Natural gas pricing is falling through the floor due (currently at $3.74/mcf) to an over supply. Constellation is located in the mid continent and they receive even lower prices than Henry Hub on any volumes that are not hedged. 2009 will be a difficult year for the industry as rigs are idled and the oversupply is worked off. I question whether they can maintain the distribution if the downturn lasts more than a year. Ideally, CEP and QELP would be great merger candidates with overlapping assets. This company needs to be recapitalized in the long run.
CEP is not as efficient an opperator as most other companies so it is more leveraged to the price of natural gas. The fundamentals of NG for the US seem pretty out of wack now. CEP is like a call option for the price of NG in 2010 in my opinion.
CEP does have some valuable hedges which will keep it operating for another year or two. I think if they can actually be successful in drilling and coupled with the hedges, they should be ok in '09 and decent shape in '10.