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QR Energy, LP (NYSE:QRE)

Q4 2013 Results Earnings Conference Call

March 3, 2014 10:00 AM ET


Alan Smith - Chief Executive Officer

John Campbell - President and COO

Cedric Burgher - Chief Financial Officer

Josh Wannarka - Director, Investor Relations


Kevin Smith - Raymond James

Ted Durbin - Goldman Sachs

Noel Parks - Ladenburg Thalmann

Ethan Bellamy - Robert W. Baird


Welcome to QR Energy’s Fourth Quarter 2013 Results and General Partner Buy-out’s Conference Call. My name is [Tisha], and I will be your operator for today’s call. On the line we have Chief Executive Officer, Alan Smith; President and Chief Operating Officer, John Campbell; Chief Financial Officer, Cedric Burgher, and Director of Investor Relations, Josh Wannarka. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions)

Thank you. I would now like to turn the call over to Josh Wannarka. You may begin.

Josh Wannarka

Thank you and good morning. Welcome to fourth quarter 2013 earnings and General Partner buy-out call. We issued two press releases this morning that contain information we will discuss on the call today. Additionally, we posted a GP transaction slide deck on our Investor Relations website at that we will reference during this morning’s call.

Before we get started, I would like to remind all listeners that we will use forward-looking statements as defined by securities laws. These statements reflect our views with regard to future events and are subject to various risks, uncertainties and assumptions.

Our results may differ materially from those conveyed in our forward-looking statements. For a more complete list of these risk factors, please read QR Energy’s 10-K, which we field with the Securities and Exchange Commission this morning. This document is available on our website on the Investor Relations tab.

Additionally, during the course of today’s discussion management will refer to adjusted EBITDA, distributable cash flow and the distribution coverage ratio as important metrics for evaluating QR Energy’s performance. Please note that these are non-GAAP financial measures and they are reconciled to their most directly comparable GAAP measures on the last page of this morning’s press release.

Now, I’ll turn the call over to Chief Executive Officer, Alan Smith.

Alan Smith

Thanks, Josh, and good morning, everyone. Thank you for joining us. This morning in several releases we announced our fourth quarter results and 2014 outlook and the partnership buy-out of the General Partners. With the strong operational results in the last half of 2013 and GP buy-out we believe QRE is poised for top-notch execution and growth in 2014.

I will begin the call today by providing a few opening comments regarding QRE and hit the highlight of the buy-out transaction. John will then provide the operational update and Cedric will conclude with an overview of our financial performance and provide the details of the GP buy-out transaction.

So let’s get started. In the fourth quarter we continue to perform very strong operationally as our 2013 capital and working program led to an increase in production in proved reserves. John will give you the production details in a moment but a very good year on the reserve side.

Proved reserves increase to 109 million barrels of oil equivalent, a 10% increase above 2012 levels, primarily as a result of strong performance revision and East Texas Oil Field in August 2013, proved reserves were 85% proved developed and 70% -- 77% liquids. We are very proud of the asset base that has been created over the past three years and remained committed to assuming the right kind of assets for an upstream MLP.

Switching to the A&D markets, 2013 was a year where we focused on execution and remained discipline following our strict investment criteria when pursuing acquisitions. Due to our existing liquidity and the announcement this morning we are very excited about the opportunity set that we believe is coming to the market over the next six to nine months. The markets are no doubt very competitive but we are well-versed of being proactive in our pursuit deal.

As an example, East Texas Oil Field acquisition in August met our criteria and as John will discuss continues to be a great asset to the partnership and as a second largest operator by production in the field, we are natural fit for bolt-on opportunities.

Since closing the August transaction, we have completed $23 million in bolt-on deals in East Texas Oil Field and are on track to complete an additional $47 million in East Texas area in the first half of this year. Acquisition growth is a key component of our strategy and we expect to be accurate in 2014.

Before we delve into an overview of the GP buy-out I wanted to briefly discuss rationale for the transaction. Since our IPO, we have received feedback from our analyst and investors that the management incentive was complex and the amounts difficult to predict in any given quarter.

Well, we listened and design the buy-out structure than in the nutshell, simplifies the capital structure of QR Energy LP, eliminate the existing MIF payment and future MIF payments related to future acquisitions and is projected to be immediately accretive to QRE’s distributable cash flow per unit.

In return for the MIF elimination, the owners in the GP have the right to earn up to 11.6 million Class B units in four equal annual installments, provided certain QRE performance thresholds are met. This structure caps the number of Class B unit that maybe earn by the owners of the GP which is a positive for our unitholders.

This transaction tucks in the GP under QR Energy LP allowing QRE unitholders to elect directors going forward. All of this translates into a lower cost to capital for QRE, which enhances our competitive position and future acquisition growth opportunities.

We are excited about the transaction and believe we have structured something that is mutually beneficial to the unitholders and the GP. We will be more competitive in A&D markets and our ownership structure will be less complex and more easily understood.

Before turning the call over to John, I would like to reiterate, how proud I am of our organization and its performer during the fourth quarter and in 2013. We have a lot to look forward to going forward in 2014 and I appreciate your support.

Thank you again for your time this morning and now I’ll turn the call over to our President and Chief Operating Officer, John Campbell.

John Campbell

Thank you, Alan. The fourth quarter was very strong operationally as we continue to experience success from our capital and workover programs specifically in East Texas and Jay Field operating area.

For the quarter we increased production of 18,522 Boe per day, a 3% above the third quarter, achieving our stated guidance of 18,500 to 18,900 Boe per day, despite weather-related downtime in the Permian Basin.

The product mix was comprised of 73% liquids or approximately 61% cruel oil and 12% natural gas liquids. Total liquids production increased 7% over the previous quarter as we continue to target low risk or weighted projects.

During the quarter, overall revenue prices were mixed versus the third quarter as tightening of the LLS market along the Gulf Coast, pricing at Jay and general macro conditions meet lower oil prices.

On the natural gas side, we saw a slight uptick as a nation experienced colder temperatures in November and December. Including hedges, our average realized oil and natural gas prices were $95.46 per barrel and $6.29 per Mcf, respectively.

At this time, we do not hedge NGLs, which had an average price of $40.50 per barrel, 7% higher than the third quarter at $38.02 and the second consecutive quarter of improvement.

Similar to the third quarter, the improvement is primarily due to increased posted propane and butane prices at Mont Belvieu and Conway. LOE in the fourth quarter was $37 million or $21.70 per Boe in line with our stated guidance of $20.50 to $22.50 per Boe. Our excellent operational practices supported our capital and acquisition efforts by resting the production declines and about 65% of our productive assets in our Eastern Business Unit.

Drivers of this accomplishment were high runtimes on our operated water and nitrogen injection facilities at Jay, focus on quick repair of down wells and reducing well failure rates. In the Permian, our team was also very focused on improving operational efficiencies and reducing costs. These efforts resulted in an approximate 12% reduction in controllable LOE for the second half of 2013.

Total capital spending for the fourth quarter was $22.4 million including $17.5 million of maintenance capital, or approximately 24% of EBITDA. Two areas I would like to briefly highlight are East Texas, which saw a 16% quarter-over-quarter increase in production and the Jay Field. While production was flat quarter-over-quarter, performance continues to exceed expectations.

These two areas combined, delivered volumes at a capital efficiency metric under 5,000 per Boe and notably include a project toincrease the efficiency of our NGL inspection facility at Jay, recompletions in East Texas and artificial lift equipment upgrades across our asset base.

On a total company basis, our capital efficiency was approximately 36,000 per Boe, which reconfirms our maintenance capital. The performance of these assets underscores one of QR Energy’s key strengths, our people. In the Permian as previously announced, we experienced freezing temperatures in the middle part of the fourth quarter that caused power issues on some of our properties in West Texas, temporarily affecting production in those areas.

The impact for the quarter was approximately 150 BOEs per day. I would like to extend a thank you to our operations team in the Permian Basin for enduring an unseasonably cold winter and doing a great job to minimize even further disruptions. Despite weather moving through the region, we remained active operational.

In Garden City, we completed our third vertical well in the Wolfcamp formation. The well came online in October with a seven day IP rate of 260 BOEs per day in line with expectations. In the Turner Gregory field, we drilled two verticals wells to the Clear Fork formation. Both wells are waiting on completion.

And finally, in crank County, we participated in a non-operated well that targeteted the Devonian and Penn formations. We plan to participate in three additional wells in this area in 2014. Concurrent with our drilling program, we actively conducted workover operations that included recompletions, restimulations and pump upgrades.

In 2014, we will continue to pursue identified organic growth opportunities that include drilling horizontal Cotton Valley infill wells at Overton, vertical infill wells at Doucette. And in West Texas, we will be active in the Turner-Gregory, Garden City and the M State areas. We had an outstanding fourth quarter operation and we are already very active to begin the year.

Looking at our forward guidance, in 2014, we expect to spend approximately $100 million, $72 million of which will be our maintenance capital. We anticipate first quarter production to be in the range of 18,900 to 19,600 BOEs per day and annual production guidance to be 19,700 to 20,400 BOEs per day, which again does not include potential acquisitions. LOE is anticipated to be in the $21 to $23 per Boe range for both the first quarter and the full year.

Now, I will turn it over to Cedric for a review of our operating financial results and continued discussion of the general partner transaction.

Cedric Burgher

Thank you, John. Financial results for the fourth quarter were solid as demonstrated by adjusted EBITDA increasing to $72 million, or 4% above the third quarter and distributable cash flow increasing to $37.4 million, or 7% above the third quarter.

Driving this growth was increased production volumes, realized hedging gains and improved cash operating margins, offsetting lower commodity prices for the quarter. This led to a fourth quarter coverage ratio of 1.2 times, which on a fully diluted basis is 1.0 times.

Revenue for the fourth quarter was $119 million, a 5% decrease from the third quarter despite increased production due to further tightening in the LLS markets, revised pricing in our Jay Field and lower NYMEX oil prices.

Fortunately as John discussed, our operations team continues to do an excellent job managing expenses in the field. Production and other taxes were 5.8% of product revenue and improvement from the third quarter of 6.4% due to a more favorable product mix and lower revenue.

Total G&A for the quarter was $10.5 million, which includes non-cash amortization expense of $1.8 million related to long-term incentive unit awards. Cash G&A was $8.7 million, which was below our guidance of $9 million to $10 million. Excluding the effect of any acquisitions, we anticipate G&A to be in the $9 million to $10 million range in the first quarter with full year cash G&A expectations to be in the $32 million to $35 million range.

Our interest expense for the period was approximately $12.1 million, which reflects interest payments on our debt as well as a non-cash gain on interest rate hedges in the amount of $800,000. Our all-in effective interest rate for the quarter including the senior notes and interest rate swaps was approximately 5.1%.

At year end, we had approximately $312 million of availability under our credit facility, which combined with $13 million of cash on our balance sheet, provides the company with total liquidity of approximately $325 million. Our liquidity positions us to be able to take advantage of other bolt-on opportunities or acquisitions.

On the hedging front, going into the first quarter, we have hedged approximately 9700 barrels per day of oil and approximately 32 million cubic feet per day of natural gas. Based on fourth quarter production levels, our current oil and natural gas production remains approximately 80% hedged for 2014.

Before I continue to the general partner discussion, I will cover a few other items. First, this morning we filed a prospectus supplement establishing an at-the market equity program. This will allow us to issue small amounts of equity from time-to-time.

While we currently do not have a need for additional equity, the ATM program allows us to opportunistically access the equity capital markets timely and at a lower cost than traditional equity financing methods. We see this as just another financing tool in the toolbox and one that works very effectively when making bolt-on acquisitions.

Secondly, on March, our third monthly cash distribution attributable to the fourth quarter of $16.25 per unit to all common and class B units. We have received a warm response from our unitholders, regarding converting to a monthly distribution and we plan to maintain this policy into 2014.

Third, K-1 packages are scheduled to be mailed to unitholders by March 13th. Also on that date, you may access a copy electronically in the Investor Relations section of our website. If you have any questions, the support representative can be reached at 877-222-3205.

Now, I would like to address the general partner buyout transaction in a little more detail. As Josh mentioned earlier, there are slides on our websites that I will be referring to, for his part of our discussion.

The buyout structure was designed by the general partner and the Conflicts Committee to incentivize strong performance and increase the upside for the partnership over the long term. The transaction is immediately accretive to 2014 with no upfront consideration and the elimination of the management incentive fee payments, effective at the beginning of this year.

Looking now at Page 3 of the slide deck, the GP unitholders will have the ability to earn unit payments in any four of the next six calendar years with the first eligibility for issuance for the year ended 12/31/14. There are three conditions that must be satisfied for the payment to be issued following any given year.

Number one, continue to pay a target distribution of at least $47.44 per unit per quarter in each of the previous four quarters. The aggregate of our current monthly distributions paid in the quarter is $48.75 and the partnership does not foresee any decrease in the distribution as a result of this new structure.

Number two, distribution coverage must be greater than one times on a calendar annual basis. And number three, the partnerships leverage ratio must not exceed four times debt-to-EBITDA on a quarterly basis.

Assuming all three conditions are met, a quarterly units will be issued to the general partner at the beginning of the following year. In the event, not all conditions are met, there will be no issuance for that year. The GP will have six years to earn the maximum unit consideration. After four issuances or a maximum of six years, there is no more obligation to the partnership.

Moving to Slide 4, there are multiple benefits to the partnership that this transaction offers. First, we anticipate that the transaction will lower our cost of capital by eliminating the management incentive fee. Furthermore, the transaction structure maximizes balance sheet flexibility and liquidity as the consideration for the buyout is contingent, settled in the future and paid in units, not cash.

Secondly, the transaction simplifies our corporate structure. The subsequent slides will demonstrate a cleaner organization chart that will be more easily understood by our investors and our stakeholders.

Third, we expect this transaction to enhance our distribution growth profile by using class B units as consideration, there is an aligned incentive to increase the unit price over the next four to six years as the number of units has been quantified.

Removing the management incentive fee increases the potential for accelerated growth and enhance the competitive position which should lead to greater economic return to QRE unitholders. The last point I will make on this slide is the enhanced governance created by the transaction. With the new structure, the unitholders will now have the opportunity to vote on the Board of Directors going forward.

Turning to Slide 5, the previous structure position the GP about QR Energy from of governance and control perspective giving full control of the unity to the GP along with the quarterly management incentive fee.

With the prior structure, the management incentive fee had the potential to grow substantially over the long term, with increases in commodity pricing or acquisitions. Since our inception, we have tripled the size of the management incentive fee base and we will continue to pursue the A&D markets as a means to grow our asset base. Therefore, eliminating the management incentive fee structure lowers our cost of capital and positions the company to be more successful in the acquisition process.

On slide 6, the post-transaction structure shows the gray GP box now under or owned by QR Energy and the management incentive fee no longer applicable. We believe this simplified structure will be more easily understood by the investment community and this offers the unitholders more control over QR Energy, with the ability to elect the board.

With that, I’d like to say that we are very excited about where we are and where we are going in 2014. The new structure puts us in a great position to pursue accretive growth opportunities. We continue to deliver strong operational results and we remain committed to our goal of increasing distributable cash flow. Thank you for your attention this morning. We are now ready to open the line for questions.

Question-and-Answer Session


(Operator Instructions) And your first question comes from the line of Kevin Smith.

Kevin Smith - Raymond James

Hi, good morning, gentlemen.

Cedric Burgher

Good morning, Kevin.

Kevin Smith - Raymond James

Alan and Cedric, thank you for your prepared remarks on the decision to purchase the GP. First, I think it was absolutely the right thing to do, so congratulations. My question is does this decision change anything at Quantum Resources or Quantum Energy Partners, either through the G&A breakout or change incentives to drop down properties in any way?

Cedric Burgher

This is Cedric, Kevin. Thank you. No, it does not. The G&A allocation will continue as has been in the past.

Kevin Smith - Raymond James

Okay, great. And then also thanks for the information on the bolt-on for -- the $70 million bolt-on acquisitions in East Texas. Can you give us any more color on that, basically on the timing? It looks like you got some done in 4Q and then a little bit in 1Q. Is this all from the same seller, kind of how is the process going?

Cedric Burgher

It’s actually from multiple sellers. When we went over there, purchased a relatively sizable position in East Texas field towards the end of last year. We recognized that the team on the ground we have over there and our operational capability that this was a still good opportunity for us to potentially aggregate some bolt-ons. And so, we’ve had an active program in our business development group and our business unit to be able to get that done. So it’s a number of transactions.

We did it toward the end of last year was some other interest that came along with the East Texas acquisition in August-September of last year and that was in the $17 million range, and then we continue to do some smaller kind of less than $10 million bolt-ons that happens before the end of the year. And then we actually came across a more gas deal acquisition that really the great tuck-in with our existing East Texas assets that was about a $35 million, $36 million transaction.

So I think when you look ones I just mentioned there, that’s going to be the bulk of them. And then, we have one $11 million transaction that we have signed purchase and sale agreement on right now, that it is in the East Texas Oilfield that we should close here in the next 30 days. So I think we will continue to look for opportunities here and I think that’s just a continuation of what we told you we’re trying to do.

Kevin Smith - Raymond James

All right. Thank you very much. It sounds like you guys are heading in the right direction. I appreciate the color.

Cedric Burgher

All right. Thanks.


And your next question comes from the line of Ted Durbin.

Ted Durbin - Goldman Sachs

Hi, good morning.

Alan Smith

Good morning.

Ted Durbin - Goldman Sachs

I was wondering if we can talk about -- a little bit about how you came to the 11.6 million units with the price that you’re paying to the GP. And I guess, what I am talking about is, the management incentive fee was $4 million last year or it’s about $8 million or so, $7 million or $8 million based on the big growth of PV10 for 2013 versus -- if we pay out that 11.6 million, I realize that over time, that's sort of $22 million, $23 million of cash outflow. So how did we come to that number, I guess, was my first question?

Alan Smith

Okay. So, Cedric and I will likely tackling this, but I would tell you is that there is really two components of value that you have to think about with regard to the myth. We understand that it was a little bit complex before and that’s why we’re trying to simply here, but you actually have what we call an existing management incentive fee base. And that is the asset that they currently held that has not been previously converted.

And so that is the first component of value and the year end reserve report would have taken the fee to between $5 million and $9 million depending on the ability to pay that fee based on -- you’ve heard us talk about adjusted operating surplus before. So when we looked at that with the transactions and the potential dropdown that we have come in later this year, there was a high level of confidence that that piece of the fee would be earned and in the conversion. So you’ll be able to value that in relatively the same form that you would the previous conversion. And so when you do the math on that, that’s going to put you kind of in the $80 million to $85 million range.

Then when you think about the future acquisitions, the second component of value of the contractual right that the GP had, is future acquisitions. The GP owners get a management fee associated with future acquisitions. So we can’t describe the actual methodology because I think that the GP and the Conflicts Committee kind of came at it potentially in all the different way to get to the same answer. But the reality is that if you use a conservative assumption of growth over the next 4 to 5 years and apply this structure that existed prior to the buyout here, you would come up with a rather significant number.

And so the second part of the transaction was discounted significantly just because of the things which you would expect to be discounted for market risk, acquisition risk, other things like that. So we actually took it in two components, which was the existing the base and where we think that was going to end up. And then we took the future acquisitions that on a conservative look over the next four to five years where that would look up assigned appropriate risk to that. And then ultimately when you add it all up and do the math, it comes out to be the 11.6 million units.

Cedric Burgher

This is Cedric. The only thing I would add is one other way to come at it or look at it is, if you recall last year we converted 80% of the fee base for 6.1 million units, and we've also collected since inception about $12.5 million of cash. So 11.6 million obviously is less than two times our first conversion and it’s all based on future expectations and all of that. When any time you value any thing, it’s obviously some kind of a discount or future expectations. But at less than two times the first conversion, we think you could argue that if you model out your acquisition profile, a lot just depends on how big and how fast you think will grow. But that’s how we looked at it in terms of value.

Alan Smith

And then the only other thing that I would add is that the structure that we are now under caps the number of units that the GP can earn, whereas before it was basically go on for years and years to be a very, very sizable number. So this caps it and I think it illuminates the myth, which is, I think, clearly what makes this accretive to the unit holders.

Ted Durbin - Goldman Sachs

Okay. That's all very helpful. I really appreciate that. I guess a couple other things, then, on the new structure here. I guess, first is, does it change the way you think about the types of properties you might want to acquire, or does it change anything on the organic growth CapEx, workovers versus active drilling and things like that?

Alan Smith

What I would say is that we continue to work our asset base really hard. We’ve had some time to do that because last year as we mentioned, it was a year of execution. So as we work these assets like this, we usually continue to find additional inventory and things to do. So, I think that John’s group will continue to do that and we don’t anticipate some huge organic growth. But we do feel like the inventory, can perpetuate us for beyond, really, around five years and keeping things flat to slightly growing.

On the acquisition front, I don’t think it changes anything because I think, you’ve heard us say time and time again that we are very disciplined about the type of assets we think belong in an upstream MLP, that being the lower decline, longer life assets that do not require maintenance capital to keep that production and cash flow flat. So, I don’t think you will see us change anything in that regard and that will able to just -- will make us we think more competitive as to what we can actually pay.

Ted Durbin - Goldman Sachs

Great. And then if I could just ask one more just on the convertible preferreds here. I guess, one question is just sort of -- have you thought about those again a little bit, again as a potential headwind on the cost of capital side?

Obviously, you made the announcement today, but I'm wondering where your thoughts are on, where should we think about when those actually -- when those convert? Is it sort of a potentially a fourth quarter ‘14? Is that the best way to think about that?

Alan Smith

So, following in a detailed review of the convertible to preferred units, the step up in the fee or in the distribution will occur in the first quarter of 2015. So we wanted to be clear about that. I think that as we said before, as the step-up gets closer then I think it’s gets a lot easier to think about how that those convertible preferreds should be valued.

So, really, all we could say at this point in time is we don’t have any new immediate plans for those units other than probably in the second half the year, as the step up in the distribution gets closer that we will probably will re-evaluate what the options are with that security.

Cedric Burgher

The thing I would add is that we gave you the fully diluted coverage ratio of 1.0 times today which fully diluted just assumes that the step-up that had already occurred. With the accretive transaction for the buyout that obviously adds to that going forward and it’s also accretive not just this year but to distributable cash flow for years to come at a significant level if you model, say you model $500 million a year in acquisitions.

If you do the math you will see a significant amount of increase in our cash flow after distribution. And so we think this is -- really helps position as for that step-up and like I said we are at one time in the fourth quarter fully diluted. So we think we are well positioned to meet that step-up beginning -- at beginning of next year.

Ted Durbin - Goldman Sachs

Great. I'll leave it at that. Thanks for all the color.

Alan Smith

Thanks, Ted.


And your next question comes from the line of Noel Parks.

Noel Parks - Ladenburg Thalmann

Good morning.

Alan Smith

Good morning, Noel.

Noel Parks - Ladenburg Thalmann

I just wanted to clarify one thing, with the $11.6 million figure that the GP is entitled to, is that also capped in terms of any future dilution or is there any adjustments that can be made for that on other equity issuances?

Alan Smith

Well that one is capped for the GP. It won’t -- it cannot go up. It can go down if you don’t meet the annual test as we described but there is no restriction on the company in terms of growing and issuing equity to the market enables the finance, partially finance acquisitions if I understood the question right.

Noel Parks - Ladenburg Thalmann

I had just meant that at times GPs have the option of taking part in any subsequent offering as diluted to sort of maintain their percentage ownership overall. And I was just...

Alan Smith

Good question, there is no feature like that.

Noel Parks - Ladenburg Thalmann

Okay. Great. That was my main thing. And I guess just a little bit, you did talk a bit about NGLs and at this point not considering hedging, any thoughts going forward or kind of with your current proportion of NGLs that you pretty much can't plan as to your current policy?

Alan Smith

We did not plan to hedge NGLs. It’s still not in our view a good economic proposition.

Noel Parks - Ladenburg Thalmann


Alan Smith

I have seen obviously the NGL prices have been improving now two quarters in a row. It’s also by the way about 5% of our cash flow hedge revenue and if you look at the -- that's well below our pure average in terms of (inaudible) our equations. And just like Cedric said the liquidity associated with those hedging markets, just aren't deep enough. And then as Cedric alluded we don’t generally like the prices we see in even anything outcast in one year and plus we think there is probably lot more upside than there is downside in those numbers right now.

Noel Parks - Ladenburg Thalmann

Great. That's all from me. Thanks.

Alan Smith

Thanks, Noel.


And your next question comes from the line of Ethan Bellamy.

Ethan Bellamy - Robert W. Baird

Hey guys, did you guys get a fairness opinion on this trade?

Cedric Burgher

No, I mean I think that the structure that was contemplated here with this type of structure or transaction required us to engage the independence with our Conflicts Committee. So three members of our board make up the Conflicts Committee, they meet all the independent tests and then they add legal council and investment banking advisors that work very, very closely with them throughout this entire process. I think by definition the way that this process work it had a pretty much of built in fairness opinion on built in.

Ethan Bellamy - Robert W. Baird

All right. Thanks.


(Operator Instructions) And at this time, sir, there are no further questions.

Alan Smith

Well, we certainly appreciate everyone’s time this morning. And if you have any further questions, don’t hesitate to call, Cedric or Josh and thanks for your time.


Thank you for your time and participation. This does conclude today’s conference call. You may now disconnect.

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