Please refer to Slide 2 in our presentations and note that our discussion today will include forward-looking statements within the meaning of securities laws. While we believe the expectations in such statements to be reasonable, there can be no assurance that such expectations will prove to be correct.Our 2011 first quarter highlights. Please refer to Page 3 of the presentation where we summarize the first quarter results. The weak natural gas prices continue to hold back our financial results despite the strong production growth we had in the first quarter. We reported revenues of $88 million, generated EBITDAX of $65 million and had operating cash flow of $56 million or $1.18 per share. The gain we recognize from selling some of our Stone shares allowed us to make a profit this quarter. We reported net income of $2.4 million or $0.05 per share. This quarter, a solid return of strong production growth as our production increased 18% over the fourth quarter 2010 number. We are back on track in our Haynesville operations having overcome the shortages of track crews that adversely impacted our production in the second half of last year. With our dedicated crew in place, we are more confident about our production growth and our increasing our guidance for production from a 16% to 23% increase to a 26% to 32% increase. Our 2011 drilling program is off to a good start. We drilled 19 successful wells, including 15 Haynesville shale wells and 2 Eagle Ford shale wells in the first quarter. We are most excited about our most recent Eagle Ford shale well in McMullen County, which is recently out on production at a rate of 1,264 BOE per day. Our balance sheet continues to be very, very strong. We completed a $300 million senior notes offering in the first quarter, which extended the maturities of our debt and added to our liquidity. I will turn it over to Roland to review the financial results for this quarter in more detail. Roland?
Roland BurnsThanks, Jay. On Slide 4 in the presentation, we break down our oil and gas production by quarter and by operating region and we highlighted our production from the Haynesville program in blue on the chart. In the first quarter of this year, our production averaged 222 million cubic feet of natural gas equivalent per day and 18% increase over the fourth quarter of last year and 6% higher than production in the first quarter of last year. Production in this quarter set a new record high for onshore operations as we have now overcome the shortage of completion services, which impacted our Haynesville operations in the third and fourth quarter of last year. Haynesville production increased to 133 MMcfe per day as compared to 94 MMcfe per day in the fourth quarter of last year. Production from our Cotton Valley wells declined to 41 MMcfe per day, and we averaged 38 MMcfe in our South Texas region and 10 MMcfe per day in our other regions. Despite a number of interruptions due to plant or pipeline spinning down due to the extreme cold weather we had in the very early part of the quarter, the reduction of completion activity for our Haynesville wells allowed us to have a strong production quarter. With our dedicated frac crew now in place and operating very effectively, we now expect 2011 production to approximate 92 Bcfe to 96 Bcfe, which represents a 30% to 36% growth over 2010 production if you exclude the 4% of 2010 production not related to the properties that we sold last year. Oil prices continue to be very strong in the first quarter, which we cover on Slide 5. Our realized average oil price increased 34% in the first quarter of 2011 to $89.94 per barrel as compared to $67.08 per barrel in the first quarter of 2010. Oil price in the first quarter averaged 96% of the average benchmark NYMEX WTI price.
With 96% of our production natural gas, the weak natural gas prices offset the strength of oil prices and had an adverse impact on the financial results this quarter. Slide 6 shows our average gas price, which decreased 25% in the first quarter to $3.96 per Mcfe as compared to $5.30 in the first quarter of 2010. Our realized gas price was 96% of the average NYMEX Henry Hub gas price during the quarter.On Slide 7, we cover our oil and gas sales. the lower natural gas prices offset the 6% production increase, and our sales declined by 17% to $88 million in the first quarter. Our earnings before interest taxes, depreciation, amortization and exploration expense and other noncash expenses or EBITDAX also decreased by 19% to $65 million, as shown on Slide 8. Slide 9 covers our operating cash flow. Our operating cash flow for the quarter also came in at $56 million, 22% lower than cash flow of $72 million in 2010's first quarter. On Slide 10, we outlined our earnings this quarter. We reported net income of $2.4 million or $0.05 per share as compared to the earnings of $7.3 million or $0.16 per share in 2010's first quarter. Our first quarter financial results included several unusual items. We retired our senior notes, which were due in 2012, in the quarter, with proceeds from a $300 million senior notes offering. The first quarter 2011 results included charge of $1.1 million or $0.7 million on an after-tax basis or $0.02 per share related to the early redemption of the 2012 senior notes. Read the rest of this transcript for free on seekingalpha.com