Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Sharon Lui - Wachovia.
Sharon Lui - Wachovia
I was wondering if you could just touch on the commodity price and the NGL ratio assumptions in setting your '09 guidance? What is your long-term outlook and the type of cushion that you are looking at if there is a correction in commodity prices?
Matt Jones
Sharon, for modeling purposes, we assumed NGL prices that were somewhat below those prevailing in the marketplace today. I think Bob had said about 50% of our NGL volumes through '09 are effectively hedged through existing positions, so about 50% of our current volumes will flow with commodity price movement.
As far as the correlation is concerned, we assumed for guidance purposes that correlation would remain historically low. In fact, we assumed correlations would remain about where they are or have been on average over the last, say, four to six weeks. So, we are certainly hopeful that correlations will recover. I expect that they will, but conservatively in our modeling we assumed correlations would continue at the, again, historically low levels that prevail today.
Sharon Lui - Wachovia
I guess on the crude oil and the natural gas side, are you assuming the current strip prices?
Matt Jones
We are.
Sharon Lui - Wachovia
I noticed in your updated hedges that the crude oil puts that were purchased in the outer years, 2010 to 2012, were taken out. I was just wondering what is the rationale for ?
Matt Jones
We unwound or removed or terminated the puts that were in place associated with the positions that were entered into, primarily in connection with the Chaney Dell, Midkiff/Benedum acquisitions. The puts that were put in place were $60 to $70 puts. We did not feel that those puts really provided much protection to us any longer.
So we are, as you know, continuing to take a view of the 2010, 2011 and even 2012 hedges. We are watching the market closely and we are determining the appropriate course of action associated with those positions but as far as the puts that we had in place are concerned, we did not feel that the puts provided us really any meaningful protection going forward, so we simply terminated those, along with the other positions that we have unwound recently.
Operator
Your next question comes from Carlos Rodriguez - Hartford Investment Management.
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