Last, we also updated our commodity hedging presentation. You may access both the first quarter 2010 earnings press release, and the updated hedging presentation on our website at www.eaglerockengery.com under the Investor Relations tab.As most of you are aware, our conference committee and board of directors have reviewed and approved a series of transactions among Eagle Rock Natural Gas Partners and Blackstone Minerals Company, to simplify our capital structure and improve our liquidity. We refer to these transactions as the recapitalization transactions, and will be bringing certain aspects of both to all of our unit holders on May 14, 2010. We will not consummate the recapitalization transaction without the requisite approval of our unaffiliated unit holders. In connection with the proposed transactions we have filed, the definitive proxy statement, and other documents with the SEC. Investors and security holders are advised to read the definitive proxy statement, because it contains important information about Eagle Rock and the recapitalization transactions. Copies of our SEC filings and the definitive proxy maybe obtained on our website at www.englerockenergy.com, on the SEC’s website at www.sec.gov, or by contacting our Investor Relations department. Engle Rock and our Directors, Executive Officers and other members of our management and employees may be deemed participants in the solicitation of proxies from our unit holders, in connection with the recapitalization transactions. Information regarding the special interest of those who maybe deemed to be participants in the proposed transaction is included in the definitive proxy statement. Information regarding our Directors and Executive Officers is also included in our 2009 10-K, and will be included in the subsequent beneficial ownership filing to the SEC. Joe and Jeff will discuss the recapitalization transactions in their prepared remarks, but the discussion will be strictly limited to information contained in our SEC filings. We will be limited in our ability to address questions regarding certain aspects of the recapitalization transactions on this call.
I will now turn the call over to Joe Mills, our Chairman and CEO, for a review of the first quarter 2010 results.Joe Mills Thank you, Adam. Good afternoon ladies and gentlemen. I appreciate you joining us for a discussion of our first quarter 2010 results. First off I need to apologize about my voice. I have lost my voice in the past 24 hours, so please bear with me as I walk us through our first quarter results. We issued our earnings release after the markets closed last night, and we reported adjusted EBITDA of $36.8 million for the quarter, down by 28% as compared to the fourth quarter of 2009, and 10% as compared to the first quarter of 2009. The reduction in the adjusted EBITDA is primarily due to a material decrease in our realized commodity hedge portfolio as compared to our hedge portfolio in all of 2009. The average strike price on Eagle Rock’s crud and NGL hedges in the first quarter of 2010 fell by 15% to $75.48 per barrel, as compared to the $101.6 per barrel in the fourth quarter of 2009. As a result, cash flow from our realized commodity derivative settlement fell by $15.6 million, to a realized loss of $2.7 million for the first quarter, as compared to a realized gain of $12.9 million in the fourth quarter of 2009. Our first quarter financial results are like the challenges and the opportunities that we face. We continue to benefit from our diversified business model. Excluding the effects of impairments, our midstream operating income fell by approximately 4%, but our upstream and minerals operating income increased by 53% and 12% respectively. Read the rest of this transcript for free on seekingalpha.com