Please keep in mind that some of the comments made during this call will be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. As such, no assurances can be given that these events will occur or that the projections will be attained. A variety of factors exist that may cause actual results to differ. For a further discussion of risk factors, see Murphy's 2011 annual report on Form 10-K filed with the SEC. Murphy takes no duty to publicly update or revise any forward-looking statements. I will now turn the call over to Kevin for his comments.Kevin G. Fitzgerald Thanks, Barry. Net income in the first quarter of 2012 was $290.1 million or $1.49 per diluted share. This compares to net income in the first quarter of 2011 of $268.9 million or $1.38 per diluted share. There were no unusual items significant to the 2012 quarter, but 2011 did include $30.5 million of $0.16 per diluted share of income from discontinued operations related to the 2 U.S. refineries and associated marketing assets that were sold at the end of the third quarter 2011. Taking a look at net income by segment. E&P segment for the first quarter of 2012 a net income of $321.6 million compared to net income in the first quarter of last year of $260.4 million. Higher E&P earnings for 2012 were primarily attributable to higher average crude oil sales prices and lower exploration expenses. Unfavorable variances in the 2012 quarter included lower crude oil sales volumes and significantly lower North American natural gas sales prices. Crude oil, condensate and gas liquids production for the quarter averaged approximately 107,500 barrels per day in 2012 compared to approximately 113,300 barrels per day in 2011. This decrease was mostly attributable to lower gross volumes in Kikeh, Malaysia and Azurite, offshore Republic of the Congo. Natural gas items, however, were a quarterly company record of 525 million cubic feet per day in the first quarter of 2012 compared to 413 million cubic feet per day in the 2011 quarter, an increase of over 27%. This increase was primarily due to a full quarter of production at the Tupper West in British Columbia, which was on production for only a portion of the 2011 first quarter after coming online in February of last year.
In the downstream segment from continuing operations, we had net income in the first quarter of 2012 is actually a net loss of $4.2 million compared to net income in the first quarter of 2011 from continuing operations of $300,000. In the U.S. downstream operations reported a loss of $7.2 million in the 2012 quarter compared to income of $9 million in 2011, mostly as a result of lower retail fuel margins, which averaged $0.02 per gallon lower in the current quarter and lower retail fuel sales volumes, which were down about 6% year-over-year. Merchandise margins for the 2012 quarter were essentially flat with last year. Results for ethanol production operations were also downy year-on-year due to weaker crush spreads.U.K. downstream operations recorded income of $3 million in the 2012 quarter compared to a net less of $8.7 million last year. The improvement was largely due to better refinery margins and higher throughput volumes at the Milford Haven refinery. In the corporate segment, we had a net charge of $27.3 million first quarter of this year compared to a net charge of $22.3 million in the first quarter 2011. This unfavorable variance is mostly attributable to higher administrative costs and lower interest income in the current quarter. At the end of the first quarter 2012, the long-term debt amounted just under $250 million, a 2.7% of total capital employed. Cash, cash equivalents and short-term investments totaled over $1.4 billion at March 31. Earlier this week, our 10-year $350 million bond matured and were paid off through borrowing under our revolving credit agreement. We're currently working a process to sell $500 million of new 10-year notes. The proceeds from which, if successful, will be used to repay those borrowings and for general corporate purposes. And with that, I'll turn it over to David. Read the rest of this transcript for free on seekingalpha.com