Rex Energy (REXX) Q4 2011 Earnings Call February 22, 2012 10:00 am ET Executives Thomas C. Stabley - Co-Founder, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Director Patrick M. McKinney - President and Chief Operating Officer Analysts Neal Dingmann - SunTrust Robinson Humphrey, Inc., Research Division Leo P. Mariani - RBC Capital Markets, LLC, Research Division Ronald E. Mills - Johnson Rice & Company, L.L.C., Research Division Michael Scialla - Stifel, Nicolaus & Co., Inc., Research Division Presentation Operator
Finally, in our Butler area, we ended the year with an inventory of 19 gross wells drilled and waiting completion. These 19 gross wells provide us with an inventory to begin completions in advance of the commissioning of our second cryogenic processing facility, the Bluestone Plant. The Bluestone Plant will have inlet capacity of 50 million cubic feet per day and is scheduled to be commissioned in May of 2012.With the success of our 2011 drilling and completion program, our average daily production rate grew by 92% over 2010, and our December exit rate increased 119% year-over-year. Our fourth quarter production growth of 12% over the third quarter represents our fifth consecutive quarter of double-digit production increases. In addition to our 100% success rate in the Marcellus Shale, we also drilled and completed 2 successful test wells, one of the Upper Devonian/Burkett shale and the second in the Utica Shale. These wells also demonstrated that the Burkett and the Utica Shales are commercially viable in Butler County acreage, providing us with the potential of the 3 separate commercial zones throughout our 67,000 gross, 45,000 net acres in Butler County. Leasing during 2011 was predominantly focused on acquiring and growing our acreage positions and our liquid-focused plays in the Appalachian Basin. We are very excited about our 15,000 acres in the Warrior Prospect in Carroll Country, Ohio, which we believe will be perspective for liquids portion of the Utica Shale. We announced last evening in our press release that we are planning to spud our first well in Carroll County during April of this year. We also continued our leasing campaign in our core operating area in Butler County throughout 2011. We opportunistically leased or traded into approximately 10,000 net acres -- 10,700 net acres, bringing our total acreage in Butler County to 67,200 gross or 44,800 net acres.
In our Illinois Basin, after much hard work and a success brought about by our ASP project team, we booked proved reserves in 2011 from our Middaugh project in the large field. With these results in hand, we are moving forward with the next phase of development in our Perkins-Smith Unit in 2012. And in 2013, we are planning to shift our focus to the high-impact Delta unit, where the production from that project in the previous 2 could potentially double the existing production in the field.Finally, our successes in 2011 translated into an increase in our operating revenues of 67% over 2010, growth in earnings per share from continuing operations of 128% year-over-year and an increase to EBITDAX of 139%. To sum up, we successfully executed our strategy in 2011, and execution resulted in a significant growth production in revenues. The growth will help to position Rex to achieve the objectives we have laid out in our 2012 plan. On Slide 5, I'd like to draw your attention to a few important points. Our per-unit lease operating expense and cash G&A expenses continued to decrease as we ship more of our production base to areas with lower operating costs. Although our lease operating expenses has increased $2.6 million for the quarter and $8.4 million for the year, our per-unit lease operating expenses decreased 35% and 30%, respectively. Similarly, our cash G&A and administrative expenses increased $0.5 million during the quarter and $5.8 million during the year, while decreasing on a per-unit basis by 48% and 29%, respectively. I would also like to note that with the successes we've achieved in our ASP project and the large field water enhancement projects, the company was able to slightly increase oil production in the Illinois Basin. That is a significant accomplishment in a mature field, and we're very pleased by these results. Read the rest of this transcript for free on seekingalpha.com