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Alliance Holdings GP, L.P. (NASDAQ:AHGP)

Q2 2008 Earnings Call Transcript

July 28, 2008 10:00 am ET

Executives

Brian Cantrell – SVP and CFO

Joe Craft – President and CEO

Analysts

Jim Rollyson – Raymond James

Paul Forward – Stifel Nicholas

Ron Londe – Wachovia

Luther Lu – FBR Capital Markets

Rob Mullin – Duquesne Capital

Mike Tang [ph] – Morningstar

Franklin Ross [ph] – Link Foundation [ph]

Operator

 

Good day, ladies and gentlemen, and welcome to the second quarter 2008 Alliance Resource Partners LP and Alliance Holdings GP conference call. My name is Katie and I’ll be your coordinator for today. (Operator instructions) I would like to now turn the call over to your host for today, Mr. Brian Cantrell, Senior Vice President and Chief Financial Officer. Sir, you may begin.

Brian Cantrell

 

Thank you, Katie, and welcome everyone. We appreciate your interest in Alliance Resource Partners, which today we refer to as ARLP, and Alliance Holdings GP, which we refer to as AHGP. We released our 2008 second quarter earnings earlier this morning and will now discuss these results and our outlook for the remainder of 2008.

Following our prepared remarks, we will open the call to your questions. Before we begin, I’ll run through a few reminders. As is our practice, since AHGP’s only assets are its ownership interests and ARLP, our comments today will be directed to ARLP’s results and outlook unless otherwise noted. In addition, some of our remarks this morning may include statements, which are not historical in nature and may concern future expectations, plans and objectives of the partnerships regarding our future operations.

Any such comments constitute forward-looking statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995 and are based on to believe so the partnerships and those of their respective general partners and management, as well as assumptions made by and information currently available to them. Although the Alliance partnerships, their general partners and management believe the forward-looking statements are reasonable at the time made, no assurances can be given that such statements will prove to be correct. These forward-looking statements are subject to a variety of risks, uncertainties and assumptions, which are contained in our filings from time to time with the Securities and Exchange Commission and are also reflected in today’s press releases on the partnerships.

If one or more of these risks or uncertainties materialize or if the underlying assumptions proven correct, our actual results may vary materially from those we anticipated, estimated, projected or expected. In providing these remarks, neither ARLP not AHGP has any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Finally, we will also be discussing certain non-GAAP financial measures. Definitions and reconciliations of the differences between these non-GAAP measures and the most directly comparable GAAP financial measure are contained at the end of the ARLP press release, which has been posted on the partnership’s [ph] Web site and furnished to the SEC on Form 8-K.

Now that we are through the preliminaries, I’ll turn the call over to Joe Craft, our President and Chief Executive Officer. Joe?

Joe Craft

 

Good morning, everyone, and thanks for joining our second quarter 2008 earnings review. The US co-markets remained stronger in the first half of 2008 and are expected to continue to benefit from favorable global and domestic coal supply and demand fundamentals for the foreseeable future. The coal continuing to be the fuel of choice to meet the growing electric power generation needs around the global, demand for coal continues to outpace supply and has resulted in significant price increases in every coal market in the world.

Domestically, coal consumption is rising, exports are growing year-over-year and utility stock piles are declines. Combining this rising demand with various constraints that continue to limit increases in coal supply supports our optimistic outlook for coal prices for the foreseeable future. These markets are helping ARLP stay on track to meet its production and distribution growth targets.

During the quarter, we continued to experience increased demand for our coal in all the markets ARLP serves and successfully added to our coal sales commitments beyond 2008 at attractive prices. We also made significant progress on the construction of our new River View mine and continue to have positive discussion with potential customers for our growth projects at Tunnel Ridge, Gibson South and Penn Ridge.

Overall, we remain encouraged about ARLP’s future growth opportunities and are committed to sharing the gains from these opportunities with unitholders. Toward that end, management has set a goal of increasing ARLP unitholder distributions by 6% to 8% per quarter through 2010.

For the 2008 quarter, the Board of Directors of each partnership announced significant increases to their respective unitholder distributions for the second quarter just ended. The ARLP Board declared a quarterly cash distribution, a $0.66 per unit for the 2008 quarter, a 12.8% increase over the distribution for the first quarter of this year and a 17.9% increase over the distribution for the 2007 second quarter.

The AHGP Board declared a quarterly cash distribution for the 2008 second quarter of $0.3525 per unit. As a result of the accelerate cash flow growth available to AHGP from its ownership interest in ARLP, the declared distribution represents a 22.6% increase over the cash distribution paid for the first quarter of this year and a 33% increase over the distribution for the second quarter of 2007.

I know that many of you on the call today will be to happy to hear that our Boards also reviewed their practice of considering changes to distributions on a biennial basis and decided they will now begin considering increases to unitholder cash distributions on a quarterly basis. At this time, I’ll turn the call back to Brian for a more detailed look at our financial results, after which I’ll return to further discuss the outlook for ARLP and AHGP. Brian?

Brian Cantrell

 

Thank you, Joe. For the 2008 quarter, ARLP recorded EBITDA of $65.4 million and net income of $36.7 million or $0.68 of adjusted net income per diluted limited partner unit, which was in line with our expectations. Although these results were below those reported for the same period last year, to better compare ARLP’s operating results between the 2008 and 2007 quarters, we believe it is appropriate to consider the impact of several significant non-recurring items, which affected both quarters.

Specifically, our comparative results were impacted by a gain on the sale of non-core coal reserves, the loss of synfuel related benefits and the settlement gains for claims associated with the 2005 failure of the Vertical Belt system at our Pattiki mine and the 2004 mine fire at our Excel No. 3 mine. After normalizing for these items, ARLP’s EBITDA and net income in the 2008 quarter increased by 14.4% and 6.8% respectively when compared to the 2007 quarter.

In addition, I would point out that ARLP’s declared distribution to unitholders for the 2008 quarter was well above analysts’ expectations, which impacted the comparison of ARLP’s $0.68 of adjusted earnings per unit to the Street consensus of $0.72 per unit for the 2008 quarter. By way of example, had the Board utilized the analyst consensus distribution of $0.62 per unit, ARLP’s adjusted net income per diluted LP unit for the quarter would have been $0.72, right on top of the Street’s expectations.

Driven by record average coal sale prices of $39.50 per ton and our coal sales volumes, ARLP’s revenues increased $12.9 million in the 2008 quarter to $276.2 million. Price realizations per ton in the Central and Northern Appalachian Regions continued to benefit from both improved contract pricing as well as higher prices from sales into the spot and export markets during the 2008 quarter.

Higher coal sales volumes came primarily from ARLP’s production capacity expansions in the Illinois Basin. These quarter-over-quarter increases more than offset the loss of $11.1 million of revenues from synfuel related activities in the 2007 quarter. Segment adjusted EBITDA expense per ton sold was essentially flat quarter-over-quarter at 29.55, even though ARLP’s operating expenses in the 2008 increased $13.4 million to $191.4 million. This increase was primarily attributable to increased coal production volumes, which were up 14.7% to 6.5 million tons.

Operating expenses in all of ARLP’s operating regions during the 2008 quarter continue to be impacted by increased labor related expenses as well as higher cost for steel and other consumables on maintenance cost, materials and supplies. All of our operations also continued to experience higher costs and reduced productivity due to increased regulatory compliance requirements.

General and administrative cost rose in the 2008 quarter primarily due to increased staffing levels as a result of ARLP’s growth initiatives and higher incentive compensation expenses. Recent capital expenditures related to our growth initiatives and infrastructure improvements also drove DD&A up by approximately $4.2 million to $25.6 million.

Capital expenditures during the 2008 quarter were approximately $37 million and we continue to anticipate total capital expenditures for the year in a range of $200 million to $220 million. To help finance its growth, ARLP recently completely a $350 million private placement of senior notes. 205 million of these notes replaced a seven-year tranche with a coupon of 6.28% while the balance of 145 million was placed in a ten-year tranche at a 6.71% coupon. By completing this debt financing and with our strong internal cash flow, ARLP remains very well positioned to meet the anticipated capital requirements for the River View mine as well as our other growth initiatives.

I’ll now turn the call back to Joe for his guidance review and closing comments. Joe?

Joe Craft

 

Thank you, Brian. Reflecting our results through the first half of 2008 and our current projections, ARLP is confirming its previous guidance for 2008 coal production in a range of 26.4 million to 27.3 million tons, essentially all of which is committed to contract pricing. We are also reiterating our previous guidance ranges for revenues excluding transportation revenues of $1.03 billion to $1.1 billion, EBITDA of $250 million to $280 million, and net income of $130 million to $160 million.

As a result, we continue to expect 2008 financial results will be comparable to 2007 despite the loss of approximately $31.3 million for EBITDA and $28.5 million for net income in synfuel related benefits realized last year. Counting our plant production increases in the Illinois Basin from the new River View mine and the expanded operating capacity at our Warrior operation that we mentioned during our last earnings call, ARLP now estimates coal production will increase over 2008 level by approximately 1.2 million tons in 2009 in an estimated additional 4 million tons in 2010.

As I discussed earlier today, we have successfully increased our coal sales commitments beyond 2008 at attractive prices and continue to maintain exposure to the market with approximately 9% and 25% of our anticipated coal sales volumes remaining unpriced in 2009 and 2010 respectively. Our revenue expectations for the out years have improved since our last earnings call.

Based on new commitments during the quarter and our current price estimates for our unsold coal, ARLP now anticipates its total average price realizations for sales done will increase over estimated 2008 levels by 25% to 35% in 2009 and 40% to 50% in 2010. Like all other publicly traded coal producers, we expect our profits will grow significantly over the next two years assuming we can realize these revenue projections.

These projections also give us confidence. We can meet the goal I mentioned earlier that management has set of increasing ARLP unitholder distributions by 6% to 8% per quarter through 2010 starting with the third quarter in 2008. Even with these higher distribution payouts, we expect ARLP’s distribution coverage ratio will continue to be greater than the average publicly traded partnership over the next two years.

Assuming AHGP maintains its existing distribution coverage ratio and ARLP’s distribution growth bill was met, AHGP unitholders would see its quarterly distribution more than double through 2010, highlighting again the accelerated cash flow growth achievable at AHGP due to its ownership interest in ARLP.

That concludes our prepared comments. We again appreciate your interest in ARLP and AHGP, and we’ll now open the call for your questions. Katie, would you help us?

Question-and-Answer Session

 

Operator

 

(Operator instructions) Your first question comes from the line of Jim Rollyson from Raymond James. Please proceed.

Jim Rollyson – Raymond James

 

Good morning gentlemen.

Brian Cantrell

 

Morning.

Joe Craft

 

Good morning.

Jim Rollyson – Raymond James

 

It’s just kind of following back up on the distribution growth, you mentioned 6% to 8% growth per quarter through ’10, is that sequential growth or year-over-year growth, just to ask?

Joe Craft

 

It’s per quarter.

Brian Cantrell

 

Sequential.

Jim Rollyson – Raymond James

 

Okay. That’s what I thought you meant. That’s pretty stout growth. How do you feel once you get out to 2010 if you extrapolate this, obviously you feel pretty comfortable that those type of distributions are sustainable given whatever pricing might look like when you get after that stage? Is that obviously a fair assumption?

Joe Craft

 

That’s a fair assumption. So as get closer in time, we will evaluate the markets. We’ll see how successful we are in pricing, committed times with prices. And we will make that judgment as we get closer to that time. But based on our current committed sales prices, increased tonnage, we feel comfortable that we can meet that target based on what we see today.

Jim Rollyson – Raymond James

 

Very good. What kind of – if you look at the numbers you threw out for pricing expectations in ’09 and ’10 in terms of 25% to 35% and 40% to 50% growth over ’08 levels, can you kind of give us some sense on what kind of regional price assumptions you are using for I guess the 9% that’s still open to the 25%? Basically what are you guys thinking for prices as you look out at ’09 and ’10?

Joe Craft

 

I think that we do not break that down by region. But I think that our prices aren’t too far off of what you would expect – as you’ve heard other coal producers were not projecting anything. It’s greater than what you’ve read about in general press. So I would say that based on what we are seeing in the market, we’re very comfortable with our price projections that they are achievable at this moment in time.

Jim Rollyson – Raymond James

 

Okay. Last one for me, just maybe spend a minute on costs, kind of what inflation – obviously we were seeing fuel cost, fuel costs etcetera all moving up. Maybe a little bit about what you guys are seeing, what you are trying to do to prevent that and just kind of how you think that proceeds going forward?

Joe Craft

 

Again we are continuing to be pressured by cost on the labor front. We are giving increases to maintain in our position as far as attracting labor. So that’s a factor that we anticipate will continue to show increases. We are still seeing steel price increases reflected through our operations. We are still seeing productivity impacts from regulatory changes. At the same time, I think as you can tell by our quarterly results year-over-year being basically flat, we are doing a very good job of managing those and trying to keep those as close to current levels as possible, even though in our projections we do anticipate inflationary pressures as we go forward over the next couple of years.

Brian Cantrell

 

Yes, Jim, we do take a look at our supply chain and where we can, we try to manage those either from a reliability of supply standpoint as well as managing costs. By way of example, you are probably seeing we have a joint venture on a rock testing company, which has helped us manage that area. We have the ability to manufacture our own roof poles. So we are being proactive in those areas where we feel like we can go in and manage those costs a little bit more tightly.

Jim Rollyson – Raymond James

 

Right. If you put numbers on it, I guess some of your peers in the public market have kind of talked about high-single digit to maybe low-double digit core inflation in ’08. Any thoughts on what you guys are seeing or what you are expecting and how that goes into ’09?

Joe Craft

 

We are not projecting increases to that level in our cost that I think it’s definitely fair to say that we will see inflationary pressures.

Jim Rollyson – Raymond James

 

Okay, thanks guys. Good job.

Joe Craft

 

Appreciate it.

Operator

 

Your next question comes from the line of Paul Forward from Stifel Nicholas. Please proceed.

Paul Forward – Stifel Nicholas

 

Thanks. Good morning.

Brian Cantrell

 

Good morning, Paul.

Paul Forward – Stifel Nicholas

 

Just wanted to maybe follow up on the new contracts that you’ve signed with Allegheny, does your 2010 pricing increase of 40% to 50%, does that increase a contribution from this new agreement with Allegheny?

Joe Craft

 

Yes, it does.

Paul Forward – Stifel Nicholas

 

Okay. And do you have any –?

Joe Craft

 

And we have several others. I mean, there were more than a half dozen contracts we’ve signed in the past quarter. So –

Paul Forward – Stifel Nicholas

 

Was that the biggest one or –?

Joe Craft

 

No.

Paul Forward – Stifel Nicholas

 

Okay. Well, that’s good. What about – do you have any updates, thoughts on when you could bring Tunnel Ridge online?

Joe Craft

 

We are in negotiations with several parties on that tonnage. So we are hopeful that we can have an announcement on that soon. Right now, I think we’ve given expectations to bring in production on as early as 2009, 2010. So we are still on track to do that based – assuming that we can conclude the negotiations we’ve got ongoing for sales commitments for that production.

Paul Forward – Stifel Nicholas

 

And talking about 2009, I assume that would be development tonnage just rather than (inaudible)?

Joe Craft

 

Right. And those tons are not included in the numbers I gave you earlier because we are not committed to that at this moment.

Paul Forward – Stifel Nicholas

 

And if, let’s say, the timetable slips on Tunnel Ridge, what’s your ability to ship Illinois Basin coal up the river to meet your obligations up in that region?

Joe Craft

 

It’s real. I mean, that’s primarily the flexibility that was granted under the Allegheny contract. So if we don’t build Tunnel Ridge, we will supply that contract out of Illinois Basin.

Paul Forward – Stifel Nicholas

 

And I trust there is no possibility you’d give us any sort of pricing information on these contracts?

Joe Craft

 

That’s a fair comment.

Paul Forward – Stifel Nicholas

 

All right. I didn’t really think so. Okay, well, thanks a lot.

Joe Craft

 

Thanks, Paul.

Operator

 

Your next question comes from the line Ron Londe from Wachovia. Please proceed.

Ron Londe – Wachovia

 

Yes. Could you give us a feel for how many of your tons might reach the export market?

Joe Craft

 

In 2008, we don’t have substantial tonnage go in to export. For 2009, it is possible that we could see maybe a 0.5 million tons go to the export market, maybe more. Again, we don’t have – well, that’s probably what I would guess, somewhere in the 0.5 million to 1 million ton range.

Ron Londe – Wachovia

 

So you wouldn’t have the flexibility kind of stuff that up?

Joe Craft

 

We do have the flexibility to do that. However, we are seeing strong enough demand that domestically our strategy right now is to try to commit as much of the tonnage we have under long-term contracts. And the domestic players seem to be willing to go longer in terms than what we’ve been able to talk to people in the export market to do. So our strategy is to try to have that sustainable long-term cash flow. And if we’ve got what we call tier one, category one customers, our focus would be to look for those long-term relationships and sell into those markets.

Ron Londe – Wachovia

 

When you talk long-term, how long-term are you talking?

Joe Craft

 

Five to ten years to 20 years, something in that zip code.

Ron Londe – Wachovia

 

Okay, thank you.

Joe Craft

 

Yes. That’s all.

Operator

 

Your next question comes from the line of Luther Lu from FBR Capital Markets.

Luther Lu – FBR Capital Markets

 

Good morning.

Joe Craft

 

Good morning.

Brian Cantrell

 

Good morning, Luther.

Luther Lu – FBR Capital Markets

 

I want to follow up with Paul’s question about Tunnel Ridge. Do you guys have the permit already or it’s still in progress?

Joe Craft

 

We have the mining permit. We still have refused permit to go.

Luther Lu – FBR Capital Markets

 

Okay.

Joe Craft

 

But (inaudible) permit.

Luther Lu – FBR Capital Markets

 

Okay. The refused permit is for a permit, isn’t it?

Joe Craft

 

I’m not exactly sure on that.

Luther Lu – FBR Capital Markets

 

Okay. And with the mining permit in hand, have you committed the purchase to long one [ph]?

Joe Craft

 

Not at this moment, no.

Luther Lu – FBR Capital Markets

 

Okay. So you have not ordered a long one yet. Okay. What about –?

Joe Craft

 

We’ve talked to suppliers about slots. So we’ve reserved slots, but we haven’t issued appeal.

Luther Lu – FBR Capital Markets

 

Okay, okay. So if you were to issue the appeal today, when do you think that you can get the long one? What’s the lead time on that?

Joe Craft

 

I think fourth quarter of 2010.

Luther Lu – FBR Capital Markets

 

Okay.

Joe Craft

 

That’s when.

Luther Lu – FBR Capital Markets

 

Okay. What about the Gibson South project, any update on that one?

Joe Craft

 

We are continuing to negotiate for that as well. So we are also in conversations for that operation as well. So I think the timing on that probably has slipped a year since – I mean, we are looking at probably 2011. That’s when we can get the contracts negotiated. Not exactly sure what our last – that’s still within our way. Okay? So we are probably in the 2011 time period. The issue gets in the timing of contractors to construct slopes and shafts.

Luther Lu – FBR Capital Markets

 

Okay.

Joe Craft

 

As much as in this market, and it is more construction timeline than it is market demand opportunities.

Luther Lu – FBR Capital Markets

 

Okay. And with recent drop in the sulfur credits, are you guys seeing in the marketplace that narrowing – there is a narrowing gap between the high sulfur Illinois product and the medium sulfur Illinois product?

Joe Craft

 

We are not seeing much immediate change there. I think the utilities are trying to determine what that means today. But we continue to see, what I call, our low sulfur Illinois Basin product still compete very well relative to Central App substitute. Unfortunately we just don’t have lot of tons to sell to take advantage of that.

Luther Lu – FBR Capital Markets

 

Right.

Joe Craft

 

So we are not really seeing any change within the last week or two. But I think the utilities are trying to evaluate what this change means I think in general for high sulfur coal and for the scrubber markets that is still going to be – I mean, we don’t see any negative effects out of this and what the special way the SO2 credits are trading today.

Luther Lu – FBR Capital Markets

 

Okay. And one more question if I may, in your prepared remarks you mentioned that you guys are experiencing reduced productivity due to some regulatory issues. What are those issues?

Joe Craft

 

It’s just the mine itself, basically with their enforcement and the attention that they are spending, and they have just stepped up their oversight. So the point when they come in, they like to disrupt production.

Luther Lu – FBR Capital Markets

 

I like this [ph]. Okay. Thank you very much.

Joe Craft

 

Yes.

Operator

 

Your next question comes from the line of Rob Mullin from Duquesne Capital. Please proceed.

Rob Mullin – Duquesne Capital

 

I think it’s actually – actually as a follow-up I guess from the last question. Just kind of – I wanted to get just – not just the prices offer, but what care – legal status of care being kind of thrown up in the air. So what you guys’ take is on that? Is it – do you see that as a structurally positive, structurally negative – not so much for your customers’ reaction, although what your guys’ reaction to the vacation, the fact that of course vacated the care process?

Joe Craft

 

I think in the long-term it’s not going to have any impact. I think that our expectation there will be an attempt to legislatively bring the controls back in place. Absent that, I think that Illinois Basin coal, Gate A [ph] coal is still very low cost relative to Central App So I personally think that they are obviously from a Clean Air Act perspective, I can burn the coal probably easier today than they could with care. So it’s going to create uncertainty in the short-term, but long-term I think it will balance out to where as far as our objectives of bringing own production in those two regions. It hasn’t changed our customer’s view and it hasn’t changed our view on the demand for that product. As we mentioned numerous times, the investment we make there will be driven off commitments from customers. So I think as evidenced by the Allegheny announcement and the current conversations we are having for Tunnel Ridge, the utilities continue to have an appetite for the higher sulfur Gate A Illinois Basin coals.

Rob Mullin – Duquesne Capital

 

And in terms of the overall scrubber build that you are anticipating through – how much of that is sort of RE committed that regardless of this care ruling, what you would expect the amount of scrub plants to be 80% of what you expected, you know, if care just went away or –?

Joe Craft

 

You got a macro question and a micro question. I think what we’ve – on a macro basis, there is probably – that will be a delay. On a micro, as far as the markets that we are focused on for the construction of the mines that we are constructing and we sell into, we are not really seeing any change in demand as we speak today.

Rob Mullin – Duquesne Capital

 

Great. Thank you very much for your time. Appreciate it.

Joe Craft

 

You bet.

Brian Cantrell

 

Thanks, Rob.

Operator

 

Your next question comes from the line of Mike Tang [ph] from Morningstar. Please proceed.

Mike Tang – Morningstar

 

Yes, hi, great quarter. I just have one quick follow-up question about the committed tonnage. What differences do you have across basins? For example, are there more uncommitted tons in Central Appalachia or Northern Appalachia as a percentage versus Illinois Basin?

Joe Craft

 

We don’t really break that out. So I’m sorry that for competitive reasons we don’t disclose that.

Mike Tang – Morningstar

 

Okay. Just one quick other question. Do you have any potential to still shift lending or shift production in order to get more lower quality in metallurgical coal versus high quality steam coal from this point forward?

Joe Craft

 

We do at our Maryland operation. Again, we are substantially committed for 2008. So it’s not going to benefit us this year.

Mike Tang – Morningstar

 

Right. But what about next year and the year after?

Joe Craft

 

For the second quarter of 2009, those contracts come open to where that is a possibility.

Mike Tang – Morningstar

 

Okay, thank you.

Operator

 

Your next question comes from the line of Franklin Ross [ph] from Link Foundation [ph]. Please proceed.

Franklin Ross – Link Foundation

 

How are you guys doing?

Joe Craft

 

Good, Frank, how are you?

Franklin Ross – Link Foundation

 

Great quarter to you guys. I guess my question is really centered around River View and in terms of how much coal you price there and how much you committed and kept unpriced going forward?

Joe Craft

 

We’ve committed substantially all of it for a period of time, three to five years. Some of those contracts would come open and priced in the three-year time frame. But as far as commitments, I mean we are committed for most of that tonnage through – for about five years, I believe it is.

Franklin Ross – Link Foundation

 

Okay. And when you look at your five to 20-year contracts this time over last quarter, how do you protect yourself to capture rising prices if the market goes that way?

Joe Craft

 

We got in to see they stand or stated inflationary numbers, specific inflation numbers, that pix numbers, say, to try to protect that margin (inaudible) cost escalators.

Franklin Ross – Link Foundation

 

So are those numbers – are those costs escalators, are those dynamic or static? Are they fixed or –?

Joe Craft

 

Some of them are dynamic and some of them are static. Some of them are fixed and some of them try to track our cost.

Brian Cantrell

 

It’s just on individual case basis on negotiations with the particular counterparty.

Joe Craft

 

Some people want certainty and some want to just be willing to take indices.

Brian Cantrell

 

Yes.

Franklin Ross – Link Foundation

 

And on the unpriced positions, are those totally uncommitted, those unpriced positions or –?

Joe Craft

 

Some of them are committed terms with – subject to reopener.

Franklin Ross – Link Foundation

 

Okay. All right, great. Thank you very much.

Joe Craft

 

Yes.

Brian Cantrell

 

Thanks, Franklin.

Operator

 

At this time, I’m showing you have no further questions. I’d like to now turn the call back over to management for closing remarks.

Brian Cantrell

 

Once again, we appreciate everybody’s time this morning and your interest in both of our companies and we look forward to talking again soon. Thank you very much.

Joe Craft

 

Thank you.

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