Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Lenny Brecken - Brecken Capital
Lenny Brecken - Brecken Capital
If you look at holding your volumes static, the pricing environment pretty much static, I’m trying to get a sense of what future upside there is on the EBITDA line as we move into 2010 or 2011, so that the distribution can actually grow?
When I look at the Haynesville opportunity, yes it’s going to enhance your cash flow, but it looks like it’s going to just cover, give you a buffer on EBITDA line for maintenance CapEx and here and there it’s not really going to allow you to grow your distribution.
So, can you give us just a snapshot into your expectations for what up side there is on the EBITDA line going into 2010, 2011 so that we can get some comfort that you can actually growth the distribution? Thank you.
Stephen Arata
Certainly, I’ll address part of that and I think Byron will add in at the end. With respect to the Haynesville project, we actually expected to significantly enhance our EBITDA and potentially allow us to increase our distributions.
We have assumed a very conservative ramp up of volumes next year and one of the keys to that project as Byron mentioned during his discussion was that, it does position us well for further expansions beyond just the initial project and particularly if those are funded at the joint venture through the issuance of debt that will reduce our overall cost of capital and allow us to increase our distributions going forward.
Byron Kelley
Yes, one thing I would add to as we were taking about Haynesville is that I mentioned two events related to Petrohawk and Exco increasing their drilling activity. So that, as we look at the ramp up of volumes, I think there’s a good opportunity that even with the ramp up that we’ve got in our model, it is accretive, but I think there is an opportunity here that those volumes are going to ramp up much quicker with the activity that we are seeing.
So, I think that Stephen mentioned that there’s a number of expansion that are being looked at and that all of those are long term expansion. Some of those can be done potentially; one of those can actually be done by the end time the project is placed in service, which will add incremental revenues and margins for us out of that business.
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