Our gross Marcellus shale production as of October 20, 2012, was approximately 154 Mmcf per day (32.4 Mmcf per day net), which represents an increase of more than 37% since the end of 2011. For the week ended October 24, 2012, we had more than 19.5 Mmcf per day (4.0 Mmcf per day net) of production shut in due primarily to offset drilling and completion activities. We have implemented a development program within our acreage in Northeast Pennsylvania and are continuing an appraisal program in Central Pennsylvania. Most of our drilling activity will be in Lycoming County, Pennsylvania where we are realizing our best returns in the Marcellus shale, particularly in West Lycoming where our last completion had initial production of 6.9 Mmcf per day. However, we continue to see good results in Central Pennsylvania with initial production from our most recent wells averaging over 7.0 Mmcf per day. We are currently drilling with one operated rig. Our budget, as revised in February 2012, was to drill 49 gross (12.4 net) operated wells in the Marcellus shale play in our Appalachia region. Of the 49 wells, 46 gross (11.5 net) are development wells and 3 gross (0.9 net) are appraisal wells. We continue to evaluate our 2012 Marcellus program, which could impact our rig count, activity levels and number of wells turned to sales. Our net drilling dollars are reduced by the effect of the carry we receive from BG Group. Approximately $5.2 million of the carry remains available to us from BG Group as of September 30, 2012. We expect that the remaining carry will be used in the fourth quarter 2012.
During the third quarter 2012, we spud 3 new operated wells and drilled and completed 10 gross (2.9 net) operated wells in the Marcellus shale. These 10 completed wells include nine wells in Northeast Pennsylvania and one well in Central Pennsylvania. We are also focused on building our field infrastructure, particularly water handling lines, storage and disposal facilities, in support of our expected levels of activity. These infrastructure investments are expected to be the primary drivers to reduce our average development well costs.