By the way, what kind of sensitivity does XTXI have to natural gas prices in your opinion? They are driven by volumes, but if prices are down enough then is it not true that E&P activity will stop, and there will be no more growth opportunities for xtxi?
I think if gas prices were to go down, the slowdown in E&P activity would still be very far out in the future, but people would nevertheless price it into xtxi now rather than later.
Crosstex has some exposure to natural gas prices but not a lot. They have tried to avoid any price risk by renegotiating contracts after purchasing assets. They also try and hedge away as much residual exposure as they can.
Given where prices ar currently, it would take a LARGE move down for E&P's to stop drilling. If you remember, the last slowdown in drilling occurred when prices drifted close to $2.00. It will be years, if ever, before we see those kinds of prices again. Granted, E&P companies are doing riskier drilling now that prices are up but I still think at $3.00, we would still see robust drilling. Maybe just not offshore.
I would also be interested in the beer man's opinion.