Quicksilver Resources, Inc. Q3 2007 Earnings Call Transcript

Nov. 7.07 | About: Quicksilver Resources (KWK)

Quicksilver Resources, Inc. (NYSE:KWK)

Q3 2007 Earnings Call

November 6, 2007, 2:00 PM ET

Executives

Richard C. Buterbaugh - VP, IR and Corporate Planning

Glenn Darden - President and CEO

Philip W. Cook - Sr. VP and CFO

Analysts

Subash Chandra - Jefferies & Company Inc.

David Kistler - Simmons & Company

Ellen K. Hannan - Bear Stearns

David Tameron - Wachovia

Noel Parks - Ladenburg Thalmann

Jack N. Aydin - KeyBanc Capital Markets

David Snow - Energy Equities, Inc.

Marshall Carver - Pickering Energy Partners

Irene Haas - Canaccord Adams

Richard Tullis - Capital One Southcoast, Inc.

Scott Hanold - RBC Capital Markets

Jeffrey Hayden - Pritchard Capital Partners, LLC

Sunil Jagwani - Carlson Capital, L.P.

Operator

Good afternoon. My name is Crystelle and I will be your conference operator today. At this time, I would like to welcome everyone to the Quicksilver Resources Third Quarter 2007 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. [Operator Instructions]. Thank you. Mr. Buterbaugh, you may begin your conference.

Richard C. Buterbaugh - Vice President, Investor Relations and Corporate Planning

Thank you Crystelle and good afternoon. Joining me today are Glenn Darden, President and Chief Executive Officer; Toby Darden, Chairman; Phil Cook, Senior Vice President and Chief Financial Officer and John Regan, Vice President, Controller and Chief Accounting Officer.

This morning the company issued a press release detailing Quicksilver's record results for the third quarter of 2007. If you do not have a copy of the release, you can retrieve a copy on the company's website at www.qrinc.com.

Please keep in mind that during today's call, the company will be making forward-looking statements which are subject to risk and uncertainties. Actual results might differ materially from those projected in these forward-looking statements. Additional information concerning risk factors that could cause such differences is detailed in the company's filings with the SEC.

Today's presentation will include information regarding adjusted net income and adjusted EBITDA, non-GAAP financial measures. As required by SEC rules, a reconciliation to the most directly comparable GAAP measures are available on our website under the Investor Relations tab.

For the third quarter of 2007, the company reported adjusted net income of $32.2 million or $0.39 per diluted share. Diluted earnings per share increased 39% from the prior year quarter and were up $0.01 per share from the second quarter of 2007. These improved results reflect the continued successful execution of our development program in the Fort Worth Basin Barnett Shale, which resulted in materially increased volumes of natural gas and natural gas liquids. Total volumes were a record 238 million cubic feet of gas equivalents per day average for the third quarter, exceeding the upper end of our increased guidance range.

Total volumes were up 36% from the prior year quarter and up 14% sequentially from the second quarter level.

Now I will turn the call over to Glenn Darden for some added color on these record operating results.

Glenn Darden - President and Chief Executive Officer

Thank you, Rick. This has been a very productive quarter for Quicksilver from many standpoints. As Rick said in the introduction, our production volumes hit record numbers, 36% higher than the same period last year and our adjusted net income increased 39% over that same timeframe. We generated $100 million of operating cash flow in the quarter, and that's the first time in our company history.

Quicksilver also significantly strengthened its capital structure primarily through two transactions: the first, the completed initial public offering of our midstream entity, Quicksilver Gas Services, KGS, as we refer to it, which raised approximately $100 million for the parent and a second transaction, the announced divestment of our Michigan, Indiana and Kentucky producing properties to BreitBurn Energy. That transaction closed last week for nearly $1.5 billion in cash and BreitBurn units. The culmination of these transactions not only brought in over $800 million in cash but also provided our shareholders two additional growth opportunities through two new entities. In the case of KGS, Quicksilver retained a 73% interest and with BreitBurn, Quicksilver retained 32% of limited partnership units.

On the operational side, we have been very busy. Quicksilver drilled 68 Barnett wells in the Fort Worth Basin and connected 61 into sales. On the Canadian side, we drilled 96 Horseshoe Canyon coal wells connecting 56. In the Barnett specifically, company volumes were up 150% year-over-year and 32% sequentially. Yield on processing this liquids-rich gas increased to over 115 barrels of natural gas liquids per million cubic feet of gas. The NGL production is up three-fold for the year at 38% sequentially.

As we said in this morning's press release, Quicksilver expects to exceed our initial forecast of 25% growth in total production for 2007 despite the divestment of approximately 75 million cubic feet equivalent per day from our properties in Michigan, Indiana and Kentucky. All of this growth has come from internally generated drilling projects and not one mcf has come from acquisitions. Quicksilver Canada is on track to grow production volumes 10% this year, primarily through our Horseshoe Canyon CBM development. The team continues to work on the Manville coals as well and have drilled five wells in the quarter which we are now testing. We are currently producing over 16 million cubic feet a day on a net basis from the Canadian operation.

In West Texas, the company's Delaware Basin Barnett Shale project, we have now drilled a total of six wells to date: three horizontal and three verticals, of which one is a salt water disposal well. We are currently in various stages of completion and flow back and will be connected to a sales line by year end for more extended production testing. We probably will not have results to talk about before mid next year, but are encouraged by our early work and results.

We do have one more project we haven't talked about, and that is the Lake Arlington Barnett Shale drilling. As you may recall, this is a 5000-acre contiguous acre project that Quicksilver teamed up with Marshall R. Young Company. Quicksilver has a 75% working interest in this area essentially in East Fort Worth in Tarrant County. Quicksilver has drilled 7 wells to date and has 2 drilling rigs currently working in the area. The Lake Arlington project is in an area of dry gas and these volumes will not be connected to our processing facilities, but rather directly into our own gathering system and then into sales. We brought the first 5 wells online two weeks ago at a combined rate exceeding 30 million cubic feet a day. Those 5 wells are currently producing over 25 million cubic feet a day. The seismic analysis indicates a fairly consistent thickness of shale across the block in a relatively quiet geologic setting. We believe this area will generate over 5 Bcf per well in reserves and the project's total recovery may be significantly higher than our previous projections. It is early in this project, but production data from both our wells and wells offsetting the block indicate we are at a very attractive area.

Quicksilver's Barnett team has continued to work on down spacing on the drilling side in the field. At the end of last year, the company had not booked reserves on spacing inside of 1000 feet between wells. In 2007, most of our drilling has been on 500 feet between wells and we are now testing a few wells on 250 feet between wells. Our engineers are confident that the 500 feet between well spacing is working well, and early results on the 250 feet spacing look promising, but we need more production history before deciding that that is the way to go. Quicksilver has developed approximately 10% of our Barnett acreage to date. So this testing is very important for the overall development plan.

All parts of the Quicksilver team are pushing this company forward. We have layered two major transactions on top of an accelerated drilling program, a plant and pipeline operation and new ventures in the U.S. and Canada and haven't missed a step. I can't thank our employees enough for the outstanding job they have done.

Our mission remains the same: To have Quicksilver resources be a leader in our unconventional gas development with industry leading organic growth at the lowest cost, and this plan is working.

And now I would like to turn the call over to Phil Cook, our CFO to discuss the financials. Phil?

Philip W. Cook - Senior Vice President and Chief Financial Officer

Thank you, Glenn and good afternoon. I will jump right into the numbers. Production volumes grew from 175 million cubic feet a day in the third quarter of 2006 to 238 million cubic feet a day in the current quarter, a 36% increase year-over-year.

For the nine months ended September 30, average production volumes grew 28% when compared to the year ago nine months. And sequentially, daily production volume grew 14% compared to the second quarter of this year.

Total revenues for the third quarter were approximately $159 million, an increase of more than 60% from the prior year quarter to approximately $99 million. Roughly two-thirds of that increase is due to volume growth with the remaining one-third related to increased commodity price realizations and increased third party revenue from KGS gas... from the KGS gas system in Texas. For the nine months ended September 30, total revenues grew from $288.3 million in 2006 to $412.2 million in the 2007 period, a 43% increase, 70% of which is due to increased production volume. Sequentially, oil and gas revenues grew by 13%.

Realized natural gas price for the quarter was $6.63 compared to $5.73 last year. For the nine months ended September 30, gas price realizations were $6.77 compared to $6 and a nickel in the previous nine month period. Natural gas liquids realized prices were $41.82 in the current quarter compared to $41.92 in the year ago quarter, roughly flat. However, for the nine months ended September 30, liquid prices are down from $41.51 in the 2006 quarter to $39.88 in the current quarter, a 4% decline. Realized oil prices were down about $1.78 a barrel for the nine month period from $61.84 a barrel in the 2006 period to $60.06 a barrel in 2007, a 3% decline.

For the quarter, the company generated $97.5 million of adjusted EBITDA as compared with $65.6 million in the previous year quarter, a 49% increase.

Net income for the quarter, as Rick said, was $28.7 million or $0.35 per diluted share as compared to net income of $22.9 million and $0.28 of diluted share in the year ago quarter. Net income for the quarter was reduced by $0.04 per share for net charges related to the divestiture of the Michigan, Indiana and Kentucky assets. The expenses were for severance benefits paid to employees and other divestment expenses, offset by some hedging gains of approximately $0.02 a share which had to be marked to market because of the divestiture. Therefore, net income adjusted for these items would have been $0.39 per diluted share, a 39% increase year-over-year for the quarter. Net income for the nine month period ended September 30 was $83.3 million or $0.01 per diluted share compared to $74 million or $0.91 per diluted share in the year ago period.

Again, in the nine months ended 2007, we had net charges of approximately $0.04 per share related to the divestiture of Michigan, Indiana and Kentucky. So on an adjusted basis, earnings would have been $1.05, a 15% increase year-over-year for the nine months.

Total operating expenses for the quarter excluding DD&A were $63.8 million as compared to $35.6 million in the prior year quarter and $46.8 million in the second quarter of 2000. The sequential increase of $16.9 million includes approximately $7.4 million of costs related to the divestiture of the Michigan assets. These expenses, as I said, were severance benefits for our employees in the filed in Michigan, Indiana, Kentucky as well as deal-related expenses. Approximately $5.4 million of these expenses are in LOE and approximately $2 million are in G&A. The remaining increase of $9.5 million was related to increasing operations in Texas as well as seasonal increases in Canada and Michigan and LOE-related expenses.

Oil and gas production costs, which we commonly refer to as LOE, was $2.02 in Mcf for the third quarter as compared to $1.69 in the second quarter of 2007. As I just discussed, included in LOE is approximately $5.4 million of costs related to the divestiture of Michigan, Kentucky and Indiana. And with those costs excluded, LOE on a unit basis would have been $1.78 for the quarter, a 5% increase quarter-over-quarter, primarily, as I said, related to seasonal activity post break up in Michigan and Canada.

Production taxes were $0.20 on an Mcfe basis as compared with $0.22 in the second quarter of '07. The decrease in production taxes is related to more Texas production on a percentage basis which has a lower production tax rate.

A little more focus on some detail in Texas operations, which is now our largest operating area. Our unit operating cost in Texas including taxes for the quarter are $1.66 as compared to the year ago quarter of $1.81. For the nine months ended September 30, our unit operating costs were $1.72. As we continue to grow our Texas production and gain efficiencies in our cryogenic facility, we are reducing our unit base costs. Our cash operating margin based on current prices continue to be far in excess of 50% across the company.

The DD&A run rate for the quarter was $1.47 per unit, flat with the $1.47 per unit reported in the second quarter. Our DD&A rate changes during the year as we add depreciable assets.

G&A was $0.56 on a unit basis excluding divestment expenses for the quarter as compared to $0.39 in the year ago quarter and $0.54 in the second quarter of this year. For the nine months ended, G&A is $0.56 on a unit basis, which includes approximately $0.11 of non-cash deferred equity compensation expenses related to LTI plans for all employees. Therefore, on a cash run rate basis, G&A is about $0.45.

Our headcount has increased by 20% year-over-year due to our increased capital program

and drilling activity.

During the nine months, we spent approximately $714 million of capital on a consolidated basis. Included in that amount was $576 million for exploration and development activities and $129 million on the midstream side of the business. Funding sources for this capital program consist of three components. Cash flow from operations was approximately $247 million along with IPO proceeds from the KGS offering of approximately $100 million and an increase in debt on our balance sheet of approximately $400 million. Our revolving credit facility at quarter end was approximately $820 million drawn on a borrowing base of $1.1 billion.

As you know, on November 1, we closed the sale our Michigan, Indiana and Kentucky assets with BreitBurn Energy. In the closing, we received $750 million in cash and 21,347, 922 units in BreitBurn Energy common units. We anticipate using the $750 million in cash to pay down debt and post close had net debt, that is debt less cash, of approximately $600 million. This translates to a total debt to total capital of approximately 36%. During the first quarter of 2008, we'll pay taxes on the cash portion of the transaction which will be approximately $50 million in alternative minimum tax. Thus, the net cash proceeds from the transaction is $700 million.

I expect debt to total capital to be at approximately 40% by year end and on a debt per proved Mcfe basis, I expect to be in the mid $0.50 range. Post-November 1, our borrowing base was reduced to $750 million of which we anticipate having drawn $100 million roughly at year-end 2007.

Now I will make a few comments regarding what to expect for the fourth quarter of '07. Production volumes for the fourth quarter should be in the range of 210 million to 220 million a day on a gas equivalent basis. Keep in mind that these volumes exclude Michigan, Indiana and Kentucky for November and December of this year. At the middle of the range, this guidance would result in equivalent production of 212 million cubic feet equivalent per day for the year, which equates to 26% year-over-year production growth rate even excluding Michigan, Indiana and Kentucky for the last two months of the year.

With respect to commodity prices, it should be noted that for the rest of the year, we have approximately 123 million a day of natural gas hedged with collars which have a weighted average floor of $8.15 per MMbtu and a weighted average ceiling of about $10.75 per MMbtu. These hedges are on approximately 80% of our expected gas production. For the remainder of the year, we have collars on 1000 barrels of oil with a floor of 65 and a ceiling of $81.95 and we have 3000 barrels a day of NGLs hedged with the swap that has an average swap price of $41.75 per barrel.

On the unit cost side, obviously unit costs are as much affected by volumes as they are absolute costs. With the volume expectations that we have given, the following run rate ranges should be expected for the fourth quarter. Again, keep in mind these ranges include the divested properties for the month of October. For LOE, LOE should be in the range of $1.45 to $1.55. That guidance is down $0.22 from the third quarter because of the divesture of the Michigan, Indiana and Kentucky assets. They will not be included obviously in our cost structure for November and December.

On the production tax side, they should range from $0.10 to $0.15. Again, production taxes in Texas are much lower than they were in Michigan, Indiana and Kentucky.

On the G&A side, G&A should be in the range of $0.55 to $0.60 on a unit basis and DD&A should be in the $1.45 to $1.50 range.

One last item that I would like to discuss is the accounting for the BreitBurn units that we are now holding. We will account for the units using the equity method of accounting, which means that our proportionate share of their income will be recorded by Quicksilver as other income as well as increasing our investment in BreitBurn on the balance sheet. Their cash distributions on the other hand will not be recorded as income but will be recorded as reduction in our investment in the units on the balance sheet. We expect cash distributions to be approximately $9.5 million in 2007 and approximately $50 million in 2008. We also expect to get an approximate 80% share [ph] on those distributions for tax purposes.

And now I will turn the call back over to Rick.

Richard C. Buterbaugh - Vice President, Investor Relations and Corporate Planning

Thank you, Phil. Operator, at this time I would like to open the call to any questions.

Question And Answer

Operator

Thank you. [Operator Instructions]. Your first question comes from the line of Subash Chandra.

Subash Chandra - Jefferies & Company Inc.

Yes, good afternoon. A couple of questions on Lake Arlington. I think you talked... Glenn you talked about previous projections, was that the pre-Bcfe I think you talked about before as pro-well reserves?

Glenn Darden - President and Chief Executive Officer

Yes.

Subash Chandra - Jefferies & Company Inc.

Okay. So it is a 5 versus a 3. And is there some targeted spacing you are shooting for and what have you sort of done so far?

Glenn Darden - President and Chief Executive Officer

We are working on that Subash and we have drilled... most of these wells so far are 500 feet between. One of the test wells that we drilled is 250 feet between wells out there.

Subash Chandra - Jefferies & Company Inc.

Okay. And for the CapEx number for Q4, are we still talking about a little over $300 million?

Philip W. Cook - Senior Vice President and Chief Financial Officer

No, it's not that high.

Unidentified Company Representative

No, it's not that high, Subash.

Philip W. Cook - Senior Vice President and Chief Financial Officer

We are looking at our numbers right now.

Subash Chandra - Jefferies & Company Inc.

Okay.

Philip W. Cook - Senior Vice President and Chief Financial Officer

I think it's about $230 million to $250 million.

Subash Chandra - Jefferies & Company Inc.

$230 million to $250 million, got it. Okay. Now West Texas, I guess, if you wanted to ramp up in '08 or '09 or what have you, I guess where does that financial capacity come from or second, does it make any sense to sort of partner up out there and to find a way to accelerate development through a partnership or joint venture?

Glenn Darden - President and Chief Executive Officer

Well at this point, Subash, we don't think it makes sense to team up because we don't really know what we have. And so we are going to be conducting tests similar to what we have done in Michigan, Canada and the Fort Worth Basin on how to drill these wells the proper way and frac them the right way, what spacing, those kind of things. But at this point, we don't have an economic project there. We have always found that holding on to more of the ownership in the beginning is in the better path to follow. So it's a bit early and it's a bit early to talk about financing that project, but obviously we have done some things to put this company in much better financial shape to be able to handle a new project.

Subash Chandra - Jefferies & Company Inc.

Okay.

Philip W. Cook - Senior Vice President and Chief Financial Officer

Subash, this is Phil. Let me just clean up a little bit. Capital for the fourth quarter is $200 million, and that's all in, that includes pipe as well as E&P capital.

Subash Chandra - Jefferies & Company Inc.

Okay. Great, thank you. And one final one here in [indiscernible], I think Glenn you said previously that you expect it to recover all the reserves that you sold out of Michigan, Kentucky, Indiana to mid '08, that's still the projection or do you think you can do it quicker?

Glenn Darden - President and Chief Executive Officer

Well, very comfortable with the earlier statement, and it may come in a little bit faster. But we are going to replace those reserves fairly quickly.

Subash Chandra - Jefferies & Company Inc.

Okay. Thanks a lot.

Glenn Darden - President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of David Kistler.

David Kistler - Simmons & Company

Good afternoon.

Glenn Darden - President and Chief Executive Officer

Good afternoon.

David Kistler - Simmons & Company

A quick question with respect to Barnett. When we start thinking about CapEx for this next quarter and going forward, can you give us a sense for how much of that will be allocated or kind of on a percentage bases to kind of Eraf [ph], Boske [ph], Summerville counties?

Glenn Darden - President and Chief Executive Officer

Well, first of all, I wouldn't put Summerville in the same category as Eraf and Boske.

David Kistler - Simmons & Company

Okay.

Glenn Darden - President and Chief Executive Officer

Summerville, we are drilling... that's in our... what we see is our core area and it's defined... we have a map posted on our website in that kind of 2.5 Bcf equivalent range. The Boske and Eraf are a bit of different category in that we haven't seen the consistency of results and in fact we are not really counting on those in our growth projections at this point. We are certainly not giving up on those areas and we have seen some encouraging signs in a couple of different areas, particularly Northern Boske we feel much better about. But when you get down in Central Boske and over into Eraf, it gets a little bit less consistent, I will put it that way.

David Kistler - Simmons & Company

Okay. Switching over to Canada, in the past you guys mentioned and have delivered on living within cash flow in Canada. Will that kind of continue going through 2008? And then if you can kind of give us some of your thoughts, I know it's early in the game, on the Alberta royalty situation up there?

Glenn Darden - President and Chief Executive Officer

Sure. We are going to continue our strategy of Canadian, or Canadians living on its own cash flow. They've done a great job this year. They're are going to grow production 10 plus percent, and we think we can do that. Same thing... the same cash flow next year and grow at a similar number. As far as the royalty side, our analysis at this point on the Alberta royalty issues, our royalty actually goes down a bit. So it improves our economics a bit, simply because these are kind of lower rate shallow gas wells in Albert and they are not being penalized. So that was kind of good news for us coming out, and that, percentage wise, it may drop our royalty 20% or so, something like that.

David Kistler - Simmons & Company

That's great. And then last question in Canada service cost environment, if that kind of continues to abate or do you actually use the capital benefit there to accelerate any of the drilling you are doing up there?

Glenn Darden - President and Chief Executive Officer

Well, not to exceed our cash flow, but we've got a couple of projects that we're working on. Obviously, spoke about the Manville and we still haven't made a final decision there. We have some more work to do, but we have a team up there that's very talented and we are pushing them to look for other opportunities. As you alluded to, the service side has improved a bit from a cost perspective and we may be able to take advantage on some things. We are trying to see if there are other opportunities up there.

David Kistler - Simmons & Company

Great. Thanks so much guys.

Glenn Darden - President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Ellen Hannan.

Ellen K. Hannan - Bear Stearns

Thank you. Just a couple of follow ups. Glenn, in Lake Arlington, how many rigs do you plan to keep running in that area next year?

Glenn Darden - President and Chief Executive Officer

We are working on that right now, Ellen. We have got two right now and it may go up to four over time. We are in great shape from a lease perspective. We are... the biggest thing as I said in the prepared remarks early was we've got to make sure we are drilling on the proper spacing. We are really looking at obviously maximizing all of these projects and Lake Arlington looks to be about our best individual project certainly from a per well reserve side.

Ellen K. Hannan - Bear Stearns

Any comments on what the drilling complete costs on these wells are?

Glenn Darden - President and Chief Executive Officer

These wells are more expensive. We drill longer laterals, we've given more frac. We have a thicker section of Barnett there. We have viola underneath us, so we are able to blast away a bit more with the fracs. So they are costing us a bit more, but it's certainly proving to be well worth it.

Ellen K. Hannan - Bear Stearns

And just one other... one follow up on one of Phil's comments on your AMP, will you accrue for that in the fourth quarter or is that an '08 event Phil?

Philip W. Cook - Senior Vice President and Chief Financial Officer

Yes. We'll accrue for it, but we'll pay it in the first quarter of '08.

Ellen K. Hannan - Bear Stearns

But we'll see it in your tax rate in the fourth quarter effectively?

Philip W. Cook - Senior Vice President and Chief Financial Officer

Correct.

Ellen K. Hannan - Bear Stearns

Okay. Thank you very much. That's it from me.

Glenn Darden - President and Chief Executive Officer

Thanks Ellen.

Operator

Your next question comes from the line of David Tameron.

David Tameron - Wachovia

Hi, congratulations on a great quarter.

Glenn Darden - President and Chief Executive Officer

Thank you.

David Tameron - Wachovia

A couple of questions. Phil, the $750 million cash, what was your net after-tax amount that you are going to be taking in house?

Philip W. Cook - Senior Vice President and Chief Financial Officer

$700 million.

David Tameron - Wachovia

$700 million.

Philip W. Cook - Senior Vice President and Chief Financial Officer

We'll pay $50 million in alternative minimum tax in the first quarter of 2008.

David Tameron - Wachovia

Okay. And so you're net-net through balance to your cash statement is going to be $700 million?

Philip W. Cook - Senior Vice President and Chief Financial Officer

Yes.

David Tameron - Wachovia

All right. Thanks. And then a quick question on the Barnett, the EURs with the liquid, in your recent presentation you are saying 3.5bs per barrel when you grow sort of liquids. How prevalent is liquids across your acreage position?

Glenn Darden - President and Chief Executive Officer

That's very consistent down the Hood Summerville corridor over into the Western portion of Johnson County. Where it gets dry as you bend around into Hill County. We look at most of our acreage position in Hill County is going to be dry gas it appears, and or Lake Arlington project is dry gas as well.

David Tameron - Wachovia

Okay. All right, fair enough. And then finally your 2007 program thus far, the 50 acre spacing, what type of... how many wells have been drilled up on 50-acre spacing and what percentage of your '07 plan is on those levels, what percentage of your '08 plan do you expect to be on those levels?

Glenn Darden - President and Chief Executive Officer

Well of course, the acreage, the area is defined by the length of the lateral. So our engineers always slap my hand and say we are 500 foot spacing, we having feet between wells. But roughly that could be 55 acres or so with the length with about a 3000 foot lateral. So almost all of our wells in '07 have been drilled on that tighter spacing, the 500 feet between wells. We are starting to experiment with some wells inside of that spacing, as I talked about, but that's pretty early right now, but early indicators are promising.

David Tameron - Wachovia

All right. I'll let somebody else jump on. I'll jump back in the queue. Thanks.

Glenn Darden - President and Chief Executive Officer

Thank you, Dave.

Operator

Your next question comes from the line of Noel Park.

Noel Parks - Ladenburg Thalmann

Hello.

Glenn Darden - President and Chief Executive Officer

Hey Noel.

Noel Parks - Ladenburg Thalmann

I just had a few questions. I was curious, what are you seeing in decline pattern, especially as you drill more in some of the more recent parts of your acreage? I was wondering are there been any changes to the curves you were looking at earlier in the year in any particular areas of your acreage?

Glenn Darden - President and Chief Executive Officer

We really haven't seen any differences even going from 1000 feet between wells to 500 feet. Now as I said earlier, we didn't book any reserves at the end of '06 on inside of 1000 feet between wells. It certainly looks like we are going to be booking a fair bit of reserves on that 500 feet between well. But at this point, are we cannibalizing from well to well? It doesn't appear so, but we'll let the outside engineers tell us that one.

Noel Parks - Ladenburg Thalmann

Okay.

Glenn Darden - President and Chief Executive Officer

And as far as the decline curve, we are not seeing any material differences in the decline.

Noel Parks - Ladenburg Thalmann

Okay. So consistent with the sorts of curves you we were showing, let's say, at the Analyst's Day earlier in the year?

Glenn Darden - President and Chief Executive Officer

Yes.

Noel Parks - Ladenburg Thalmann

Great.

Glenn Darden - President and Chief Executive Officer

One exception would be perhaps a little higher liquids yield.

Noel Parks - Ladenburg Thalmann

All right, as you report I guess up to 115 now.

Glenn Darden - President and Chief Executive Officer

Right.

Noel Parks - Ladenburg Thalmann

Okay. And people have asked a little bit about Canada, but as you look forward and plan up there, certainly the royalty relief is great. What are you seeing for RORs up there given the shifts in service costs and pricing and so forth as you look at that versus the much higher RORs you have in the Barnett?

Philip W. Cook - Senior Vice President and Chief Financial Officer

Well, Noel, you hit the nail on the head, and that's why we are diverting capital from the U.S. to Canada. Our rate of return in Canada is on the order of 30% for new projects and in Texas we are in the 50 plus range, depending on which well we are talking about.

Noel Parks - Ladenburg Thalmann

And where was that Canada ROR say a year ago, and I think the pricing environment looked even a little bit more aggressive I remember?

Philip W. Cook - Senior Vice President and Chief Financial Officer

Yes, probably 27, something like that.

Noel Parks - Ladenburg Thalmann

Okay. So not that much?

Philip W. Cook - Senior Vice President and Chief Financial Officer

What happened in the fourth quarter of last year has a difficult time moving the needle when you've got 300 Bcf booked. So it did get kind of sloshy up there, but it didn't change our overall returns much.

Noel Parks - Ladenburg Thalmann

I see. And back to the Barnett --

Unidentified Company Representative

Excuse me, Noel, but that's looking at the project as a whole, our rate of return for the entire project.

Philip W. Cook - Senior Vice President and Chief Financial Officer

Right. That's right.

Noel Parks - Ladenburg Thalmann

Okay. And back to the Barnett, do have any updates on the Cowtown Plant and just where you are in that build out and volumes and throughput?

Glenn Darden - President and Chief Executive Officer

Yes, we are currently we have built our second plant. We are operating through that plant while we do make some modifications to the first plant, and that should be completed in the middle of November, but sometime soon in the next couple of weeks. And we have because of the ramp up in volumes and what we are seeing coming down the pipe, literally, where we have ordered a third plant with 125 million a day capacity, which would give us a total capacity in the Cowtown system of 325 million a day.

Noel Parks - Ladenburg Thalmann

And what's the rate right now that you are actually processing?

Glenn Darden - President and Chief Executive Officer

110 million a day.

Noel Parks - Ladenburg Thalmann

Okay. And then just lastly for Phil, the comment you made at the very end, there was something I sort of missed, you were talking about the income you expected from BreitBurn.

Philip W. Cook - Senior Vice President and Chief Financial Officer

Right.

Noel Parks - Ladenburg Thalmann

And I heard something around $50 million cash distribution expected in 2008.

Philip W. Cook - Senior Vice President and Chief Financial Officer

Yes.

Noel Parks - Ladenburg Thalmann

Was there a 2007 number as well?

Philip W. Cook - Senior Vice President and Chief Financial Officer

Yes. We'll get about $9.5 million in 2007.

Noel Parks - Ladenburg Thalmann

$9.5 million. Okay, great. That's all I have. Thanks.

Philip W. Cook - Senior Vice President and Chief Financial Officer

$9.5 million. I'm sorry.

Noel Parks - Ladenburg Thalmann

$9.5 million.

Philip W. Cook - Senior Vice President and Chief Financial Officer

Yes.

Noel Parks - Ladenburg Thalmann

That's all I had. Thanks.

Philip W. Cook - Senior Vice President and Chief Financial Officer

Thank you.

Operator

Your next question comes from the line of Jack Aydin.

Jack N. Aydin - KeyBanc Capital Markets

Hi guys. Looking at Lake Arlington, I know you indicating the EOR about 5 Bs. Did you change your resource potential from the previous presentation of 180 to 210 Bcf? What kind of resource potential now you're looking at?

Glenn Darden - President and Chief Executive Officer

Well it could be as much as double that, Jack at this point.

Jack N. Aydin - KeyBanc Capital Markets

Okay. Now also in the... did you indicate any... are you willing to talk about the CapEx for 2008?

Glenn Darden - President and Chief Executive Officer

Not yet. We are still grinding on that. We are in the budget process right now, but it... we are anticipating drilling a similar amount, number of wells in the Barnett at this point, but we are planting [ph] up those numbers now.

Jack N. Aydin - KeyBanc Capital Markets

Okay. And you mentioned that for the E&P side, the CapEx for this year was what, $574 million, is that what you said?

Philip W. Cook - Senior Vice President and Chief Financial Officer

Yes, through the third quarter.

Jack N. Aydin - KeyBanc Capital Markets

Through the third quarter, okay. Now if I look at your presentation and you think the finding and development cost was about $0.94, it looks like you might be able to replace your reserve, what you sold, by this year end, am I correct?

Glenn Darden - President and Chief Executive Officer

We are not projecting it. And actually Jack, we are not projecting $0.94 as an F&D; it's closer to $1.20 or so that we are looking at. But maybe a touch higher than that, but it's still going to be a very, very competitive rate. If you'll recall, we probably booked more... well, we did book more proved undeveloped locations just in the way we were drilling last year than we will this year. So, but overall, I think that we are among the best in the Barnett Play and industry certainly with our F&D cost. But I don't believe we'll be able to replace it quite by year end, but certainly in the first half of the year we'll have those reserves replaced.

Jack N. Aydin - KeyBanc Capital Markets

I assume you are going to book some more reserve... you book some reserve in Lake Arlington this year then based on the experience you are having in those 5, 6 wells?

Glenn Darden - President and Chief Executive Officer

Yes, I think we probably will with the engineers like run time and we've just put our first block of wells on two weeks ago. So I think with a couple of months of run time, we should be able to book some reserves there.

Jack N. Aydin - KeyBanc Capital Markets

Thank you.

Glenn Darden - President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of David Snow.

David Snow - Energy Equities, Inc.

Yes, I am wondering if we could get a little color on the fracing. Are you simul fracing or a stagger fracing where you bounce back and forth from one parallel horizontal to the other one or you are just putting each one on and then fracing the next one as the more conventional approach? I'm not sure what you're doing there.

Glenn Darden - President and Chief Executive Officer

We are... what's termed simul fracing. We are certainly flowing these wells back together.

David Snow - Energy Equities, Inc.

You are not bouncing back and forth fracing the end of one and then the toe of the other one and that type of thing?

Glenn Darden - President and Chief Executive Officer

Primarily, parallel wells and fracing them together.

David Snow - Energy Equities, Inc.

And was... has anybody yet experimented with two vertical wells for these thicker sections?

Glenn Darden - President and Chief Executive Officer

I'm sure companies have, we are not, we're drilling horizontal wells. We feel like it's the best way to approach it. Most of our acreage is in areas where we don't have the valve underneath us and the horizontal application seems to be the best way to approach it. We already --

[Multiple Speakers].

David Snow - Energy Equities, Inc.

Two parallel wells that are both horizontal, one above the other.

Glenn Darden - President and Chief Executive Officer

I think there are some players doing that, we have not done that yet.

David Snow - Energy Equities, Inc.

So you're thicker section at Lake Arlington?

Glenn Darden - President and Chief Executive Officer

We're looking at all of the data there, but at this point we haven't done that yet.

David Snow - Energy Equities, Inc.

What do you... you're tracking that whole interval over there with one horizontal? Going vertically from top to bottom of the section?

Glenn Darden - President and Chief Executive Officer

But we're not sure, but we're making some pretty good wells, so we're going to keep after it and I think the biggest question mark we have is how tightly we drill, how close we drill these horizontal wells, but we hear what you're saying, David, and other players are perhaps experimenting with it and we may do some out there as well.

David Snow - Energy Equities, Inc.

I knew they were going to, I didn't know if they'd actually gotten ramp to it yet, do you hear they have tried to do this?

Glenn Darden - President and Chief Executive Officer

I'm not sure in this area; I know its other parts of the play. There are couples of operators who've tried that but I'm not sure the results have been... well we just don't know the results, truly.

David Snow - Energy Equities, Inc.

Okay. Thank you very much.

Glenn Darden - President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Marshall Carver [Pickering Energy Partners].

Marshall Carver - Pickering Energy Partners

Yes, good afternoon. Just had a few quick questions to take through, one, the CapEx $286 million in the third quarter going to 200 in the fourth, where is the slowdown are you going to be drilling fewer wells, fewer net wells 3Q to 4Q?

Philip W. Cook - Senior Vice President and Chief Financial Officer

Well, let's put the slowdown in perspective. We are well ahead of the pace that we, the guidance that we gave in the beginning of the year, even midyear. So, one of the things we have seen, Marshall, is more efficiency with each rig, so I wouldn't just look at the dollars spent and the number of rigs. We are going to end up drilling 220 to 230 wells. So, I don't... I wouldn't read too much into that slowdown because nobody around here thinks we're slowing down. And remember... but I gave you is combined E&P and pipe.

Marshall Carver - Pickering Energy Partners

Right, okay. In terms of the production guide up for Q3 and Q4, do you all have a feel for how much of that is better well performance versus how much was the accelerated CapEx?

Glenn Darden - President and Chief Executive Officer

Well, a good bit of it is well performance because we are seeing better wells on average at closer spacing or at least the same wells, if not a little better. And certainly in the Lake Arlington area, we have seen better ones.

Marshall Carver - Pickering Energy Partners

Okay. Thank you. Lake Arlington well cost, where are those, do you think?

Glenn Darden - President and Chief Executive Officer

They are higher than our area; they could be size 4 million or so but again longer laterals more fracs, more stages but looks like it's worthwhile.

Marshall Carver - Pickering Energy Partners

Right, those are very good wells. In terms of... if you be adding a couple of rigs at Lake Arlington growing from two to four, would you be pulling those rigs from other areas in the Barnett or without be adding a couple of more rigs overall for the Barnett?

Philip W. Cook - Senior Vice President and Chief Financial Officer

I want to add, we are working on that budget right now, I would say we are going to be drilling with 13 to 15 rigs next year, just about the same pace as we are drilling this year. But if we move more to Lake Arlington, we've got some time commitments there, some drilling commitments but we are in very good shape there but the biggest thing is just an orderly development in every thing that we are doing. So, I think you can look at our rig fleet is expanding or contracting by two or three rigs at any given point.

Marshall Carver - Pickering Energy Partners

Okay. Thank you. Couple of final questions. One, is the total volume at Cowtown is about a 110 million a day, how much of that is third-party and will that percentage stay the same?

Glenn Darden - President and Chief Executive Officer

About 25% of that is third-party, Marshall, and we estimate that that percentage may shrink a little bit as more Quicksilver volumes come on. As a percentage of the total, the total will increase over time and as you can recognize from the additional plant we build.

Marshall Carver - Pickering Energy Partners

Right. And final question. Can you talk about going North in the Barnett to come oil and maybe clay or... Clay County or something like that; any thoughts there?

Glenn Darden - President and Chief Executive Officer

We are not doing it, at this time

Marshall Carver - Pickering Energy Partners

Okay. Thank you very much.

Glenn Darden - President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line or Irene Haas [Canaccord Adams].

Irene Haas - Canaccord Adams

All my questions have been asked, thank you.

Glenn Darden - President and Chief Executive Officer

Thank Irene.

Operator

Your next question comes from the line of Richard Tullis [Capital One Southcoast, Inc.]. Richard, your line is open.

Richard Tullis - Capital One Southcoast, Inc.

Thank you. Good afternoon. Most of my questions have been answered as well; just two quick ones. What's your current net acreage in the Barnett... Fort Worth, Barnett right now?

Glenn Darden - President and Chief Executive Officer

It's close to 270,000 net acres.

Richard Tullis - Capital One Southcoast, Inc.

Okay. You still consider about 60% of that in the Fairway?

Glenn Darden - President and Chief Executive Officer

We think so. Right.

Richard Tullis - Capital One Southcoast, Inc.

And have you adjusted your average EUR for the Barnett at all since last presentation?

Glenn Darden - President and Chief Executive Officer

No, we haven't.

Richard Tullis - Capital One Southcoast, Inc.

Okay. You're still looking at about 2.8 Bs on average?

Glenn Darden - President and Chief Executive Officer

Equivalent... on an equivalent basis, right.

Richard Tullis - Capital One Southcoast, Inc.

All right. I think that's it for me today. Thank you.

Glenn Darden - President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Scott Hanold [RBC Capital Markets].

Scott Hanold - RBC Capital Markets

Good afternoon.

Glenn Darden - President and Chief Executive Officer

Good afternoon.

Scott Hanold - RBC Capital Markets

West Texas, Barnett and now you guys really aren't seeing a whole lot at this time similar to some of the other industry participants out there, but can you kind of give us a general sense of what really needed to happen to make that economic? Is it free ads [ph] or is it lowering the cost or is it seeing better productivity?

Glenn Darden - President and Chief Executive Officer

Well, we have a very thick section out there, Scott. And so we're looking at verticals versus horizontals as an option. We're looking at stimulation, variations. I think stimulation is going to be the key to it all, whether it's vertically or horizontally. And we've seen significant gas. We just think we're going to play it with little while to optimize.

Scott Hanold - RBC Capital Markets

Okay. So, if I can read into that little bit, it's basically getting the right track at the end of the day to get the productivity? Is really the key there?

Glenn Darden - President and Chief Executive Officer

That's the key to all these unconventional plays at this time and well configuration is just a way of delivering the frac better.

Philip W. Cook - Senior Vice President and Chief Financial Officer

And I think we're in the area of the basin where the costs we can get down and subsequent wells from our first horizontal well, we lowered the costs. So we think we can get there from a cost side. We need to get the volumes up and that's where the fact optimization is. But we've been encouraged so far and it's still very, very early in the process, but with what we've seen so far we're not discouraged in the least.

Scott Hanold - RBC Capital Markets

What are your, I guess, obviously, recent relative term, you haven't drilled a whole lot of wells out there at this point. But what has been the most recent well coming at first cost?

Glenn Darden - President and Chief Executive Officer

We are just... we haven't talked volumes. We're testing that right now. We're trying to get some longer tests as we can hook in the sales line so.

Scott Hanold - RBC Capital Markets

Okay. I am sorry, I guess, I meant on the cost side. What are the costs to drill?

Glenn Darden - President and Chief Executive Officer

I think we're getting close to the $3 million, $3.5 million range on the horizontal completing well.

Scott Hanold - RBC Capital Markets

Okay. $3 million and $3.5 million, and remind me then what sort of your view, and I think you've mentioned this before but what kind of rate would you need to see to feel this is an economic play?

Glenn Darden - President and Chief Executive Officer

I'd say comparable rates to the Fort Worth Basin at those prices and that's a horizontal... verticals aren't the best way to go.

Philip W. Cook - Senior Vice President and Chief Financial Officer

Yeah it really depends on vertical versus horizontal there, I think.

Glenn Darden - President and Chief Executive Officer

We've got a much thicker section our there, Scott, and that's what's driving the analysis on vertical versus horizontal. We've got between 400 and 800 feet of Barnett. And that's a lot of edge when you're looking at it to frac and so it maybe that the long term is vertical versus horizontal. We'll have to wait and see. We are trying it both ways.

Scott Hanold - RBC Capital Markets

Okay, well I look forward to an update on that next year. Couple of quick questions. I think you gave a rate that Canada was producing. Was that 60 million a day? Did I hear that right?

Philip W. Cook - Senior Vice President and Chief Financial Officer

Yes, it's all in that basis a little bit above that.

Scott Hanold - RBC Capital Markets

Okay. Do you have a Barnett Shale production rate as well at current rate?

Philip W. Cook - Senior Vice President and Chief Financial Officer

Yeah. We're about a 120 million a day.

Scott Hanold - RBC Capital Markets

Okay, and finally BreitBurn shares... and I know you guys have lockup period on that. Can you kind of give us a sense on what your thought is for that, those shares once the lockup expires, what can we expect from you all?

Glenn Darden - President and Chief Executive Officer

Well, I think, yes we do have a lockup and that's 12 months for 50% of the units and 18 months for the remaining 50%, but the way we look at them, we believe BreitBurn is a great company that is going to improve from here in terms of distributions, those... at distributing cash and raising productions. So, this is a, it's a good structure, it doesn't have an IDR in its GP side, and we think that there are good stewards and they are managing their company well to... we're comfortable being an investor with them. So, we'll see what happens in a year from now, we are in, we think and certainly we know our properties... which is a big part of that company now... are going to continue to, we think, increase in cash distribution, simply because they are going to be able to put more dollars of investment up there.

Our dollars were dedicated to the Barnett and it's our understanding that BreitBurn is probably tripling the CapEx up there that we have put. So, that's an encouraging sign and we like those reservoirs up there. So, it's a little premature to say what we will do with those, we look at those assets like we look at every other asset in the Company in that we want to maximize and we think it's a good way to play, a good trend arrived with the BreitBurn.

Scott Hanold - RBC Capital Markets

Okay. I appreciate your time.

Operator

Your next question comes from the line of Jeff Hayden [Pritchard Capital Partners, LLC].

Jeffrey Hayden - Pritchard Capital Partners, LLC

Hey, guys, good afternoon.

Glenn Darden - President and Chief Executive Officer

Good afternoon.

Jeffrey Hayden - Pritchard Capital Partners, LLC

Couple of quick questions here. Just couple of follow-ups, Glenn you talked a little bit about the bookings in the puds bookings, could you give us a sense on what you think your pud percentage is going to be like at yearend '07 versus yearend '06?

Glenn Darden - President and Chief Executive Officer

I really don't know and I... just instinctively we're drilling more wells off of central pass, we're really probably going to book more PDP, but I'll say this, I don't think our pud components goes up but I don't know if it goes down significantly.

Jeffrey Hayden - Pritchard Capital Partners, LLC

You are probably about the same, is the best way to think about it. And then just kind of jumping back to Lake Arlington, we will follow-up there. You know about $4 million well cost, I believe, was due up there for some of those wells, what kind of viral links and how many frac stages would you do in those wells?

Glenn Darden - President and Chief Executive Officer

Longer and more. I don't know.

Jeffrey Hayden - Pritchard Capital Partners, LLC

Is there any more color than this?

Glenn Darden - President and Chief Executive Officer

Well, I don't think so at this time, Jeff, but thanks for asking. It's a grey area, Jeff, and we are excited about it, it's a much thicker section than we played with before. Our team is doing a great job out there with the fracs but I don't, I think they would appreciate that we keep quiet on what they're doing.

Philip W. Cook - Senior Vice President and Chief Financial Officer

We are learning a lot with longer laterals. I'll put it that way.

Jeffrey Hayden - Pritchard Capital Partners, LLC

All right, guys, I appreciate it.

Glenn Darden - President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Sunil Jagwani [Carlson Capital, L.P.].

Sunil Jagwani - Carlson Capital, L.P.

Hi, good afternoon, guys. I have a very straight forward and simple question. What's the current F&D running per PDP in the Barnett?

Glenn Darden - President and Chief Executive Officer

We have that calculation.

Philip W. Cook - Senior Vice President and Chief Financial Officer

I'm not sure that's a very straightforward and easy question.

Sunil Jagwani - Carlson Capital, L.P.

I realized by the second half I'll finish my question, perhaps.

Philip W. Cook - Senior Vice President and Chief Financial Officer

I mean, I think, what we've said on F&D is that last year we were at $0.96 this... and the year before that we were at a $1.20 something like that. And that we expect to be at maybe north of a $1.20 this year, but --

Sunil Jagwani - Carlson Capital, L.P.

That's the spuds, right.

Philip W. Cook - Senior Vice President and Chief Financial Officer

That's all we ended for the company. These wells in Texas that are 2.8 Bcf wells we're drilling for anywhere from $2.5 million to $3 million. So, you can do that math.

Glenn Darden - President and Chief Executive Officer

It's not going to change significantly.

Sunil Jagwani - Carlson Capital, L.P.

Because last year if I just looked at it, I think, if I divided the capital by the change in the PDP year-over-year, I'm doing this strictly from memory, but it was a little bit over $2, so should we expect that to hold?

Glenn Darden - President and Chief Executive Officer

No

Philip W. Cook - Senior Vice President and Chief Financial Officer

No.

Glenn Darden - President and Chief Executive Officer

It's not $2.

Sunil Jagwani - Carlson Capital, L.P.

Okay. I'll check my numbers offline then. Thank you.

Glenn Darden - President and Chief Executive Officer

Thank you.

Operator

We have a follow-up question from David Snow.

David Snow - Energy Equities, Inc.

Hi. I'm just trying to do the arithmetic, when you gave your average Bcf per well... 2.8 Bcfe per well... is that on your all of your acreage or the 60% that's in the Fairway?

Glenn Darden - President and Chief Executive Officer

That's in the 60% and does not include Lake Arlington.

David Snow - Energy Equities, Inc.

Okay. Well what about the other 40? Does it have any best, the less consistent stuff that you're not put values on yet?

Philip W. Cook - Senior Vice President and Chief Financial Officer

At this point, we've booked very little outside that 60% area but it would not be.... it would be less than the 2.8.

David Snow - Energy Equities, Inc.

Okay. Thank you very much.

Glenn Darden - President and Chief Executive Officer

Thank you.

Operator

At this time, presenters, there are no more questions.

Richard C. Buterbaugh - Vice President, Investor Relations and Corporate Planning

Thank you Crystal. As a reminder, a replay of this call will available on the Company's website for 30 days. Quicksilver expects to release fourth quarter earnings on Tuesday, February 26, 2008.

I'd like to thank you for your time and interest in Quicksilver this afternoon. This concludes our call.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!