Paul KorusGreat stuff. Thank you, Mark. Our earnings release detailed very positive results of operations for 2011 and a favorable outlook for 2012. Before turning the call over to Tom and Joe to describe these accomplishments and expectations, I'd like to briefly reiterate just a few financial highlights. First off, I need to mention ahead, our view of 2011 is challenged by the fact that it's often compared to our record results in 2010, a year in which we hit on all cylinders and set new highs for most measures. Not even Jeremy Lin scores more points each and every night. Still at 2011, we achieved even greater revenues in cash flow than we did in 2010. Our revenues reached nearly $1.8 billion versus $1.6 billion in 2010. Our cash flow from operating activities rose to $1.3 billion compared to $1.2 billion a year earlier. Our earnings were also strong. Once again, we exceeded the $500 million mark. In 2011, net income totaled $530 million or $6.15 per share. That compares to $575 million or $6.70 per share in 2010, a year in which we had substantially larger hedging gains and non-recurring income from the early extinguishment of some debt. As this usually indicates, the prices we received for our production of oil, gas and natural gas liquids had the greatest impact of anything on our financial results. In 2011, price realizations for oil and natural gas liquids increased by more than 20%. On the other hand, gas prices were 10% lower. During the year, our production and revenue mix changed as we came more tilted towards liquids output versus natural gas. In 2011, about 50% of our production was gas, with 44% being oil and natural gas liquids. Combining with the effect of prices however, roughly 70% of our revenues were derived from oil and natural gas liquids, with less than 30% coming from gas.
The shift in our production mix is no accident. It reflects the choices we make for capital investment. So even though we may not always deliver as robust overall growth rates as some would like to see, we continue to make good profits and are able to do so without levering up our balance sheet or issuing equity.We had good growth in our proved reserves during 2011 and have an equally active capital program plan for 2012. With quality cash flow at a very strong balance sheet, we have a lot of flexibility for how we fund our 2012 program. With that, I'd like to turn the call over to Tom. Thomas E. Jorden Thank you, Paul. I'm going to be working off the presentation as posted on our website. So if any of you have it up, I'll be starting with Slide 7. If you don't have it up, it's not really that important, but there are some figures in there that might help as I talk. In 2011, we invested here under $1.6 billion in exploration and development. We drilled 174 net wells, and as Paul said that's on our release, we had extremely solid returns in our Permian and Cana programs. We grew our proved reserves to 2.05 Tcf equivalent, which is a record for us. Our Permian Mid-Continent reserves proved increased 26%, an all-time high of 2 Tcf equivalent. We added 587 Bcf equivalent from extensions and discoveries, and 45% of those adds were liquids, 55% gas. All in all, we replaced 272% of production. But the real story, and we'll get onto that as we give you a little detail, is our record 2011 Permian Basin and Mid-Continent production of 487 million cubic feet equivalent per day. Those 2 regions in aggregate showed a 16% production growth over 2010. Those are our engines of growth.
On Slide 8, it shows our core operating areas, and many of you are familiar with this but just to recap, of that 2.05 Tcf equivalent, 98% are Mid-Continent and Permian reserves, and fully 89% of our production are Mid-Continent and Permian. So those are the engines.On Slide 9, it shows us graphically. Slide 9 shows our proved reserves as they've increased in the last few years. We have a very solid reserve base. As Paul said, our investments have pulled us towards liquids-rich areas. That's in part tactical, a little strategic, but it's mostly driven by the invisible hand of the disconnect between gas and oil prices, and we are just in a very nice position with one of the best Permian assets amongst our peers, and we can emphasize that oil production by simply shifting our weight. As you can see in 2011, we ended the year 41% liquids; 59% gas, that's a nice healthy growth; compound annual growth rate of 54% of liquids growth, and we ended the year with 82% proved developed reserves, 18% proved undeveloped. The next slide, Slide 10, shows our proved reserves by region, and this again shows the solid growth that we're seeing out of the Permian and Mid-Continent. We've been growing the last few years, a compound annual growth rate of 28%. In 2010, we did sell our Riley Ridge asset in Sublette County, Wyoming. That was 210 Bcf of proved undeveloped gas reserves. That's the gray bar there on your slide on 10. We replaced those reserves, and accounting for that still increased our proved reserves 9%. If net of that sale, if we get back that sale out, we increased our proved reserves 23%. So a very solid year on a reserve basis. Read the rest of this transcript for free on seekingalpha.com