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Legacy Reserves LP (NASDAQ:LGCY)

Q2 2011 Earnings Conference Call

August 4, 2011 10:00 ET

Executives

Cary Brown – Chairman and Chief Executive Officer

Steve Pruett – President and Chief Financial Officer

Analysts

Kevin Smith – Raymond James

Michael Blum – Wells Fargo

Ethan Bellamy – Robert W. Baird

Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Legacy Reserves Second Quarter Results Conference Call. Your speakers for today are Cary Brown, Chairman and Chief Executive Officer and Steve Pruett, President and Chief Financial Officer. At this time, all participants are in a listen-only mode. Following the call there will be a question-and-answer session. As a remainder, this call is being recorded today August 1, 2011.

I’ll now turn this conference over to Mr. Pruett.

Steve Pruett – President and Chief Financial Officer

Thanks, Caron. Welcome to the Legacy Reserves LP’s second quarter earnings call. Thank you for joining us this morning. Before we begin, we would like to remind you that during the course of this call, Legacy management will make certain statements concerning the future performance of Legacy and other statements that will be forward-looking as defined by securities laws.

These statements reflect our current views with regard to future events and are subject to various risks, uncertainties and assumptions. Actual results may materially differ from those discussed in these forward-looking statements and you should refer to the additional information contained in Legacy Reserves LP’s Form 10-Q for the quarter ended June 30, 2011, which will be released on or about August 4th, that’s today, and subsequent reports as filed with the Securities and Exchange Commission. We also encourage you to review our 10-K, which was filed in March along with our press releases. Legacy Reserves LP is an independent oil and natural gas limited partnership, headquartered in Midland, Texas, focused on the acquisition development of long-lived rock oil and natural gas properties primarily located in the Permian Basin, Mid-Continent and Rocky Mountain regions in the United States.

I’ll now turn the conference over our founder Cary Brown, Legacy’s Chairman and Chief Executive Officer.

Cary Brown – Chairman and Chief Executive Officer

Welcome guys. Thanks Steve and thanks to our friends and unit holders for joining us today. I have been looking for this call for a while. I guess since about the last call as I saw the April numbers coming in and our Legacy team members have just done an outstanding job. They always do. It was a tough first quarter, but they have done just a wonderful job this quarter. We’ve grown production by about 18% on a quarter-over-quarter basis. And yet I was thinking about how did they do it? They’ve grown about 40% if you look year-over-year, but 18% this quarter how did they do it. It is a thousand different decisions. We’re now up to about 5,500 wells. We told you guys last quarter that we had some plant downtime issues and some weather issues and our guys just got after – got the wells back online and with no rain out in the Permian I’m thankful to say we don’t have any weather related issues. We’d like to have some rain, but they have gotten production up and they just continued to do a wonderful job on that. We’re still experiencing some plant downtimes, but we’re not having the weather issues and that was a big, big impact on our production.

The other impact we see is from our capital program. Our capital program has been outperforming our expectations and it continues to do so. What you’re seeing this quarter from our capital program is really from the capital program. Probably last quarter and the quarter before that, as you generally see a lag effect. But our capital has continued to do well. It’s been about half of our capital on Wolfberry. Those results are just outstanding. We got one rig running and we completed a well about every three weeks. The other half of our capital program is scattered through our asset base. What I’m noticing is that in all the areas that we’re in, new technology is really making a difference. We’re finding that with a lot of oil in place and you give a little bit of new technology – it’s not new technology, it’s just different applied. We’ve been practicing all of my career. But we’re doing – using that technology in a little better ways to get more oil out.

That other half of our capital program, I’d like to point to one project and say this is the one that did it, but it’s really a bunch of different projects. But the rates of return on those projects are the best I’ve seen in my career and that’s attributed to the employees we have, the price environment we’re in, the oily rock we’re in and the way they are able to stay on top of the new technologies and figure out ways to apply them on our assets. So, with that we’re growing our CapEx. We grew our CapEx from $11.9 million in the first quarter to $17.4 million. I think you’ll see us continue to spend CapEx as we’re seeing projects coming in from our partners where we’re not operating a percentage as well as on our own asset base that are just outstanding rates of return.

The other thing that impacted the production is we continued to do what we do which is make acquisitions. We closed a $66 million deal in May that brings us to $93 million for the year roughly on pace for our $200 million a year of acquisitions. We still have a pretty good pipeline there. So, I’d say that’s really cool to grow production, but when you at growing production while strengthening expenses in this environment you've just got to. once again take our hats off to employees, who actually reduced our expenses by about 2% quarter-over-quarter, I don’t know that it’s – I would say that a long-lasting impact what I would say is the first quarter was out of phase and we maybe back on the run rate now, in the environment we’re entered into questions, performance by the employees again.

So I want to say hats off to them, if you look at all of that as the production is coming in and the capital – we actually grew EBITDA of 53.8 million, which is up 27% with distributable cash flow up to about $0.72 a share, and we grew distribution of $0.54 a shares. So on our front, we’re looking great – one thing I want to talk about, guys is our CapEx. Obviously as you can see from the numbers, we have organic growth in that CapEx profile. We spent about 32% of our cash flow in CapEx this quarter, if you look back one quite that much in the first quarter, some of that is growth, we still don’t know how, do effectively tell you what percentage is growth, what percentage is maintenance. But I would tell you I don’t think there is another coming after that has a lower base decline on their base assets within the kind of areas that we’re in. So if you’re going to break it out I think we would be on the end of our periods and what our maintenance CapEx would be, I don’t expect we’re going to get into habit of that, but I do think it’s not a fair look, when you look at – we covered our distribution about 1.3 times, that’s on all of our CapEx, not just the maintenance CapEx.

So, we think that’s the right way to look at it for us and but I do think that we’re going to be in the top of our figures, both on capital efficiency and on the decline in the base assets and I think we’re really have a great coverage.

If you look at our balance sheet, we’re about two times of our run rate EBITDA on our debt so we’re in great shape on our debt. We’ve got good deal flow on the acquisition front. So I don’t see anything, we’ve got good hedges in place to protest this against downside prices. So, we’re really good about what we have in the future and especially with the good employees who are associated with and what they are doing with properties we got, I am just proud to be a part of this team.

So with that I’ll turn back over to Steve and let him give a little more details over the numbers, but hats off to employees for a great quarter.

Steve Pruett – President and Chief Financial Officer

Thank you, Cary. As Cary mentioned, production increased to 18% sequentially to 13,360 Boes per day, up from 11,356 Boes per day, in the first quarter you recall on the first for those of you who participated in the first quarter call, we have significant impact due to severely cold weather that caused power outages, that in turn caused refinery outages for about six weeks. We had a lot of crude that backed up in field. We also have benefited of our $66 million natural gas acquisition that closed on on May 5th and as Cary also mentioned we had some very favorable results from our Wolfberry drilling and completion activities.

First quarter compared to the second quarter, our oil production was up by 12% natural gas production increased 40% primarily because of that gas acquisition in New Mexico and our NGL production was up 4%.

Importantly though year-over-year we were up 40% and a low double digit component of that was organic growth. Average realized prices, excluding commodity derivative settlements were $76.34 per Boe in Q2, up 7% from Q1. Oil prices were up 11%, gas prices were up 12% and NGL prices up 7%. But wonder how Boe prices can only be up 7% of the two major components were up 12% and 11% respectively that because our natural gas mix – our natural gas contributed more than mix and it’s lower Boe price realization than for crude or NGLs. Our sales were up 28% to $92.8 million, importantly despite all this activity if more wells take care of our absolute production expenses are lifting costs as we refer to them excluding taxes decreased 2% to $21 million, which is quite accomplishment. We told you in April that we had rather enabled that we had some extraordinary expenses related remedial workover projects, as well as integration expenses on our Concho acquisition. And we also lifted a lot of crudes that we want to able to sell. We haven’t worked on our inventory, it’s more of steady state situation now where we are now in a place where we’d be able to sell crude that we produce so we’re not able to produce our inventory.

So we don’t look for any additional benefits from inventory drawdowns anytime soon. We did get some benefits as mentioned earlier from our natural gas acquisition as you know natural gas is cheaper to produce than oil since we’re not having lift a lot of water although there is compression and those natural gas properties is quite expensive as well, $5 per Boe. So production mix did help decrease our lifting costs per Boe by 18% to $17.25 that’s down for 2103 in the first quarter.

Our G&A expenses were also down to 4.5 million compared to 6.4 million in Q1, that translates to $3.66 per Boe compared to $6.22 in Q1. The primary driver of that was produced non-cash compensation expense from our long-term incentive plan, which was 0.5 million in Q2 compared to 1.9 million in Q1. And that’s a pretty typical seasonal experience for Q1, where we always have higher – similarly have higher level of non-cash comp expense. In addition we had $0.5 million of professional services fees related to audit and third-party reserve engineering related to preparing our 10Q – our 10K. Cash settlements paid on commodity derivatives swung to a loss or outflow of 6.3 million in Q2 compared to 1.7 billion of cash and cash receipts in Q1 and as function of higher oil prices primarily and slightly higher natural gas prices in Q2.

We were 71% hedged in Q2 compared to 74% hedged in Q1. And we recorded an unrealized gain of $41.9 million on our commodity derivatives portfolio in Q2 compared to a loss an unrealized loss of 77.1 million in Q1 and this also maybe hard one to you although our realized prices were higher in Q2 compared to Q1. The quarter ending prices decreased over the period so from march 31st through June 30th prices actually stepped down for both oil and natural gas on the forward curve. Thus we’ve had an increase and our value – of gearing value of our derivatives portfolio quarter end compared to quarter end, which is how our mark-to-market accounting works. Our adjusted EBITDA was up 27%, that’s cash flow from our assets, $53.8 million that as Cary mentioned that run rate basis our debt to EBITDA was about 1.9 times, very favorable ended the quarter of $400 million debt. Development capital was up as expected to $17.4 million compared to $11.9 million in Q1. Again we’re very excited about the results of oil and liquids rich drilling activity and I’d say which we produce a lot of casing head gas with our Wolfberry drilling activity and its very liquids rich, which results in a very high premium to Henry Hub under wet gas that we saw on these wells and as much as 40% premium to Henry Hub prices on our Wolfberry which is very natural gas.

Distributable cash flow, which is what we have available to covered distributions was increased by 33% or 31.4 million as compared to 23.6 in Q1, despite the higher CapEx of course our EBITDA was the biggest driver in that improvement and as Cary mentioned we deduct all of our capital expenditures mad in same growth, the capital and cash flow unlike some of our peers. And that results in about 1.33 times coverage of our $0.54 distribution. Distributable cash flow per unit of $0.72 and that’s up from $0.54 in Q1. We generated net income of $65.9 million or $1.51 per unit. We’ve receive some analyst report this morning that adjust that $0.55 per unit about backing out $41.9 million of unrealized gains on our commodity derivates, that were partially offset by cash flow settlement of payment in higher production taxes. So we’re very pleased with that adjusted earrings per unit.

That concludes my comments, at this time we’d be pleased to answer any questions that you may have.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Kevin Smith from Raymond James.

Kevin Smith – Raymond James

Hi, good morning gentlemen and congratulations on a very strong quarter.

Steve Pruett

Kevin, we appreciate that.

Kevin Smith – Raymond James

Steve, would you mind elaborating on the inventory draw down that you discussed in your prepared remarks? Did you see a nice benefit this quarter or how should I look at that?

Steve Pruett

Actually we saw a little bit of increase in our oil stocks in the field. And so my comment is really don’t expect any benefit from inventory draw down. We’re viewing that and Paul, correct me if I’m wrong. Paul Horne, our EVP of Operations is sitting next to me. We have about 170,000 barrels that’s just part of our day-to-day business. And it’s important we don’t see any relief or ability to draw that down. The good news is we’re not to rent – we’re not renting any frac tanks.

Paul Horne

No.

Steve Pruett

That’s not something we like to do. So, it’s just a status of the business that trucking firms, purchasers are keeping up with our production that’s the good news. But we don’t see any benefit coming down the road from being able to draw those down to lower levels. And that equate to about 100 barrels to 110 barrels per stock tank and it’s not an unreasonable level. So, it’s just a way of life for us now. So, no benefit in Q2 and don’t project any benefit from inventory or tank reductions or tank volume reductions and Q3. And let’s state that our business is growing so that what we have in stock is going to grow as we continue to acquire and drill new wells.

Kevin Smith – Raymond James

Got you. Thanks for the clarification. I heard some operators complain about the heat out in West Texas as far as limiting and compression and taking some of your gathering systems offline. Are you seeing any of that?

Cary Brown

We haven’t had any gathering system issues, but because we’re primarily an oil company and don’t have a lot of gas gathering systems. We really have not been negatively impacted by the one acquisition that we made in May is thus far a most significant gas gathering system. And we really haven’t experienced those problems of any significance or materiality.

Kevin Smith – Raymond James

Got you. Great and then last question. Cary, you mentioned a steady flow of non-op opportunities, plus all the acquisitions you've made. Are you guys expecting to increase CapEx or make any changes on it?

Cary Brown

We haven’t talked to the Board about an increase. So, I’d say that I wouldn’t be surprised if we increase, but we have not decided to increase yet.

Kevin Smith – Raymond James

Okay. Thank you very much, gentlemen.

Steve Pruett

Thank you, Kevin.

Operator

Thank you, sir. And our next question comes from the line of Michael Blum from Wells Fargo.

Michael Blum – Wells Fargo

Hi. Good morning, guys.

Steve Pruett

Good morning Michael. Thanks for joining us.

Michael Blum – Wells Fargo

You bet. Just really one big-picture question from me, can you just kind of give us – paint us a landscape of what the acquisition market looks like today? Obviously, there is a lot of people chasing oil properties, how does that look versus gas? What areas, size of deals? Just some more color around what the activity level looks like?

Kyle McGraw

Okay, Michael this is Kyle McGraw EVP of Business Development. I would say that the acquisition market we’ve been very busy as Cary talked about $93 million having been closed, 17 transactions. You can do the math those are the smaller-type deals. We have been evaluating recently large deals there are some of them out there. Gas, I’d say I’m reading more just like you’re reading and it seems to be becoming more in favorite just because the feeling that it’s – you’re kind of cyclical and we’re cash down, now it’s a good time to buy. We’re very – again we’re very pleased with what we did early this year on that transaction and are very open to other similar transactions yet we very much enjoy our early base. So, I’d say it looks like to me the marketing firms are very active there are more deals in the pipeline coming. It feels like a higher level of activity in 2011 than in 2010 I mean from the overall acquisition market.

Cary Brown

They are expensive but they’ve always been expensive. We got a good base in Wyoming to throw around. We’ve got some good base in the Panhandle to go around and then of course the Permian base to go around. So, we have plenty activity to look at and I think we’ll get our first share of the acquisitions. We’ve actually noticed some larger acquisitions. Got a phase change (ph) kind of acquisitions those are kind of interesting. Don’t know if we’ll trigger on any of those. But real good deal flow and still a lot of money out there to chase them but like we’ll get our first share.

Steve Pruett

To be clear we are bidding, we’re very active on multi-hundred million dollar opportunities and remains to be seen whether we can land any of those. But we’re very pleased with our $66 million natural gas acquisition. And we’ve a great combination of both negotiated deal flow that’s north of $10 million per opportunity along with some of the competitive processes, some of which are rifle-shot processes. To our surprise, they’re self managed – north of $50 million. So, it’s a good mix and our Kyle’s acquisition team along with Kyle are extremely busy.

Cary Brown

It is nice to think that with the capital programs that we have out there right now looks like we can grow without having to make acquisitions. That’s a nice place to be. So, we’re not if we don’t like we have to do an acquisition to continue to move the company forward, but that’s what we do and we’re still on the game and you’ll see us stay disciplined but are very active in that front.

Michael Blum – Wells Fargo

Great. I really appreciate that. One follow-up is you've seen kind of Cary over the last two years the acquisition multiples or valuations for deals has sort of crept up over time. Would you expect that to continue as we move forward, or do you think we've kind of peaked in terms of valuation metrics as a whole?

Cary Brown

Some of that is driven by the shape of the curve, so as you see this curve flat you’re not going to see those multiples start coming back in. If you see the curve significantly backward-dated we’re going up. If you’ve got $80 oil in the front, $100 oil in the back you’re going to see multiples go up, if you have the converse of that you’re going to see multiples go down.

Michael Blum – Wells Fargo

Okay, great. Thank you very much, guys.

Steve Pruett

Thank you, Michael.

Operator

Than you sir. (Operator Instructions) Our next question comes from the line of Ethan Bellamy from Robert W. Baird.

Ethan Bellamy – Robert W. Baird

Hello, gentlemen.

Steve Pruett

Hi Ethan.

Ethan Bellamy – Robert W. Baird

Could you please update us on the non-op Granite Wash wells? Have those come on and impacted production or will they? And is that post-production or will it increase average kind of base decline rates?

Steve Pruett

No, it’s we do have all three I should say Lynn (ph) has all three of those wells online and they are pretty stable. Frankly, the IP at this point is not anything like the six or now seven poster child wells that have been advertised in terms of IPs.

Ethan Bellamy – Robert W. Baird

What were they?

Steve Pruett

Sales rates were and all I can tell you is what the stabilized sales rates are with what we have in cash to pay our unit holders, and it’s around your growth rate is around 5.3 million a day and 500 barrels a day. We’re – the good news is they’re making more oil in those three wells, nice growth. They’re making more oil – it’s oil rates actually come up slightly and sounds very encouraging. Gas rate is pretty stable. So, it’s not like you would have expected I would have expected, Ethan they come on at 20 million a day and they are down at 4 million a day three months later and making a couple of 100 barrels a day of peak. We’re really encouraged by the oil rates and we’re hopeful - rate of return is all going to depend on the decline rate and thus far there is no decline established in fact it’s just inclining as these wells clean out.

So, the behavior of these wells appears to be different from other wells that we’ve seen in the area. And at this point it’s the only exposure we have there may be a location or two to drill later but hopefully Lynn is going to watch these wells for a while before they do anything else that would expose legacy capital. So, it looks like based on their stabilized rates we’re going to earn a rate of return but it’s certainly not the headline grabber like the wells that they have published on. And I read someone’s report, it might have been yours that there is some head scratching on an announcement of another 25 million a day IP, but we do the math on their average rate. Average rates are whole lot lower than that, that’s a good observation.

Ethan Bellamy – Robert W. Baird

What were the IPs, can you tells us?

Steve Pruett

I don’t even – the IPs are – I haven’t seen the completion report. Maybe they’re keeping it tight. So, I don’t know what the official IP would be, but it’s lower than I’m telling you now in combination.

Ethan Bellamy – Robert W. Baird

Okay. So that was -- so those stats you gave us were combined, not on an individual basis?

Steve Pruett

Those are three combined wells and our net exposure there is about 2.7 million and we’ve about 0.75% interest. You can do the math on that a little over 100 Boe per day, predominantly oil and liquids rich. Let’s say – yes 7.5% NRI, yeah 10% working, and 7.5% NRI. So, it’s 100 barrels a day and that’s about 26,102 barrels of oil equivalent a day, it’s about 26,000 barrels net Boe per day of liquids rich products. So, if it hangs in there it does not look that bad at this point.

Cary Brown

It should be a positive rate of return. Ethan it should be a good project. Don’t know that it will not be as good as our Wolfberry project, but I don’t think we destroyed any capital.

Ethan Bellamy – Robert W. Baird

Yes. Remind me, what county were those in, Steve, please?

Steve Pruett

(indiscernible) County.

Ethan Bellamy – Robert W. Baird

Okay.

Steve Pruett

And it’s very closer to Thomas wells and I don’t have the numbers on top of my head, but our data is I mean we’re looking at three data and of curse we have to call because we don’t have much in there. So that’s right, we maybe as well as that are nearly as good as the rest in play, certainly the IPs aren’t good. And the problem they have related to water loading and gas lift, two out of three wells to unload them and it’s just been an operational mechanical challenge. Good news is they drove them near or at or near or below AOE (ph) cost so that’s positive. So it's a wait-and-see at this point, but they are contributing and then contributed starting in about little bit in April, mostly in May for quart. So we’ll have full quarter contribution is coming this Q3.

Ethan Bellamy – Robert W. Baird

All right. Well, let's turn and focus on your good results. What's your Wolfberry type curve look like and what do you expect for EURs in Wolfberry?

Cary Brown

I'll make a stab at that. We typically anticipate wells to come in and RP in 120 Boe per day range most of are economics and what we have in our reserve look for is in the 120,000 Boe per day range for – 120 Boes per king production. You get a pretty high decline rate early and it’s very high results in nature and in flattening out and we feel very pleased we’ve been seeing additional rates averaging higher than our anticipated economics we’re drilling in a very good area right now, the rig is in what we believe these are the best acreage we have in place on our 34 lease and we drilled about half of the drills we found – we drilled only in fact the rigs back in now. We move it off and drilled Wolfberry wells in another areas we move the fast and are drilling several wells that filed against – but we where we moved into those areas those are performing nicely and the averages are at least early results better than anticipated and we’re not seeing alarming in decline rates that we suggest that wells are not going – few better than anticipated even so, we’re feeling real good about that.

Ethan Bellamy – Robert W. Baird

Are those 24-hour or 30-day IPs?

Cary Brown

Anticipated rates that I gave you are 30 day IPs.

Ethan Bellamy – Robert W. Baird

Okay, great. Thank you. Just one other question, with respect to the Permian gas acquisition, is that a normalized production rate or is that slightly lower based on first-quarter weather?

Cary Brown

I am not sure, gas acquisition, we didn’t come until May. So we didn’t have the first quarter issues, we had a couple of months, if we closed in May and we had the balance of May and June contributing for the second quarter.

Ethan Bellamy – Robert W. Baird

Okay. And then one last question and I’ll let some other people talk. Cary, you mentioned the low decline rate on the assets, which is why I'll ask Steve what the actual decline rate is because I'll know you'll give me a huge range so it won't do us much good?

Steve Pruett

I haven’t calculated that on our internal reserve report and it’d be long for me to quote that’s from our internal reserve report. I’d have to stick and keep and be boring and stick to the report that published as part of our 10K and it was in the range of 7% to 8% on PDP declines. So there is no doubt that overall decline rate PDP is going to change as we drill more and more Wolfberry, but like those Granite Wash wells at least in the power 34, we’re seeing oil production continue to decline as gas production continues to decline slightly further reserve what we’ve seen before you see, overtime gas rate and GOR going up on Wolfberry well and oil rates coming down.

This is – reverse situation of the gap that’s creating back pressure crowding out the oil and it’s gas charged decline a little bit, we had power lease making over 5 million a day and that settled down a little over 2 million wet gas $7 to $8 unanimous, pretty sweep but what better now, that oil is coming up as that back. And we saw, we solved all the back pressure problems yet, they are related to gas prices and having them take away capacity for I mean we take the gas away from results, then take gas for installing pressure. That's a long-winded way of saying that the performance of our wells is not steep hyperbolic yet, but that means we're also not realizing full capacity of the oil wells and that’s good news. We don’t see any closed out there, we don’t see – with the continuous drilling program, we don’t see the Legacy’s got the risk of base production decline or some kind of cliffs out there because we’ve got to deepen up them and to manufacture these all wells and staying that gain continuously.

And hopefully over time is our EBITDA base growth, our CapEx will grow proportionately, not hopefully. That is the game plan after way we behave except for 2009 and that’s going to continue give us more absolutely organic growth opportunities.

Cary Brown

But even I don’t think 30% of EBITDA dramatically impact your base decline.

Ethan Bellamy – Robert W. Baird

Thanks, guys. I appreciate it.

Steve Pruett

Thank you, Ethan. Good questions.

Operator

Thank you, sir. (Operator Instructions) And I see no further questions in queue at this time, I’d like to turn the conference back to Mr. Brown and Mr. Pruett for any final remarks.

Steve Pruett – President and Chief Financial Officer

Horne, wants to address a question that was very big in.Q1 and that’s related to lease operating expenses.

Paul Horne – Executive Vice President, Operations

I heard both Cary and Steve say that the acquisition of gas deal we brought in May impacted our lifting costs which we didn’t – some calculations without the acquisition of those gas reserves, our lifting gas will be gone from 2103 in Q1. So that 1845 in Q2 which would be about 13% decrease in lifting cost so that was on our based assets. And then the acquisition of that gas and took it from 18.5 down to the 17.25. So, we had a very good decline in not only lifting costs, but a slight decline in LOE as well and that’s driven by two things. That’s driven by the expenses, but obviously driven by the barrels produced and that was very good results that we’re very pleased with.

Steve Pruett – President and Chief Financial Officer

Paul thanks for elaborating that and for doing the good algebra. Well thank you for joining us today. Cary do you have any closing…

Cary Brown – Chairman and Chief Executive Officer

Yeah, I’d just say appreciate you guys. Looks like the last few weeks we’re kind of settling into a headwind on the market’s perspective, but we’ve got good hedges in place that protect us against downward prices and we’re in a great spot to grow from and take advantage of any weakness in price if we did some sellers that are ready to take that price. So, I’d say that broad markets are not looking at the details of what’s actually in that company right now because we’re in a stronger position as we’ve ever been to grow and I’d say from I’m pleased with where and sure pleased what the employees have done. So, I appreciate unit holders hanging with us.

Steve Pruett – President and Chief Financial Officer

The only thing that’s displeasing is our unit price performance, but our peers look to be in the same boat. It is disheartening to increase distributions by a $0.01 this quarter almost 2% and to report very strong record quarter for us share faced – our units faced the headwind. But again that’s a macro we can’t control that. So, in the meantime we’re going to keep our heads down and keep executing, keep acquiring and with Kyle’s efforts on that side and Paul and his team on the development side and with Bill Morris and his team on the administrative side. We’re hitting on all cylinders. So, again thanks for your time this morning.

Operator

Thank you. Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program and you may now disconnect. Everyone have a good day.

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