Looking at Slide 4. We have a summary of highlights for the third quarter. Production for the third quarter came in at 43.8 million cubic feet equivalent per day, 4% above the high end of our previous issued guidance of 42 million cubic feet per day. The feat was in combination of our recent Marcellus wells on the Behm pad in Butler County and continued strong performance from our non-operating Marcellus wells in Westmoreland County. With our 24% production growth over the second quarter, Rex has now had 4 consecutive quarters of double-digit growth and has reaffirmed its full year guidance of 88% year-over-year production growth, which is at the midpoint of our current guidance year. In Butler County, we have also completed our first horizontal Utica Shale test well, the Cheeseman #1H. The well flowed at a 24-hour test rate of 9.2 million cubic feet of dry gas per day. The well is currently shut in and is expected to be placed in service in January of 2012. Patrick will give more operational information on the Cheeseman later in the presentation.Also in Butler County, Keystone Midstream permit for our second cryogenic processing plant, Bluestone, is in the final stages of permitting and is expected to be commissioned in May of 2012. Keystone Midstream has also received the permit for the Voll field compressor station. With the additional field compression, the Sarsen Plant will be capable of processing its full inlet capacity of 40 million cubic feet per day. Commissioning the Voll compression station is expected in January of 2012. In Centre County, Williams has completed the 4-well Resource Recovery pad #3. Two of the 4 wells placed in service had a 5-day average flow rate of 6 million cubic feet per day each and 5.7 million cubic feet per day each over a 15-day period. We are very pleased with the early production rate and improved performance of these 2 wells compared to our first wells in these area.
The additional 2 Resource Recovery wells have been placed into sales, and an update of their production will be available in the company's next operational update.Finally, in our large field ASP project in Illinois, we are continuing to see positive results from our ASP project in the Middaugh Unit. We are now in the process of working with our third-party engineers, Netherland, Sewell and Associates, to assess proved reserve potential based on current information from the pilot area. More information on the ASP project will be given later in the presentation. Moving to Slide 5, there are some bullet points I would like to highlight. As stated earlier, our average daily production increased 24% over the second quarter with oil and natural gas liquids accounting for 36% of the total production. Lease operating expenses for the quarter were $9.1 million, which is an increase of 11% over the second quarter. Looking at this on a per Mcfe basis, it was approximately $2.26 per Mcfe, which is 11% lower than the second quarter. Adjusted net income was $6.4 million or $0.14 a share. This is $2.5 million or $0.05 per share above the second quarter. And EBITDAX, a non-GAAP measure, was approximately $18.8 million for the third quarter or $0.42 per share, which is 41% above the second quarter. Increase in the EBITDAX is attributable to our increased production and lower expected related G&A costs. For a detailed reconciliation of these non-GAAP measures to GAAP net income, please see the appendix at the end of this presentation. On Slide 6, we have our current hedging summary, we continue to hedge our production as the market allows and currently have 92% of our 2012 crude oil production hedged at an average floor price of approximately $68 and $111 ceiling and 48% of our 2012 natural gas production hedged with an average floor price of just over $5. Both percentage estimates are based on the midpoint of our 2011 exit rate guidance of 51.8 million cubic feet equivalent per day. As opportunities become available, the company will continue to add to its existing hedge position in the future. Read the rest of this transcript for free on seekingalpha.com