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I will now turn the call over to Mr. Larry Pinkston, President and CEO. Mr. Pinkston, you may begin.Larry Pinkston Thank you, John. Good morning everyone. I 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 first quarter results this morning. We reported net income of $52.4 million and earnings per share of $1.09. This represents a 28% increase in net income and a 27% increase in earnings per share as compared to the first quarter of 2011. Net income in the first quarter was basically flat with the fourth quarter, which was quite an achievement considering natural gas spot prices were down 26% and natural gas liquids spot prices were down 15% in the first quarter. Our Contract Drilling segment had a very good quarter especially considering all the movement of rigs out of the dry gas producing formations. Rig utilization was basically flat with the fourth quarter averaging 81.5 rigs for the first quarter. During the first quarter, we sold one of our smaller mechanical rigs and added a new 1500 horsepower rig into our Wyoming operation at Pineville. We have one additional new rig that will be added to our Balkan operation later in the second quarter. The movement of rigs out of the dry gas formation continues, we currently only have three rigs operating in dry gas areas. The demand for smaller rigs and the 800 to 1000 horsepower range continues to increase. These rigs are being utilized to drill the shallow or the horizontal liquid-rich wells. The increase cannot be described as a dramatic year, but has been very steadily increasing. Most of the increased demand we have seen has been in the Mississippian play and Northern Oklahoma and Kansas. We believe this demand would continue to increase for the next several months. Our mid-stream segments achieved a good quarter with first quarter operating margin at 26% over the fourth quarter. The increase is due to higher liquids volumes and better processing margins.
We continue to see good opportunities for mid-stream growth primarily in natural gas processing. The Mississippian play continues to grow as the industry drills wells. This play will need hundreds of millions of dollars to build out the natural gas processing infrastructure and we hope to be a significant participant in that buildout.Our Oil and Natural Gas segment had a good quarter. On our average daily oil and natural gas production was up 2% sequentially and up 18% over the first quarter of 2011. Our liquids volumes continue to increase, [book] per day liquids, up 2% sequentially and up 32% over the first quarter of 2011. Liquids production was 42% of our total production in the first quarter of 2012 as compared to 39% for the year 2011. In 2012 virtually all of our CapEx budget has been directed towards liquid-rich prospects. Since 2009, when our focus changed primarily from natural gas to liquids, our liquids production has increased 87% and is now 42% of our total production as compared to 27% in 2009. Read the rest of this transcript for free on seekingalpha.com