利安德巴塞爾 (LYB) 2008 Q3 法說會逐字稿

Hello, and welcome to the LyondellBasell third quarter 2008 earnings teleconference. At the request of LyondellBasell this conference is being recorded for instant replay purposes. Following today's presentation, we will conduct a question-and-answer session. (OPERATOR INSTRUCTIONS).

I would now like to turn the conference over to Mr. Doug Pike, Vice President Investor Relations. Sir, you may begin.

Thank you, Shelly. And hello and welcome to LyondellBasell's teleconference. I'm joined today by Volker Trautz, our CEO, and Alan Bigman, our CFO. And I'd like to point out that a slide presentation accompanies today's call and is available on LyondellBasell.com on the investor presentations page. Now before we begin the business discussion, I would like for you to note that statements made in this call relating to matters that are not historical facts are forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially from those forward-looking statements, and for more detailed information about the factors that could cause our actual results to differ materially, please refer to LyondellBasell's consolidated financial statements for the year ended December 31st, 2007, and quarter ended September 30th, 2008, which are available on the Investor Relations page of our website, www.LyondellBasell.com/investorrelations. Please also refer to Lyondell's, Equistar's, and Millennium's annual reports on Form 10-K for year ended December 31st, 2007, and quarterly reports on Form 10-Q for the quarter ended September 30th, 2008, which were filed with the S.E.C. on November 2008 and each of these which is available through the Investor Relations page of our website at www.LyondellBasell.com/investor he relations. I would also like to point out that a recording of this call will be available until 11:00 p.m. eastern time on December 18th. A web replay can be accessed at the investor presentations page of our website at www.LyondellBasell.com/investorpresentations. Now I would like to turn the call over to Alan for discussion of our third quarter results.

Thanks, Doug. Please turn to slide 3 and we'll begin our discussion with our safety record. Through October, the company has had a strong safety record consistent with the recent years and at world-class levels. Year-to-date results are, however, somewhat worse than 2007 performance. Early in the third quarter this year, a tragic crane accident involving a contractor company occurred at our Houston refinery. 11 contractors were injured in the collapse of the 30-story crane, four fatally. Later in the call we will discuss the event's impact on our turnaround work, but most importantly, this incident reminds us all why the safety of our employees and contractors must always remain our first concern.

Now let's turn to slide number 4 and look at the third quarter financial results. For comparative purposes, we have included a third quarters of 2007 for the legacy companies. As you can see, our EBITDA for the full company was $746 million based on the underlying US GAAP financial information, and the reported inventory accounting methodology which also forms the basis for our covenant calculations. Internally, for purposes of consistency across segments and to more directly take into account changes in raw material costs, we generally analyzed our results utilizing FIFO inventory accounting. Under this methodology, the third quarter EBITDA was $286 million. Under the FIFO methodology, the key differences between the second quarter EBITDA of %1.5 billion and the %286 million in the third quarter include stock effects on legacy Lyondell businesses of slightly over $1 billion and actual lost opportunity cost of approximately $250 million. related to hurricane Ike. Exclusive of these admittedly important and significant factors, overall results are essentially unchanged versus the prior quarter. While this explains the quarter on a high level, when Doug discusses the individual businesses you'll see there was much more taking place within the portfolio.

You will also note that we have highlighted a few items that we take into account when evaluating our results. As we do every quarter, we have added JV dividends and the account facility yield back to EBITDA. We have also highlighted three nonrecurring items. The first being the estimated impact of the refinery turnaround and crane incident. We have further included an adjustment to take into account the hurricane. $43 million of this represents incremental costs that we incurred due to the storm, including such items as repairs, overtime, et cetera. We have also added the estimated opportunity cost of the storm, which is simply an estimate of the lost production assuming sales at prevailing margins. Finally, during the third quarter, our results benefited from a $15 million gain related to the sale of a shutdown Canadian polymer site. Since this is neither recurring nor a direct result of operations, we believe that it is best to adjust this out of EBITDA. Given these adjustments, you can see that on average over the second and third quarter, our adjusted EBITDA has been approximately $1.1 billion quarterly. Unfortunately, the volatility created by raw material movements and the nonrecurring items tend to mask these results.

If you now turn to slide 5, you see our results through the first three-quarters. Year to date, you can see that our adjusted EBITDA on either the as reported or FIFO basis, is quite close at about $3.3 billion. Obviously the year has been extremely volatile as crude has moved through highs and lows and the Gulf Coast experienced a hurricane. We realize that this makes it difficult to analyze our results, and unfortunately this will be particularly apparent during Doug's in depth review of the third quarter. Given this reality, let's first summarize the segment results which I believe will provide some perspective of the balance within the portfolio. Our year to date adjusted segment EBITDA results show that fuels have generated approximately $1.4 billion of adjusted EBITDA, chemicals have generated approximately $950 million of adjusted EBITDA, polymer slightly more than $800 million, while technology and R&D has been steady, generating almost $290 million of EBITDA. In light of the extreme volatility, I think this shows a reasonably good balance across the portfolio.

Now I would like to turn the call over to Doug, and he will discuss the specific businesses.

Thanks, Alan. Let's turn to slide 6 and start with our fuel segment. Results for fuels declined significantly versus extremely strong second quarter results. However, the bulk of the decline was related to stock effects, Hurricane Ike, and turnaround activity. In fact, stock effects alone were responsible for approximately $520 million of the decline versus the second quarter. And approximately 50% of this variance was a second quarter benefit with the balance being third quarter costs. In addition to this inventory effect, Hurricane Ike impacted third quarter results by an estimated $90 million. Now, therefore, nearly three-quarters of the decline is represented by these two factors.

To better understand the results, it's best to discuss the individual components of the segment. The Houston refinery's third quarter adjusted EBITDA is approximately $65 million, significantly less than 640 in the prior quarter. And stock effects represented approximately $340 million of this quarter to quarter decline. Additionally, nonrecurring events such as Hurricane Ike and the turn around impacted the quarter by approximately $215 million. Now, market margins accounted for the balance of the decline as the Maya 211 spread declined following typical seasonal patterns. In the third quarter, Maya 211 spread of $27 per barrel was approximately $10 a barrel less than the record second quarter spread. However, it was several dollars stronger than spreads experienced during the third quarters of 2006 and 2007. Results for the Berre Letain refinery also declined following very strong second quarter results. Again, the decline is primarily explained by the volatility of crude oil prices and stock effects. EBITDA at the refinery declined from approximately $110 million in the second quarter, to a negative $50 million in the third quarter. With this stock effect representing $150 million of this decline. Therefore, when you look on a current cost basis, results were quite steady as crude processing rates were essential unchanged versus the second quarter, and industry benchmark spreads declined by approximately $1 a barrel. A third component of the fuels business is the oxy fuels products. ETBE and MTBE. Third quarter EBITDA was approximately $75 million. Approximately $110 million less than the second quarter and again, stock effects were a major factor, representing approximately half of the decline while seasonally lower margins represented the balance. On the bar chart in the lower right of this chart, you can see that similar to refining spreads, third quarter 2008 ETBE spreads were stronger than they were in the prior year.

Now, there's a lot going on in the third quarter sought may be best if I just step back and summarize. First, the key factor during the quarter was declining crude price and accompanying stock effects. Second, Houston refinery was impacted by planned maintenance activity as well as unplanned disruptions such as the crane incident and hurricane. And finally, margins declined from record second quarter levels but they did remain above historic third-quarter margins. I hope this quick summary simplifies an admittedly complex third quarter, and now let's take a look at the conditions that we're experiencing during the fourth quarter. Thus far, fourth quarter industry conditions have followed typical seasonal trends leading to lower spreads. And this can be seen in the bar charts on the slide. I would like to point out that the spread between WTI crude and gasoline prices has been under significant pressure, becoming negative in October. However, the impact on our business is muted as our refineries produce proportionally more diesel than typical refineries and the Houston refinery benefits from the heavy crude price discounts. As a result, October industry conditions for our businesses were somewhat stronger than during October of 2007. Specific to us, I should point out that one Houston refinery Coker continues to be down for turnaround and is currently expected to return to operation during early December. This and other delays related to the hurricane are expected to impact fourth quarter results by approximately $70 million.

Now let's turn to slide 7 and discuss the chemical segment. Remember that this segment includes our ethylene business as well as our other chemicals which include propylene oxide and its derivatives, acetyls, ethylene oxygenates and styrenes. Overall, the EBIT in this segment as $238 million, approximately $85 million less than during the second quarter. However, compared to the second quarter, stock effects had a negative impact of $485 million and Hurricane Ike impacted the results by an estimated $145 million. The pie charts on this page, you can see the olefins business accounted for approximately 70% of the third quarter's adjusted EBITDA compared to slightly less than 50% during the first half of the year when crude prices were increasing and pressuring olefin margins. Looking more closely at the individual components of the segment, the US olefins business EBITDA was approximately $55 million, which is down approximately $100 million from the prior quarter. Stock effects were responsible for a $370 million quarterly decline and the hurricane impact was approximately $100 million. Absent these items, the business improved significantly, and was driven by margins which improved by approximately $0.14 per pound of ethylene. Our cost of ethylene production metric declined by $0.13 a pound, as raw material costs declined faster than co product prices, and our average ethylene sales price increased by about $0.01 per pound. In the bar chart, you can see that the improvement was in our naphtha crackers. Given the extreme volatility in the industry, our feedstock was also quite volatile, and it began the quarter biased toward NGL, while finishing emphasizing naphtha. The quarterly average feedstock was also impacted by the hurricane as the majority of our impacted facilities were naphtha crackers.

Switching to Europe, our olefins plants were well positioned and results improved approximately $105 million from $20 million in the second quarter. This significant improvement was driven by the strong quarterly olefin pricing, coupled with declining production costs. The propylene oxide and intermediate chemicals continued to perform well. Excluding an estimated hurricane opportunity costs of approximately $45 million, results were generally in line with prior quarter results. As you can see in the bar chart in the lower right portion of the slide, October olefins contract margins were very strong as product price declines lagged production cost declines. However, although contract margins have been strong, spot prices have been weak, reflecting lower product demand. And this led to our decision to temporarily idle the La Port cracker and reduce throughput at other facilities. In Europe, our olefin plants have benefited from the quarterly product pricing convention used within the olefins industry, although the business faces similar volume pressures. And our other chemicals have generally remained on track, but again, sales volumes are pressured by similar trends.

Now let's turn our attention to polymer segment in slide 8. The polymer segment results have held reasonably steady as the adjusted EBITDA improved by $20 million to $247 million. The polymers business was subject to a much smaller hurricane impact, which we estimate approximately $15 million. And within the segment, our polypropylene results benefited from stronger margins while sales volumes declined by approximately 17% due to a combination of seasonally slow sales during summer holidays, hurricane Ike, and the economic slowdown late in the quarter. Polyethylene business experienced similar trends. I should note that US margins were significantly stronger on a current cost basis as ethylene prices declined faster than polyethylene prices. However, stock effects offset this impact. And the advanced polyolefins area and JV dividends continued to record steady results during the quarter. During the early portion of the fourth quarter, there's been significant margin and volume pressure in polymers. In Europe, quarterly monomer pricing has resulted in margin pressure as polymer prices have declined. Meanwhile sales volumes in all regions have been pressured by the economic slowdown and destocking. Additionally, currency values have negatively impacted our European profits when they're translated to US dollar reporting.

Now let's move to slide 9, see our fourth segment, technology and R&D, which has continued to report strong, steady results despite the negative impact of the dollar/euro relationship on our dollar-based reporting. Third quarter EBITDA was $88 million, essentially unchanged versus the second quarter. Now I would like to turn the call back over to Alan to discuss our third quarter cash flow and working capital before Volker wraps up the prepared comments.

Thanks, Doug. I'm going to suggest that we skip slide 10 as Doug has already addressed these points, and would ask you to turn to slide 11. On this slide, you see our third quarter and first half cash flow statements. As you can see during the third quarter operating activities had a negative cash flow, with the bulk of the issue being negative working capital impact. This is somewhat counterintuitive given declining raw material costs. In fact, this is a transitional situation resulting resulting from the timing required to realize working capital reductions coupled with the effects of the hurricane and the Houston refinery turnaround, both of which distorted our accounts payable balances. I'll discuss in this more depth on the next slide.

The next item I would like to draw your attention to is investing activity, which includes $373 million payment as settlement for the Berre refinement inventories. I also want to point out and explain that $169 million of short-term investments. This represents fund that were invested in the reserve money market fund at the end of the quarter. During the quarter, we held significant cash balances, a portion of which was invested in the reserve fund. Following the Lehman bank failure, these funds became temporarily unavailable to us for purposes of immediate liquidity. Therefore, we booked the funds as a short-term investment. During October, we received a payment of approximately 50% of this amount, and additional payments are expected prior to year end. The third item I should highlight is the receipt of $167 million related to the sale of the TDI business and Canadian polypropylene site.

Let's move to slide 12 and look at the working capital situation more closely. The top chart, components of working capital as they change from second quarter to the third. On the left side of the chart, you see the receivables and inventories both decline, bringing up cash. However, the change in payables essentially offset the benefit of these effects. This data does not represent steady state. Rather, it reflects a transitional situation created by both the hurricane and the refining turnaround. The combination of these events caused our Gulf Coast working capital to finish the quarter higher than expected given, of course, the decline in crude oil costs. For example, we finished the quarter holding inventories of crude and olefin seed that had been delivered and paid for, but due to the hurricanes had not been processed. While in other instances, we canceled orders, reducing our normal payables balances. Similarly, product deliveries were disrupted and certain product inventories finished the quarter at elevated levels. The refinery turnaround also impacted working capital as we purchased some lighter crude and participated in the components markets to a greater-than-normal extent. As a result, after taking the foreign exchange impact and the change in working capital at acquired businesses, our base business actually experienced an increase in working capital during the quarter. And we did not realize yet a benefit from cash generation that would typically accompany declining hydrocarbon prices.

On the bottom chart on this page we provided the corresponding year to date chart. On the far right,, you can see that independent of the acquisitions, working capital has increased by approximately $750 million during 2008. Again, we expect this to reverse in the fourth quarter, generating substantial release of cash. If you now turn to slide 13, you can see how these factors have come together to impact our liquidity and net debt. First, addressing liquidity, you see that including the funds in the reserve fund, we finished the third quarter with liquidity of $1.75 billion. While this is substantial liquidity, it does reflect the low point relative to the second and third quarter's average daily liquidity. As I previously mentioned, the volatility around the hurricane and timing of raw material payments resulted in the late quarter decline in our liquidity. Consistent with this, our net debt increased at the end of the quarter, finishing at about $25 billion. That includes the off-balance sheet accounts receivable securitization program. During the fourth quarter, several factors should reverse this situation. First, lower crude oil prices should lead to a significant release of cash from working capital.

Second, the Houston refinery should return to normal operations after the completion of the turn around in December. And finally, volatility related to the hurricane will be out of the system. Before turning the call over to Volker, I would like to close by addressing one final slide. I began this call discussing volatility and need to step back from details to get a better perspective. On slide 14 we have attempted to do this with respect to nonrecurring items that have impacted 2008. In total, these items, including the hurricane and refinery turnaround, impacted the year by approximately $1.8 billion. Unlike 2008, we will enter 2009 without pending acquisitions or residual merger costs. We do not have any maintenance scheduled at the Houston refinery, and hurricanes such as Ike have historically been quite rare. Although we don't expect pressure from these sources in 2009, the economic outlook has certainly worsened, and we share your concerns regarding the business environment and volatility of hydrocarbon prices going forward. I would now like to ask Volker to make a few comments prior to taking your questions.

Thank you, Alan. Well, we certainly live and operate in turbulent times with unprecedented volatility. Doug and Alan have covered many facts and data that we hope to help you model and understand recent results. I think it is best that I step back and try to summarize the situation. Simply put, in our fuels business, our maintenance turnaround, crane incident and hurricane defined the third quarter. In other things, declining crude costs enabled margins to expand, and in the other chemicals, polymers and technology, we continue to benefit from reasonable steady results. However, today our business are in a transitional period during which inventories throughput supply chain are being minimized and production margins have slowed significantly.

Consistent with this we have reduced our production and frankly, with ability is quite weak. I personally expect this period of destocking to extend through the holidays and don't expect to have a clear picture of underlying product demand until early next year. However suffice to say economy has nearly slowed and during the coming quarters we will not have the benefit from the economic tail winds that we had in previous enjoyed from 2005 to 2007. Within this environment, we are taking a number of proactive actions, perhaps most recently has been the idling of one of our US olefin plants and reduction of operating rates, but over the past year, we have taken several actions, including shut down of several polymer plants in preparation for an economic slowdown. These actions have been taken to optimize our system, and they are possible because we have multiple facilities. Simply put, we can meet our customers' current needs more efficiently by operating fewer plants at higher rates. We have similar capabilities across our system including propylene oxide and we will manage all of our product in a similar proactive manner. This is part of an effort to manage inventories to aggressive year-end targets, excluding the unavoidable impact from hurricanes and turnarounds our working capital management effort has been very successful and we will make further progress during the fourth quarter. I expect significant cash generation from capital during the quarter and with it a corresponding reduction of our net debt. The management team is also taking actions to reduce our internal costs further. We have complimented our synergy program with a substantial cost reduction effort. Together these efforts will realize cost reduction and savings that significantly exceed our original $420 million. In fact, my target is $1.2 billion, with a goal of reaching this level in 2010.

We are also taking actions to reduce our capital program to the minimal levels that we deem necessary to maintain safe environmentally sound operation. I currently expect 2009 capital spending to be reduced approximately $800 million, and we will seek further reductions. For comparison, the end of 2008, planning to spend $1.1 billion on our capital program and we now expect to spend slightly under $1 billion. So in summary, volatility and events of 2008 have not allowed us to make financial progress that we have desired. Despite this balance, we see that our portfolio is working well and as Alan pointed out, there have been $1.8 billion of items that we do not expect to recur during 2009. We are taking aggressive actions implementing a cost reduction program to reflect a difficult business environment. In 2008 our synergy program will yield savings that exceed our original targets and I am very confident that the expanded program, including the cost savings program, will also be successful.

With these comments, I will now turn the call over to you for your questions.

(OPERATOR INSTRUCTIONS). Our first question comes from Bill Hoffman with UBS.

Volker, wonder if could you address the outlook that you think for the industry right now with regard to the capacity additions in the Middle East given the significant change in the demand profile that I think we're all working under?

We'll be expecting the next 18 months about six million tons of olefin capacity coming on stream in the Middle East. Of course, that means the pressure to margins will continue. On the other hand, if you read what happened in terms of announcements throughout the industry, including our own shutdowns, there has been a sizable shutdown, OES announced a sizable shut down in Europe, in Asia, and in North America. It's much easier to sum up all that is coming up in the Middle East including the delays which by the way are all between six to nine, in some cases even more than 12 months, but it's much more difficult to sum up the announcements of shut down because here for legal and reasons related to information to worker's representatives, the picture is much more complex. So I an very much aware of the pressure and we are all aware of pressure will continue but, on the other hand, we have already -- substantial announcement in terms of shut down, the picture of real demand in -- is quite unclear. So we believe we have a clearer picture early next year. That's the reason why any forecast at this very moment is complicated.

thanks. Do you have any sense at this point in time -- I know we're going to go through an inventory de stock all the way down through the chain from where you are but how long it might take to get to what we would consider to be a steady state, even in a weaker economy? Is that going to hain mid-January, mid-February, or that kind of time frame?

If you want to hear a positive message, we get, on a weekly basis, detailed information about inventories in Asia. For the first time in twelve weeks, we have this a turnaround in terms of price development. Out of twelve items I get reported on a weekly basis for the first time, seven are up this week, slightly, but we are up. So it seems that we are coming closer to support them. But let's be honest. None of us can really assess real demand at this very moment. We all know it's down, but nobody knows how much it is down. That's the reason why everybody at that time moment is saying, let's wait at least until early next year after Chinese New Year before we have a clearer picture, but it likes like that the pipeline is getting more and more empty and we can see the first price development in opposite direction going slightly up.

Thank you. Just the final question. You threw out a cost take-out number, significant higher than the original synergies target. Can you give us more color on how you get from the 400 target to the billion plus you were talking about?

Well, we had our original synergy program was $420 million, but developed already over the last couple months, a sizable increase. On top of that we launched a savings program, a cost savings program -- including staff reduction, which is -- communicated in details these days internally but all in all we are confident that we will have a cost reduction at least of $1.2 billion until 2010 or until the end of 2010.

Can you give us any pieces of how you get there?

Look, we have also our internal communication necessities, and I can lead you through it in a couple of weeks, very much in detail, but please give us the opportunity to inform first our people internally about it. Many things are already known. For instance, we communicated that we will have a sizable staff reduction already a couple days ago but I would like to keep it first internal before we go to the outside world. Please understand this.

Yes, thank you.

Thank you. Our next question comes from Roger Schmitz of Merrill Lynch.

Thank you. Good morning.

Hi, Roger.

could you perhaps rate the relative cost positions both in the US addressing plants, Corpus Christi ethylene crackers, and then separately, that of Vessling SCA and Munster, just so we understand where they sit versus each other versus your whole complex and versus the industry in the region?

Sure Roger. What you just asked is a pretty complex question, particularly given the volatility that we've seen in raw material costs this year since that is kind of the dominant factor. But if you look at that time sites in the US, and I will start there, I would say Channelview represents two large crackers together, coupled with significant downstream capacity in propylene oxide. It's also one of the most flexible crackers -- sets of crackers that we have so that's probably on the leading edge for us, and it's generally recognized to be one of the leading edge crackers in the industry, I think if you talk to consultants and people. From there, what you find is Corpus Christi is a liquid cracker with pretty good flexibility, so it would be there. When you go into our La Porte and Chocolate Bayou plants, what you are comparing there is at La Porte, a gas cracker with some liquid capabilities, and at Chocolate Bayou, more of a liquid cracker. So trade-off there, circle around raw materials and also the other efficiencies at the site. Now, our Midwest sites are smaller crackers, but they also are coupled with polymer facilities that tend to produce a mix of polymers which have good margins and they crack ethane,and they sit on pipelines between Houston and Canada. They tend to see some discounting on the ethylene there. So while the cracker itself may not be efficient, the complex had very good efficiency for us. So I really can't tell you, here's you line them up 1,2,3,4,5,6,7, because it's very situational, and moving, but I hope that gives you a little bit of a fee. maybe Volker could talk a bit about Europe as well.

Let me compliment a little bit the statement. If you take the settlement costs, we are in some cases on an integrated basis between cracker and polymer in the first quartile, in many cases -- in some cases the second and third quartile. Unfortunately, if you take into consideration the feed stock costs, because Salomon exclude feed stock, then with the volatility we see in feedstock costs, it's nearly, sorry to say, nearly irrelevant value on fixed cost because the feedstock cost was overriding everything in the last couple of months, so flexibility and frankly also touch when you go from heavier to lighter or from lighter to heavier was much more important than either settlement cost position. So it's a flexibility of fuel crackers and flexibility to change from light to heavy and from heavy to light feed, much more important -- at this very moment and unfortunately we don't see short-term an end of volatility in the feed stock area. So flexibility is the most important element at this moment.

If I understand correctly, the Salomon was a benchmark and La porte, entire European ethylene crackers on both a conversion cost and a feed stock flexibility cost?

That's correct. Not only Europe, also North America. It's worldwide.

And do they have inside costs where you give them inside information, or do they just use their basic understanding of the plants?

It gets used inside information where you are in comparison with competition, and that's a very important information for the upgrade and in order to bring your individual facilities higher on the Salomon costs that means to better cost position.

If it's not proprietary, would you be willing to tell us where your various plants, the Salomon study gave, what ratings they gave your particular plants?

It tells you where you are in comparison with competition, yes.

But I think as Volker said, Roger, you see some plants, like a Channelview site is in the top quartile, but the problem with that, I think the difficulty of answering that is there's costs, and then there's the profitability, which, as Volker said, has been more driven by the feedstocks and the flexibility to work the feedstocks this year. What you'd see is basically Channelview would be a top quartile. Some of the other sites would also be in a second and third quartile position.

And in Europe, Michelin has always been in the first quartile on an integrated basis, OpEx in the second to third quartile. So it's usually, if you have such a broad portfolio, by definition, you cannot have full facilities in the first quartile, in some cases, for instance if you take HTPE, we are close to 20, 22% market share in Europe, and you can have all plants in first quartile, that's even mathematics.

Last question, I'll let it go. The Munchmunster Germany ethylene cracker, because it's I think a little smaller, not -- I believe it not on the ARG pipeline, would that be higher or lower, including feed stock flexibility, versus SCA?

That's a typical cracker on a Solomon -- not in the first quartile, but the refineries, which feeds this cracker are in a isolated situation, so we have a substantial benefit from the feed stock costs, liquids going into the cracker, so on an integrated basis, including feed stocks we are positioned -- so that's the reason why we expanded this slightly in the last three years.

Thank you very much for that. Appreciate it.

Thank you. Our next question comes from Michael Boam with BlueBay Asset Management.

Hi, it's Mike Boam of Blue Bay Asset Management.

Hi, Mike.

Very quick question. Just in terms of your covenant EBITDA can you point in the direction of what is actually used and what is allowable to be uttered back for covenant compliant purposes?

Yes, what is allowed to be added back, obviously it's a reasonably complex definition, but in a nutshell what's added back is any money that we spend on cost reduction measures can be added back to EBITDA. Also, extraordinary, not opportunity costs, but extraordinary expenses can also be added back.

So I mean, for the first nine months of the year, what is your, if you like, covenant EBITDA please?

I don't have that number here in front of me, but -- can we give that? No. But there are some substantial add-backs.

Okay. Thank you.

Thank you. Our next question comes from [Satchin Dexter] with Sandell Asset Management.

Good morning. Back to that question of covenant compliance, assuming you guys are not in compliance at the end of 4Q '08 to what extent would you guys pursue the equity cure?

We expect to be in compliance at the end of fourth quarter.

Okay. What about 1Q 0 nine? Assuming is you guys are just not in compliance, would you guys go that route?

We also expect to be in compliance with our covenants in 2009.

Okay. Can you talk about cash burn, what you guys expect in 4Q '08?

We expect to generate cash as we benefit from lower feedstock prices as well as return to a steady state after the refinery turnaround and the hurricanes. So we expect to see an increase of liquidity and release of cash from working capital. --

Flows to our inventories, takes a while, so we free up cash --

Do you guys also have the ability to do open market purchases of debt?

I wouldn't want to comment on that. That's obviously always fairly complex issue that relates to different credit agreements that we have.

All right, thanks.

Thank you. Our next question comes from Gentry Klein with Cedrus Capital.

Hi what is your estimate of insurance reimbursements in terms of dollar amount and timing?

I think that's still being developed at this time, the as you work through that and you work through with the insurance companies is probably premature for us to get into that too much. What you do cuff property damage side. We do have some property damages. We work that through. We would expect there will be a claim and a business interruption. There may well be a claim but would be too early to quantify anything there.

Can you give us a sensitivity impact on EBITDA for every dollar change in the Maya spread, given the decline in the price of crude?

I'll give it to you for the Houston refinery. And, of course, when you get a dollar change in margins at the Houston refinery is worth about $100 million a year. So that's kind of the guideline you want to look at. Now, you typically realize about two-thirds of the change in that Maya 21 spread, so a dollar times two-thirds times 100 that would be your annual impact.

Any thoughts on where you see the Maya spread narrowing? Seems like late '90s the WTI Maya spread was single digits. Do you think it could get down there?

You have to be able to make a call on a number of different markets there. Actually in the last three weeks what we've seen is it actually has opened up some. It had gone down to about $12 and opened up to about $15. So we've been seeing over the last, I'd say couple years, sort of a 12 to $16 range for that spread. Clearly if crude fell to $30, it would be difficult to see spreads of that magnitude but I wouldn't really be in a position to estimate it at this time.

Thanks a lot.

Thank you.

Thank you. Our next question comes from Richard Fehling with Deutsche Bank.

Couple questions. One, at this stage, without revealing too much of the detail, can you provide the estimated restructuring costs associated with the new programs and what kind of charge you might take in Q4 and some of the timing through the balance 2010? Second question is would you or are you considering any divestitures as a means to boost liquidity in the current environment? Third question is just coming back to the explanation you gave on the decrease in the accounts payable. Wondering from a timing point of view we can just expect that most of that would be reversed in Q4, is the message you are telling us expect a partial reversal of that roughly 1.5 billion decline, and over what kind of time period? Thank you.

In terms of restructuring charges, obviously there will be restructuring charges, and you are not talking about tens of millions of dollars. You are talking about more than that. What I would point out, however, is that as we discussed earlier, for covenant calculation purposes, those charges are excluded specifically. So we'll have more information about that, but again, it will be reasonably significant in the fourth quarter and going through 2009 in terms of our reported net income and EBITDA. In terms of disposals, obviously, we don't comment on M&A activity but you would certainly expect in this time a company like ours to be looking more at disposals than acquisitions, so certainly there are some things that we are looking at.

Is anything imminent or are you close to it? Anything like that?

I wouldn't want to comment on that but we certainly are considering certain actions.

Look to imminent in third quarter TDI, and we sold idle sites, so --

Certainly things like real estate and noncore assets, things like that have been sold. You have seen that and you saw the TDI disposal this year. So that's the kind of thing we'd be continuing to look at.

And then the final thing, in terms of the payables, obvious we'll see them increase. I wouldn't want to comment exactly to what level they'll get to. Depends on a lot of fact to including the underlying price of hydrocarbons. We've had a lot of scrambling to keep up our forecast with what the markets are telling us but we do expect to see an increase in payables as we go through the fourth quarter.

the context of that # .5 billion decrease, is that most of that do you expect reverse at this stage, because we're kind of mid-November at this stage. I guess what I'm trying to ask is how much of that -- (multiple speakers) What you think think about, typically when you have looked at our receivables and payables they pretty much balance and you can see the change was kind of out of balance so you might think of that as a way to look at it. Obviously there's two things happening. One was the specific payables that were canceled, et cetera, but the other is that your payables are going down with crude price and energy prices. So there's an awful lot happening to try to do it. I think if you maybe -- rule of thumb, you might follow the receivables, payables change and look back over time and how the company has done.

Okay, great. Thank you.

Thank you. Our next question comes from Edison Wayne with Trust Company of the West.

hey, guys. Most of my questions have been answered but two quick questions. Are you guys seeing out of your customers, a couple of my other companies have noted that in earnings calls, that some of the clients' liquidity with the credit crisis have been pulling orders, unable to get funding to buy product. Are you guys seeing that in terms of stuff on a customer side where you have people pulling orders because they don't have the liquidity at hand to pay for product and what do you guys do about that? I guess the second question really revolves around, you guys are shutting down the coker, restarting it in December. I see in your fuel segment business, EBITDA really taking a hit in Q3, you expect to hop that up in December, only getting one month of production out of that coker in Q4. What can I see a run rate EBITDA for Q4 for the fuel segment and what are you kind of expecting in '09 to get this ramped up to what sort of run rate level?

Let's -- let me start with the latter question, and the Coker. What you saw in the third quarter was a combination of the crude spills and the Coker being down. So what we're looking at for the fourth quarter is an operating rate, a crude consumption rate that moves us from the 143,000 barrels a day rate, north of 200, probably closer to up to 225,000 barrels a day. So you'll see some strength from that. Having the coker down, in October held back rates to a certain degree. In November, we're now operating closer to 220, and then December will be a full rate. So I think it should work from there. What we're seeing as far as full Maya 211 spreads, typically $21 or $22. I think they're $23 or $24 today. It's a little difficult to give good guidance because you're seeing coker spreads turn around as fuel aisles change, but I think if you think along those rates, if you think of 143,000 barrels in Q3, then north of 220 or so in Q4, that should help you out. Into next year, we should remind you we don't have any major turnaround activity into next year, and we've continued to see Maya 211 spreads independent of the gasoline issues at over $20-some. That's a winter type of number. History would say you see several dollars more in the summer.

Just in regard to what you guys are seeing out of your clients?

You want to handle what we're seeing from customers?

Well, from customers, first of all, demand is relatively weak because they have, of course, also destocked, waiting for supplies -- with respect to liquidity, with respect to credit crunch for our customers, you have to differentiate, the big ones, the small ones. Until now, we had only a small number who didn't pay but in general, of course, it is within our risk management, the focus at this very moment, because liquidity crunch is all over the place.

Order patterns have been more influenced by anticipations of falling price than they've been by credit issues and limitations of our customers. So I think as people cut back they certainly are working --

Many positive points at this moment but if for instance, for our customers, polyethylene, which costs a couple weeks ago $2,000 is costing now $1,200, and in some areas, far below $1,000. So, of course, the credit situation also in terms of relief.

I see. And you are not seeing any major clients still pull orders in order to put -- place an order and then just say they couldn't pay for it? You guys aren't working with them or haven't seen any of this with your clients?

I'm not aware of that. That's not been specifically the issue that we've been facing. Certainly we've been facing an issue of reduced demand in some segments, but not specifically for credit related reasons.

Look, as long as customers expect we can buy our product, for a cheaper price tomorrow, they simply do not order what they will not use today, not even tomorrow. They order hand to mouth what they use tomorrow today and that's why it's so complicated at the moment to get a real hand on demand. Everybody is destocking across the value chain. Not only our customers, their customers as well.

Last question. Looks like you have 860 drawn on your revolving credit facility. Obviously good time to be holding cash is this draw based on you guys wanting to hold more cash on balance or is it just seasonal where you guys are having this issue with the working capital and you drew some down, probably pay it back later?

If you think about the end of the third quarter, obviously there was a lot of concern about not only commercial counter parties but financial counter parties as well. So a lot of corporations like ours prefer to hold on to cash rather than have available credit lines. We will be reducing that going forward a bit as things stabilize.

I think that was a good move. Thanks a lot, guys.

Thank you. Our next question comes from [Alexi Rinaud with West LB Moen.]

Good afternoon. Alexi Rinaud from West LB Moen Asset Management in Germany. I have two questions. First, is it correct to savings of $1.2 billion achieve by 2010, out of the $1.2 billion how much did you already achieve? And my second question, working up to your working capital reversal or influential firm, could you give the rough figure of how much expect, 2, 3, $400 million or even more, just an indication of where you would expect to receive in Q4?

Okay. In terms of how much we've already realized in terms of a run rate, we're going to sort of have a good figure by the end of the year but probably we're running now at about 250 to $300 million already of that in one rate achieved for the cost savings, and that's ramping up reasonably well. In terms of the working capital that is somewhat complicated and we discussed it on the payables side earlier, but I would be disappointed if we got through the fourth quarter and didn't have at least a neutral working capital, before the acquisitions for the year, but it's going to depend on a lot of different factors.

When you say neutral working capital, is it against the start of the year or --

Start of the year, that's correct.

Start of the year.

Yes.

So it would potentially mean, your other figure of just take -- you have an outflow of 756 year to date, so if I am conservative, I would say that below 500 you would be very disappointed.

If you look at where we've come to in terms of hydrocarbon price deck, from the beginning of the year to the end of the year. We would certainly expect to be at least working capital neutral, and hopefully a bit positive with that kind of price movement, but again, it does depend a little bit on timing, and it also depends on where we are at the end of the year, and volatility goes in both directions as we've seen, so it depends a bit on what we've come to by the end of the year.

Okay, good. And is there any further room to reduce your CapEx in 2009? You say $800 million, around, if the market condition were worsening again, would you -- is it possible that would you use your CapEx to 500, 600, if it was necessary?

We basically have closed any expenditure for any growth project for quite awhile. What we are considering in terms of CapEx for next year is on a quarterly basis what we need for legal requirements, for safety, and for maintenance to keep our facilities running. Nobody is spending money at this moment for growth or for additional project, so we are looking on a quarterly basis in this volatile environment, and we'll spend what is necessary in order to run our facilities a safe way.

And that makes around 800 million.

Certainly not more than 800 million. Probably a little less.

Thank you very much for your answer.

Thanks a lot.

Thank you. Our next question comes from [Taric Ahmed with JPMorgan].

Good morning. You talk a little about the JV. When do you expect production to come online, and what kind of timing could we expect dividends from the JV to start being received?

First part of the question is very simple. We ran at nearly full rates ethylenes in quite a while, polymer plants are coming onstream at this very moment, so we believe that we have integrated values, monomer and polymer early next year, most likely, we will already substantial quantities in December, but let's be on the safe side, we believe full throughput or ramping up to full throughput early next year. (inaudible) that's the only one from all projects in the Middle East that started on time and on budget.

As far as dividends, that depends on two things.

Depends on the profitability, which even at these oil prices should be quite strong. Also, obviously -- so normally we say it's sort of 24 months after startup, you should be able to start look at. That you have got a good track record you'll start to repay some debt, but it will depend on what the credit markets look like at that time. So certainly, I wouldn't model any in for 2009, 2010.

Global and local which are obvious big question marks. But hopefully by two years from now we will be in a slightly different position.

Then I guess on the credit market issue you noted in your filing that your sponsor was involved on a $1.6 billion swap on some of the interim loans? Any color that you could provide on that transactions, help us understand what's going on there?

We wouldn't want to provide further detail on that. What's in the disclosure is what we can provide.

On a similar note then, you still have that $750 million revolver from the sponsor? Can you talk about when that expires and any other color you can give on that?

I think that's been disclosed that that's an 18-month revolver -- I think that one is very fully disclosed in our financials, and that is what it is.

And so that is available today if you have drawn on it?

That is available today.

Thank you very much.

You are welcome.

Thank you. Our next question comes from [Mitsi Yannu with ECM].

Hi. Wondering if you could walk out through what you project as a quality trend versus Q4 last year both in terms of the fuel and olefins. What I'm actually trying to get color for you is how much of the demand decline, volume decline you see is related to customer destocking, how much is really demand decline.

Hi, Mitsi, this is Doug. For us on the fuel side is really a function of a different question than you asked. I think our fuels businesses will be more running full as production capabilities allow us to, when we return to Houston refinery to full production, so that's not so much a function of demand for gasoline or a demand for diesel for us. On the olefins side, as Volker said earlier, we don't have the visibility. We don't anticipate we will until end of the first quarter to really be able to differentiate what percentage of a slowdown is destocking and what percentage is really an economic slowdown, and economic activity.

I wouldn't go so far to say it would be a pure speculation for our side to come out with any figure. I had a couple of meetings recently in our chemical association was everybody asked the same question: what is the real demand at this very moment? And to be frank, nobody has an answer, and that's the reason why we can not speculate. It is, in comparison with the last year, substantially down across all product lines, but how much is real, and how much is destocking? The only thing you can say, the pipeline in Asia of course is much longer than the pipeline in North America and Europe. So destocking in Asia has been going on for quite a while, and it's very very difficult to assess. Allow me not to speculate; I can not answer this question.

Just to fine-tune my questions in terms of Q3, you did refer to the year-over-year decline in the gasoline volume, and the trend you see going forward, as opposed to contemporary adjustment, depending on the crude price, and in terms of customer discounting, when did it start? During Q3 or is it more of a Q3-Q4 story?

I think it's the best we could estimate. And I'll stay away from gasoline but go into more the chemicals and plastics. We saw some in Q3 but clearly in the last month or so, you see kind of a step up of the activity as people are approaching the end of the year and as you've seen a very significant fall on the cost side. So I would say Q3 reflects some but certainly Q4 is a step up from that level. I don't know if that helps you, but probably about as best as we can say.

Just one on the -- given that you had some rating actions in the last couple of days. Would that affect either the availability or funding costs on asset-backed facilities you have?

No, no. You know what that does, the cap on some of the bridge loan pieces, is the only real things there.

Okay. But 12.5 is the maximum, or can you actually go further?

12.5 is the maximum.

And you guys are already on the reporting for the facilities?

Depends which ones, but -- Not on daily reporting.

Okay. So how are the extra availability determined?

Availability really hasn't altered, and we've got it laid out there. Okay?

Okay. For example, your inventory facilities, am I correct to assume that your availability would be strained if the hydrocarbon pricing keeps coming down?

The rating action does not impact the availability under the facilities.

Our next question comes from [Beth Fusco with Corderis. ]

Yes, good afternoon. I did have a couple of follow-ups on liquidity matters. Actually, one on the receivable securitization program that Mitsi just referenced. In your quarter report you do note that a rating downgrade did result in your moving to daily reporting, and that it may be that that facility, the 620 million euro facility, may no longer be -- might affect availability of that facility so I would appreciate it if you could clarify that for us, please.

Let's be clear. We're talking about different things. The European receivable securitization there is daily reporting, and that's been in place for awhile. In the U.S.A. B F, there is not. But the availability is not impacted by this.

Okay. So the 620 million euro facility, or $889 million, you still have full availability on that?

Yes, that's correct.

Okay. And -- all right, fine. And the daily reporting, can you just explain what that's all about, is that a daily calculation of how much you could draw, or what is involved with that?

We don't provide a daily report of receivables. It's just a matter of how frequently you show what the availability should be. This is just more careful monitoring. That's all it is, Beth.

Okay. So it's not -- there isn't some underlying borrowing base calculation going on there?

No -- (multiple speakers)

clarification. All right, fine. I had another question, and that was on your pension funding, which you noted would be underfunded at the moment. When do you have to test that to top off?

That's a year-end test, and right now we anticipate that we're fine with that pension funding.

Okay. All right. Thank you very much.

Thank you. Our next question comes from William Matthews with Canyon Capital.

Hi, Bill.

Hey, Doug. How are you doing? You touched on this a little bit but can you just give us maybe a little more color on the refining side what the outlook is for capacity additions, specifically kind of additions that would target the diesel market a little bit and therefore maybe increase capacity in an area you have an advantage right now?

I think the key thing here is where people add ability to process heavy material what you have seen is you have seen recently two refineries that were going to process heavy Arab crude be delayed and postponed what we are going to see in shorter term here is facility, the Motiva facility in Port Arthur is going ahead, has been under construction, and that's a 2010 capacity. Other than that, I think there's some in 2011. So really if you look at refining capacity, Middle East center, it's more of a 2012 type of event.

Which came on stream quite recently which is processing heavy Saudi crude, and certainly too far away for South American processing.

Okay. And then, separate question, I had in my notes for last quarter that there was potentially a payment you were going to receive from Reliant. Has that come in? Did I write that down incorrectly?

From Reliant.

Different companies. It's a North American service provider. The reliance is an Indian competitor.

Reliance that payment did come in.

What was the size of that payment?

I believe 60 some million dollars, I believe. almost 70.

Great. Thank you.

We're going to take a few more questions, but we're running long on time, so if people could be short with their questions and limit them, it would be favored by us. Thank you.

Thank you. Our next question comes from [Douglas Capri with KKR.]

Most of my questions have been asked but just a couple quick ones. Can you give us details of your interest rate hedging that you referenced in the quarterly report and can you speak to any FX hedging that you do or more broadly philosophically your approach to FX hedging?

Interest rate hedging, I think we have disclosed what we wand to disclose, but it's not -- we've just done a little bit of given the amount that we have. But I think probably we did a little bit less than we had wanted to do. In retrospect, that's probably a good thing, but that's where we are with that. In terms of currency hedging, really we've looked at it and we obviously have revenue and EBITDA and cash flow in euros, and offsetting that we have a significant chunk of euro debt. It's not exactly balanced, but we're reasonably comfortable with where that is right now. The way we normally think about it is that would you want to have an equal amount of euro debt compared to what you are expected revenue and cash flow is in Euros. What your expected revenue and cash flow and profitability is in euros what. We also do is we do some -- call it accounting hedging where you offset so that you don't have a lot of swings in your net income based on that where, you write that against certain capital assets, but that's not really financial hedging. So that's really the philosophy that you want to balance off the profitability and the cash flow against having corresponding amounts of liabilities net currency. Almost exclusively that's euro dollar, in our case.

Great. Just one follow-up. On the accounts payable, any changes to your accounts payable terms this quarter and did the downgrade on November 14th -- did that have any impact on payable terms, vendors?

There's not a direct impact. Obviously just as we are working to try to reduce credit terms for our receivables, we're on the receiving end of that on payables. It's going on throughout the industry and the economy. But one thing just as we see that our customers are getting some relief from lower hydrocarbon prices and lower sales prices we're getting some corresponding relief on the payables side where to the extent that we have a credit limit it's easier to stay under that with much lower prices. So there's no direct impact on that, and I think that a lot of the downgrades and the -- sort of the pessimism that you get from the rating agencies and a lot of people are already surprised about the way people were thinking before that happened.

Okay. Thanks.

Thank you. Our next question comes from Perry Shaw with Princeton Advisory Group.

Hi, guys. Just wanted to confirm, what is the amount of debt amortization that's coming up in the fourth quarter of this year?

Debt monetization?

Amortization.

Our amortization has been about $190 million per year and that's basically quarterly, so something under $50 million.

And none of your facilities are coming up for renewal next year, right?

No, no. We stay at that level with the exception of a 2010 bond which is $100 million, but otherwise we'll be at that level for a couple years.

One of the things when we designed our capital structure back in 2007 was it was designed to anticipate not needing to get back to the markets for some time so that gives us a little bit of insulation.

Just one clarification, as far as the covenant EBITDA calculation, the stock effect, is that added back, or --

What we use is we use the as reported EBITDA. So when we talk about our FIFO EBITDA that we use for internal and segment reporting purposes that's not the EBITDA that's used for covenant calculation purposes. The as reported EBITDA which is a combination of LIFO for most of the US assets and especially the legacy Lyondell assets and FIFO for the European assets is what forms the basis for the covenant calculations so that's the one that's used for covenant calculations.

Okay. Thank you.

Thank you.

Thank you. Our next question comes from Vincent Lepine with BNP.

Hello. My question has been answered but I just wanted to check out something because yesterday you reported income of plus $274 million, and today given FIFO minus 94. I just wanted to check because the difference doesn't come to 460 -- would you know what the --

There are some other differences between IFRS and US GAAP accounting.

Any major ones?

Well, there's a few different ones, and might be best to go over those on the side sometime I think Vincent.

Just as an example, some of the asset-backed facilities that we have in North America are off balance sheet for US GAAP and on balance sheet for --

Probably better to take that off-line. There are some differences between US besides the way you do LIFO or FIFO.

Oh, right. And so as reported, presentation for Q3, 1.1 billion. Presentation page 4.

That's adjusted EBITDA, right.

Yes. Is that the one you would report because you can add just for --

Not all those adjustments would necessarily covenants. What Alan was saying, when you take the EBITDA as reported that is your baseline, then love some adjustments from there such as expenses related to achieving cost reductions, some extraordinary things, some of the hurricane impacts, some of the incremental cost there, some things like. There's a number of other adjustments. But -- as reported EBITDA that serves as the base for the covenant EBITDA calculation.

Okay. On your (inaudible) is there any chance -- coupon level, or do you think there's any chance you can initiate a buyback a little bit more, or is that an idea that you would --

I think you'll understand when we say we prefer not to comment on something like that at this point.

Thank you.

Thank you. Our next question comes from David Bird with Capital Management.

Hi. My questions have essentially been answered, but just circling back to the access industry's $750 million revolving facility can you comment on whether the industry is considering rolling that over?

I wouldn't want to comment on. That it's an 18-month facility as it is now.

Okay, thank you.

Thank you. Our next question comes from Bo Hunt, Banc of America.

Most already answered. Couple questions. The Berre refinery, what was EBITDA generation for the third quarter out of that?

EBITDA for Berre refinery in the third quarter it was negative 50. That's a FIFO-based number, so what you saw was you went from 110 to negative 50, and 150 million difference beg the stock effects.

I think one of the issues that we're facing is that neither inventory accounting method is quite adequate for the incredible swings we've seen in feed stock prices and a lot of the sort of normal profitability that you would see in a steady state is overwhelmed by the stock effects, whichever way you look at it.

I think, Bo, the best thing for you to do, put the two quarters together. Rates, 105,000 barrels in each period, and the industry benchmarks are within a dollar of each other in the quarter. So that will take out some of the noise of crude prices.

I got you. You would have been positive if not for the FIFO effect?

Oh, yes.

Is there any number you can give us for roughly where that would have been?

Add second and third quarter together, and that's -- kind of give you an average of the two quarters and effectively takes out this big swing crude up and then down.

Okay. Getting back to when you were talking about your Texas facilities, I think you mentioned La Porte runs off NGLs, but that's actually the facility idled in the fourth quarter. Is there a lack of integration, or what drove that decision? I would think that --

We still favor naphthas at this point in time. There's other factors of course, in all decisions but we still favor naphtha at this point in time.

Okay. Can I just pry a little more? Why is that right now? Is that for propylene purposes?

It's our cost of ethylene is better that way, and there are other factors like the -- producing the broader mix of product that come in, but it is a lower cost of ethylene for us right now.

Okay. And then -- this one is going to be a little tricky to answer but can you try and provide any kind of magnitude for what was the effect on your working capital from the hurricanes and the Coker outage in the third quarter?

You are right that would be tricky to answer.

Worth a shot.

I don't think I could do that, Bo.

Awful lot of volatility, and it's hard to say, oh this was this, and this is X, and that's Y.

Substantial. I think we're going to take one more question. Apologize to those that we're not able to cover. I'll certainly be available.

Thank you. Our final question comes from David Rosenberg, Oak Tree Capital Management.

Made it within the wire. Last question I had, most of mine have been answered, and I don't mean to beat a dead horse on the payables, but I just wanted to confirm, with payable days down so much more than receivable days, that there's no tightening of terms with your customers. It looks like there had to be some tightening, and it couldn't all have just been receiving feeds that you couldn't process because of the hurricanes given the dramatic difference in the days there.

Again, as I've said, there is obviously -- and it's very difficult to see the steady state given all the disruptions of the hurricane and the turnaround there of course has been some tightening in payable terms just as we've been tightening in receivable terms. To Doug's point you would expect to see a reasonably similar amount. Impact should be hopefully fairly neutral when we're through that, but we'll see when we get back to steady state. We have within helped by the reduction in hydrocarbon prices that means even some tightening in dollar limits doesn't impact your volume.

So if there has been some tightening in turns, is that expected to loosen, or is that kind of what keeps you from expecting it all to come back?

Some of it, as Alan said, is a function of when you were at higher crude price levels you were starting to push up against credit limits in dollars, so in some cases you moved over that. Now you are at lower prices so there's a little bit loosening from that but clearly it's still a tight credit market. I don't see that as the major factor. I think the major factor is just what we said. The hurricane and the turnaround and disruptions created by those very, very large swings, and you see it also in our inventories when you look at the inventory movements aren't quite what we'd expect.

Okay. Thanks.

Thank you. To those that we weren't able to take your questions, I apologize, but we are just time limited today. To everyone else, I'd say thank you for your attention.

This does conclude today's conference. You may disconnect at this time. Thank you.