Question-and-Answer Session
Operator
Thank you. We’ll now begin the question-and-answer session. (Operator instructions) And your first question comes from James West from Barclays Capital. Please go ahead.
James West – Barclays Capital
Hi, good morning, Gary.
Gary Kolstad
Good morning, James.
James West – Barclays Capital
Gary, no doubt you guys are undersupplying the market perhaps significantly right now, but if we look into 2009, and let’s assume in the first half we see E&P spending drop in the double-digit range, perhaps 15%. I guess the real question is, from the way you look at your demand, how much are you undersupplying the market right now? I mean, if we do see that decline next year, could you continue to be sold out really for the whole first half, maybe the whole year?
Gary Kolstad
Well, if you would ask me today, James, I’d say it probably wouldn’t have that much of an impact, that much of a drilling rate decline. Having said that, we don’t know exactly what will happen with drilling rig count. We have to offset that with the fact that these new plays, particularly the Haynesville, the Bakken are much more frac intensive. The volumes we’re putting into there are probably three to four times the amount of ceramic proppant versus a vertical well. We are really struggling to keep up. We are importing proppant from our China plant into North America. So right now, we are definitely under-serving and undersupplying. But I don’t know what the rig count will take to get it down there. In a little bit of a strange way, this isn’t such a bad thing for us because it will allow us to better supply our customers if we have a little bit of a downturn here and allows us to get Toomsboro line three up and running. I’d to like to – I’ve mentioned already, we’re trying to push that, accelerate that so that we can better serve and supply our clients. I don’t know exactly how we shake up, James, but the new plays where our proppant is being used is lot more intensive in volumes.
James West – Barclays Capital
Okay. And if you think back to 2006, the last time you were pretty much sold out, there was a shift. Some of your customers who couldn’t get ceramics shifted back to sand. And it took some time I think or some field trials or some extra marketing tip to bring those customers back into the fold. Do you sense that that’s happening right now?
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