I would now turn the call over to Larry Pinkston, President and CEO. Mr. Pinkston, you may begin.Larry Pinkston Thank you, Monica. Good morning everyone. We want to thank you for joining us this morning. With me today are David Merrill, Brad Guidry, John Cromling and Bob Parks. Each of these gentlemen will be providing you with updates concerning their segments in a few minutes. We will take questions after their comments. We released our fourth quarter results this morning. We reported net income of $51.7 million, and earnings per share of $1.08. This represents an 18% increase in net income and a 17% increase on EPS as compared to the fourth quarter of 2010. For the year, 2011 net income increased 34% and earnings per share increased 32%. We invested $832 million in the capital expenditures during 2011 which included $16 million of acquisitions. We ended the year with a conservative 13% long term debt to total capitalization. Our contract drilling segment had a very good fourth quarter and year. We began 2011 with an average of 70 rigs operating in January, and utilization increased very steadily during the year to finish the year with an average of 83 rigs operating in December. During 2011, we invested $162 million in new rig additions upgrades and refurbished bits to meet the continuing needs of our customers of horizontal drilling. We finished the year with 127 rigs, we’ve signed a contract to deliver a new 1,500 horsepower drilling rig to North Dakota during the second quarter of 2012. We are optimistic that we will have opportunities to build additional new rigs for customers during 2012. The movement of drilling rigs out of the dry gas producing basins and to the liquid rich gas basins continues. We currently – we have only six rigs operating, near 7% of our operating fleet drilling dry natural gas wells. However, as the industry continues to adjust, we believe it might further constrain on increasing industry rig utilization and day rates. We think most of this adjustment should be completed by mid-year.
Our Mid-stream segment continues to achieve significant operational growth. Fourth quarter gas gathered volumes were up 13%, gas processed volumes increased 21%, and liquid sale volumes increased 14%; all as compared to the third quarter of 2011. Although operating profit increased 4% for the quarter, margin suffered from a 15% decrease in natural gas prices we received in addition to a 10.5% decrease in liquid prices. We continue to see good opportunities for new systems and expansions to our existing systems, as is evident in our 2012 budgeted capital expenditures for this segment. Our 2012 Mid-stream segment budget is $224 million as compared to 2011 actual expenditures of $79 million.Our exploration and production segments had a great year. Our equivalent barrel production increased 23% and we replaced 203% of our 2011 production with new reserves. Our liquids production in 2011 increased 55% to an average of approximately 13,000 barrels per day for the year. In the fourth quarter of 2011, we averaged 14,800 barrels per day, and it was 42% of our total average equivalent barrel production. Since changing our focus to liquids at the beginning of 2009, our oil and natural gas liquid reserves have increased to 113%. Our focus for 2012 will remain the same with 98% of our CapEx budget in this division being directed towards oil and natural gas liquid prospects. Read the rest of this transcript for free on seekingalpha.com