Moving to Slide 2. Before we begin, let me remind you that we will be making forward-looking statements during our call today, and actual results could differ from our estimates for a variety of reasons that we described in our SEC filings. Also, this call may reference non-GAAP financial measures. Our slides in the appendix provide reconciliations to these measures.Let's begin on Slide 4. Yesterday, we reported third quarter net income of $36.1 million or $0.20 per diluted share. This compares to income from continuing operations of $29.4 million or $0.16 per diluted share in the third quarter of 2010. As we have emphasized in our prior calls, we are focused on reducing our cost structure. These efforts proved successful in the third quarter as our combined operating and maintenance and general and administrative expenses were down nearly 7% compared to the third quarter of 2010. Operating cash flow has been strong in the first 9 months of 2011, totaling $364 million, up 18% versus the same period last year. With the success we have had year-to-date, we have raised our 2011 earnings guidance range to between $1.11 and $1.14 per diluted share. Turning to Slide 5. All 3 business units showed earnings improvement in the third quarter versus the prior year. Corporate was slightly lower due to higher interest expense from the $250 million of debt issued in December of 2010. Overall, net income in the third quarter of 2011 increased by $6.7 million or $0.04 per diluted share over income from continuing operations in the same period last year. Moving to Slide 6. Wexpro, our cost of service natural gas development company, grew EBITDA to $56 million, up $6.8 million or 14% versus the same period last year. Net income was up $3.4 million to $25.6 million, an increase of 15% from the third quarter of 2010. These results were driven largely by a higher average investment base, which saw year-over-year increase of $16.1 million or 3.7%. Wexpro's capital investment of $43.3 million in the third quarter was substantially higher than last year as we saw a larger number of well completions and a higher ownership interest in wells drilled. Overall, Wexpro delivered strong results in the third quarter and earned an attractive return on equity, which was 20.7% for the 12 months ended September 30.
Turning to Slide 7. Questar Pipeline, our interstate natural gas pipeline and storage business, had a strong third quarter. Revenue was up $1 million, driven primarily by additional transportation revenues from the recently completed Overthrust Loop Expansion. These results were partially offset by lower revenues from natural gas liquid sales. Net income was $18.8 million, an increase of $2.5 million or 15% compared to last year's third quarter due in part to lower O&M, G&A and interest expense. Capital investment in the third quarter of 2011 was higher due to the investment in our Main Line 104 expansion project. Overall, Questar Pipeline earned an 11.8% return on average equity for the 12 months ended September 30.Moving to Slide 8. Questar Gas, our retail gas distribution utility, saw an increase in gross margin of $800,000 due to continued customer growth and recovery of feeder-line replacement costs. On a net income basis, Questar Gas strongly shows a loss in the third quarter. For the third quarter of 2011, Questar trimmed the loss by $1.2 million versus the prior year. This was due in part to a reduction in O&M and G&A cost versus the third quarter of 2010. On a financial basis, for the 12 months ended September 30, Questar Gas earned an 11.7% return on average equity, driven by a seasonally low level of equity on solid earnings results. Moving to Slide 9. With regard to costs, Questar's consolidated operating and maintenance costs were down $1.4 million due to lower labor and maintenance expense. Our general and administrative expense in the third quarter totaled $24.1 million, down $3.1 million from the same period last year due to lower labor and share-based compensation costs. Improvements in both O&M and G&A costs demonstrate that our cost-reduction initiatives are proving effective. Production and other taxes were slightly higher due to property taxes on higher plant investment. Depreciation was up $1.9 million due to the acceleration of capital investment over the past year. Consolidated interest expense was $800,000 lower due to the redemption of Questar Pipeline's long-term notes using short-term debt, partially offset by corporate debt issued in December of 2010. Read the rest of this transcript for free on seekingalpha.com