Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Michael Blum – Wells Fargo.
Michael Blum – Wells Fargo
I just had really one quick question on the hedging strategy, in terms of going to more of a rolling strategy are you doing that in a formulaic way so that you’re doing it once a quarter or is it still sort of opportunistic but rolling throughout the year?
Stephen L. Arata
We’re trying to do it once a quarter, it’s not on a specific date but we are trying to be more intentional about doing it on a quarterly basis than doing it in large buckets.
Michael Blum – Wells Fargo
Then just curious in terms of ethane your decision to hedge is that a function of your view that prices are not going to recover much so you’re just going to take the price that the market gives you right now or is it more sticking to that discipline.
Stephen L. Arata
It’s not really a view on pricing it’s more just trying to reduce volatility of future results. I will add Michael that our expectation is that with our hedged portfolio for 2010 so far plus if you just use the forward curve for prices of the unhedged products, we expect our full year 2010 commodity results to be almost exactly on top of 2009’s numbers. Our hedged positions for 2010 are above our 2009 hedges but if you factor in the market prices for the rest of the unhedge products it brings it right in line and we will be increasingly taking that risk off the table as the year moves on. We’re not anticipating a big impact ’09 to ’10 from commodity prices.
Operator
Your next question comes from [Yves Segal] – Credit Suisse.
[Yves Segal] – Credit Suisse
Could you just reconcile for me on the compression cap ex budget how does the decline in utilization fit with the budget right now and when you look at 2010 what are you thinking about in budgeting cap ex for the compression segment?
Byron R. Kelley
I’ll talk a little bit at the macro level, you backed up in to last year the compression business was very active and you traditionally required long lead times. So much of the purchases that we’re doing this year are a result of commitments that were made last year so we’re seeing some purchases this year that are going not all of that is being placed at this point some of that is going in to inventory. But, we’re not making commitments for purchases for next year so we will utilize this excess equipment this year that we may end up with. We’re going to place some of it but what we don’t place we will then utilize this next year for our business and so you could expect to see capital requirements in 2010 for this business will be in terms of cash outlays much less than they were this year. That’s on a macro basis, if you want some specific numbers we can delve in to that a bit.
- To read the full transcript on Seeking Alpha, click here »
