Constellation Energy Partners, LLC CEP
Q4 2010 Earnings Call Transcript

Operator: Richard Roy, Citigroup.

Richard Roy - Citigroup: Just wanted to ask questions about the settlement. So, the reimbursement of legal fees that's already reflected in Q4, but then I guess there is the purchase of the NPI and then just (spin all deficit), if you could just walk us through how you are going to account for those, pay for those and what the timeline would be?

Charles C. Ward - CFO and Treasurer: What the settlement provides is that we will minimum bid an amount that it will put in escrow of $1 million for an auction that occurs if it can occur within the six months post the approval by the Judge. So, there is a bit of timeline before the money does go in escrow and then there begins the time sequence for which the Trust can carry out an auction. We specified it during that time period we will bid that minimum of $1 million. So it's really depending upon courts date timing and things like that it could be as late as almost fourth quarter before the auction can occur.

Richard Roy - Citigroup: Just as a follow-up. So in your estimate of debt reduction for the year, are you giving any consideration to these monies or that's not included in that estimate?

Charles C. Ward - CFO and Treasurer: If we were to be successful in the auction process that wouldn't change that debt reduction forecast at all.

Richard Roy - Citigroup: Switching gears a bit to the acquisitions market, could you just describe how you're seeing the acquisitions market for the types and size of the acquisitions that you are looking for? Also is it safe to assume that you're looking more for crude assets as opposed to natural gas?

Charles C. Ward - CFO and Treasurer: We were fortunate and that we found an oral asset that we thought was fairly priced in the Central Kansas Uplift area with the good operator. We are seeing a number of opportunities, smaller opportunities come available. The very large oil opportunities in West Texas we're not going to be able to complete nor do we have the tactical team or the organization to go try do that at this time. So when you think about acquisitions for us it is going to be kind of where we are now, Oklahoma, Alabama, of course Texas if some thing appropriate shows up. Would have to be right sized Richard. We are interested in both and gas, but obviously if we can make an accretive oil acquisition that’s a far better opportunity for us in terms of revenue generation. When we account for reserves in our report we, like most people use a six to one ratio for oil to gas, but of course, when you look at revenue generation it's more in the range of 20 to 1. So we are interested in continuing to diversity our portfolio. We are hopeful that this year we can continued to do that, increase our oil product either through acquisition or through the limited capital program we have, because we did actually increase oil production. If you want tot think in terms of that increase, about 40% of it was from the capital program 60% of it was from the acquisition. So we think that’s a good use of capital forward and we are hopeful that we can make some progress this year,

Richard Roy - Citigroup: You mentioned that the depreciation rate was much lower because of the impairment last quarter, is this a good run rate to use?