Question-and-Answer Session
Operator
Thank you. (Operator instructions) And our first question comes from the line of Lasan Johong with RBC Capital Markets. Please go ahead.
Lasan Johong – RBC Capital Markets
Great, thank you. I want to ask a few questions on the E&P capital spending. It’s down about $30 million to looks like $65 million and production continues to lag. And I understand why that’s so in this particular instance, but I want to bring up the issue of divesting this business again. It does seem like a lot of difficulties meeting targets, not necessarily due to Black Hills’ fault but because it’s third-party operated. And there is a lot of volatility involved relative to the underlying assets, the utility assets, and there is potential threat of callback situation at the gas utilities. Why do you want to keep on holding to this asset? Is there something we can do to make this asset more predictable and more attractive to Black Hills shareholders?
David Emery
Hi, Lasan. The primary issue for us, and we’ve talked about this before, is that we believe that the assets that we hold have significant upside opportunity in value there. And the best way to recognize that value as a shareholder is primarily through the drill bit. And we’ve got a group (inaudible) of folks to implement the plan to develop those properties and had a few obviously some delays that we are not particularly pleased with, but still believe overall in the value and the true value creation from a shareholder perspective will be through the development of those properties rather than the divestment of the property.
Lasan Johong – RBC Capital Markets
When do you think you might realize on this value, like starting next year you think?
David Emery
Yes, certainly we hope that. As things move forward here, and we get some of these questions I earned out, couple of the properties recently are changing hands on the non-operated side and on the operated side, this gearing up our drilling permit effort. We’ve had delays particularly in the Piceance Basin that we would expect things to start improving going forward. Even now, I mean, we’ve got a fair amount of drilling activity going on and we would expect the production numbers to improve a little bit as the year goes on. We’ve said last quarter that we thought it would be challenging to meet our production numbers in 2007 this year, given the weather and permit delay starts that we have. But I would expect the numbers to improve somewhat from where they stand today.
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