they are employed to bring us ideas and if we decided to do something that they bring to us, they reap some of those awards.

Unidentified Analyst

Do you have any sort of target rating associated with the kind of below to or are you fill this three times leverage target that kind of a (inaudible) ahead you said that agency is that maybe it’s beavered up, may be a bit of more thing would have light, is there any kind of guidance they are dial of, but they are going to be using (inaudible) I want to be

Richard A. Robert

Its really not ratings driven, its just philosophy driven. We think on a few times if kind of a great mix for our types of assets, kind of our business model. And as you’ve seen, we lived with that for several years and so we think we can continue to be successful, but as far as the rate is concerned certainly in Caa1 is not a rating that we want to live with, so very long and when you think about back in April, when we got the initial rating.

We were at 78 million barrels of equivalent reserves and that is small relative to even our peers of our gas here, and it seems that the agencies were focused on the fact that our reserves were at small as they were. And so they put some production parameters, some reserve parameters and lot of the holes, it could take for two months before we did a large gas transaction and we exceeded those parameters and now we have done another transaction, which I think will only help to improve the metrics that they upon are important and has been having constructed conversations and meaning to planed and so I am hopeful that they will take another look at, they were very upset even with these transactions having occurred so soon after our initial rating, we were very honest in that, pace don’t chance that quickly around here, they don’t make the rating and then change to (inaudible) they wanted us to hit some history, they want a few some time pass and essentially that means I just have to be patient, I will do our best.

Unidentified Analyst

Okay, thank you so much Richard.

Richard A. Robert

Thank you.

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