During today's call, the company will be making forward-looking statements which are subject to risks and uncertainties. Actual results may differ materially from those projected in these forward-looking statements. Additional information concerning risk factors that could cause such differences is detailed in the company's filings with the SEC.Today's presentation will include information regarding adjusted net income, which is a non-GAAP financial measure. As required by SEC rules, reconciliations of adjusted net income to the most directly comparable GAAP measures are available on our website under the Investor Relations tab. I will now turn the call over to Glenn Darden to review our financial and operating activities in detail. Glenn M. Darden Thanks, John. Good morning. Quicksilver Resources earned $49 million or $0.28 per diluted share in the fourth quarter of 2011. Full year 2011 net income was $115 million or $0.67 per diluted share. This compares to $1.82 and $2.52 per diluted share for the respective periods in 2011. Each year was impacted by special items: in 2011, the sale of the BreitBurn units; and in 2010, the sale of our interest in Quicksilver Gas Services. Phil Cook, our CFO, will break this out in detail in his remarks. Quicksilver grew production 16% in 2011 versus 2010 volumes and replaced 165% of production. As drilling slowed down due to lower gas prices, we allocated capital to 2 grassroots oil projects: adding acreage to our Colorado position, which I'll talk about in a moment; and building new acreage basins in the Permian and Delaware Basins. These areas look very prospective for long-term growth. In Colorado, where we have assembled 210,000 acres in what we have now have established the oil window of the Niobrara, our initial drilling results have looked better with additional production run time. We have drilled and completed 6 wells testing the Niobrara, the last of which is a horizontal well. All of these wells are producing oil. We completed the first 3 vertical wells with oil fracs and the second 3 wells, 2 vertical and the horizontal, with a different style gas frac.
This technique has shown significantly better results. The horizontal well, which frac-ed only about 1,500 feet of a 4,500-foot lateral, has a 45-day production average of 230 barrels of oil equivalent per day, primarily oil. The 2 vertical wells completed in this manner are steady producers, with the best well averaging 120 barrels of oil equivalent per day, again mostly oil, over the same 45-day period.Our initial drilling covered an area approximately 30 miles in an east-west direction. We begin the drilling -- we begin drilling again next month with a series of horizontal and vertical wells. This is a bit different than we had announced, but with our vertical success, we will drill a few more vertical wells to test this as well. While we anticipate mostly oil from this project, the company will also begin work on an initial gas gathering system to capture the rich gas and NGL strength. Based on completed well costs of approximately $3.5 million per vertical well and approximately $6 million for a horizontal completed well, we believe the economics will be compelling, in excess of 40% rates of return, and we have lots of room to run. We also believe these costs will go down as we move into development. Our land team is working on multiple drilling permits currently to be prepared to accelerate this project. In West Texas, Quicksilver has secured approximately 105,000 net acres in 3 blocks. These areas have lots of activity around them and we will begin drilling next month with a target of having several wells completed by the summer. Quicksilver's objectives are the Bone Springs and Wolfcamp formations, and we will test each of the 3 acreage blocks. Read the rest of this transcript for free on seekingalpha.com