These factors are listed under risk factors in the company's Form 10-K for the year end December 31 st, 2009, and in the company's Form 10-K for the year end December 31 st, 2010 to be filed with the SEC, as updated by any subsequent Form 10-Qs, which are also on file with the SEC and available on our website. Today's call may contain certain non-GAAP financial measures. Please refer to the morning's press release for important disclosures regarding such measures and forward-looking statements discussed on today's call.With that, I would like to turn the call over to Phil Conti. Phil Conti Thanks, Pat, and good morning, everyone. As you read in the press release this morning, EQT announced 2010 earnings of $1.57 per diluted share compared to $1.19 per diluted share in 2009. Operating cash flow in 2010 also increased by $215 million, or about 50% after normalizing for changes in tax refunds. Those results were driven by another outstanding operational year at each of EQT's business units. Leading the way on the annual operating performance was a 34.5% increase in sales that produced natural gas at EQT production, which represented our highest (inaudible) ever. Gathered volumes at EQT Midstream also increased by 21%, trending up with the higher volumes in EQT production. Somewhat tamping down the impact of higher volumes, the EQT average well head sales price was $5.62 per Mcf in 2010 or about $0.18 lower than last year. The realized price drop resulted from having fewer hedges in place as compared to 2009, as well as a slightly lower average hedge price, although much of the hedging impact was offset by higher NYMEX and natural gas liquids prices. Liquids price impact is not trivial at EQT, as approximately 8% excluding [FN] of our total production within the form of liquids. For segment reporting purposes of that $5.62 per Mcf, $3.93 per Mcf was allocated to EQT production, with the remaining $1.69 per Mcf allocated to EQT Midstream. Now, that split represents quite a change from our historic allocation, so I will take a moment here to explain.
As you know by now, earlier this month, we announced that we are selling our Kentucky processing assets to MarkWest and entering an agreement with MarkWest to process our liquids-rich Huron gas. That agreement reflects EQT paying a processing fee to MarkWest and retaining a majority of the frac spread.Historically, we have reported that frac spread associated with EQT productions natural gas liquids in the processing line of EQT Midstream's results. Now that EQT Midstream is exiting the processing business, we have eliminated the processing line item from the Midstream segment page and going forward, the revenues from liquids produced from EQT productions wells will be recognized in the realized price per Mcf at EQT production. Frac spreads associated with third party gas have been left in the Midstream segment and are reported under the storage, marketing, and other line of the recast Midstream report. Do note that processing fees paid to EQT Midstream through the close of the sale, in other words, while EQT is still in the processing business, have and will continue to show up in Midstream results in that line. We reported full-year 2010 and the recently completed quarter in the new format. To help you compare historic results, we have posted reconciliations to the previous presentation format on our website. A final comment on the new presentation format, beginning next quarter or the first quarter 2011 in the price reconciliation table including in our earnings report, the revenues to EQT Midstream deduction will no longer include processing charges associated with EQT's production, lowering that deduction by approximately $0.8 per Mcfe. However, MarkWest processing fees will show up in the third party gathering, processing and transportation deduction in the table and reduce the average well head sales price to EQT by approximately $0.15 per Mcfe. Read the rest of this transcript for free on seekingalpha.com