Question-and-Answer Session
Operator
(Operator Instructions). We’ll take our first question in queue from the line of David Khani with FBR Capital Markets. Your line is open.
David Khani - FBR Capital Markets
Can you talk a little bit about your expectations for natural gas price, because obviously it has a big swing factor both on the coal side and obviously on your current natural gas production?
Bill Lyons
Right. We expect 2010 to average $6 to $7.
David Khani - FBR Capital Markets
$6 to $7. Okay. The second is, can you talk a little bit about your customer base and sort of the industrial nature I guess of the Northern App region? Are you starting to see signs that the industrial side is picking up and so therefore the demand for power would pick up?
Brett Harvey
Actually, David, we just see some movement which would be considered bright spots but all of our big utility customers on the industrial base side showed very weak sales, and that’s why we think that 2010 is going to be a bridge year in terms of energy growth. We just don’t see it at the utility side. They build inventories, and they’re not burning down the inventories. So, we see it as flat for probably the next four quarters.
David Khani - FBR Capital Markets
Okay, and then going back a little bit to the $6 to $7 per Mcf or MMBTU, how much of an impact do you think that will be on the steam coal demand inside your region? Have you guys done to math there?
Bill Lyons
We think it shifts. It’s about 25 million tons, but we think it shifts at about $5.50 per million. If you look at the cost structures of our big competitors in the Marcellus Shale, 5.5 is where it breaks down. They’re not making money unless they’re above 5.5, and we see that as a natural economic break, and they will shift back to coal at that point in time. So, about 5.5 is where we see it right now.
David Khani - FBR Capital Markets
How much met do you expect to export for 2010? Then are you seeing any signs also for the steam coal side for 2010?
Brett Harvey
We see the steam coal side as being a pretty bright spot. On the met side we expect to export about 3.5 million tons. On the steam side, we expect that to increase year to year. The price is rising right now. If you look at a Bailey type coal at the mine, it’s up to about $53 into Europe, if you look at all the components going all the way to Europe, and that’s rising. We think that our port capacity that we have at Baltimore is going to give us an advantage there to raise volumes and move that coal into the Atlantic market.
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