Drilling revenue for the three months ended March 31, 2012 totaled $29.0 million, an increase of $6.3 million, or 28.0%, compared to $22.6 million for the three months ended March 31, 2011. The favorable variance resulted from domestic and international market share growth and penetration with both new and existing customers, changes in customers' product mix demands, increased rig count, increased lost in hole revenue, favorable crude oil commodity prices, new product development, specialized customer demand for existing product adaptation, continued cross segment sales marketing efforts, sales force revitalization, and competitive pricing relief.
Drilling gross margin for the three months ended March 31, 2012 increased by $2.6 million or 28.7% to $11.5 million from $8.9 million for the same comparable period over period while gross margin as a percentage of revenue remained relatively flat increasing 0.2% to 39.7% from 39.5%, respectively. Drilling income from operations for the three months ended March 31, 2012 increased by $0.9 million or 18.1% to $5.5 million from $4.7 million for the same comparable period in 2011.
Artificial Lift revenue is still derived primarily from coal bed methane ("CBM") drilling activity, and is highly correlated to the price of natural gas. Artificial Lift revenue for the three months ended March 31, 2012 totaled $2.6 million, a decrease of $0.8 million, or 23.3%, compared to $3.3 million for the three months ended March 31, 2011 due to softened unit installation activity resulting from lower natural gas drilling activity driven by low natural gas prices, as compared to 2011. The decrease in revenue was partially offset by an increase of $0.4 million receivable from an international customer due to increased customer activity over the comparable period in 2011.
"The dedication, determination and effort of the entire Flotek team resulted in a solid start to 2012, for which all should be proud," added Chisholm. "Our goal remains to build on that momentum and focus on innovative ways to improve performance, accelerate profitable growth and position Flotek for durable growth across cycles. While we had predicted that April would be on plan, but less than record March levels due to spring break-up in the Canadian and U.S. Rockies, we believe we can show solid growth in the second quarter. While our team is pleased with the quarter, we are far more focused on the challenge of continuing to grow Flotek, providing industry-leading returns for our shareholders and making a difference for all of our stakeholders."
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