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During this call, we will discuss our second quarter results and our operations update release that were issued this morning and then, we will entertain a question-and-answer session for as long as time permits. Please be advised that our remarks and answers to your questions includes statements that we believe to be forward-looking statements.All statements that relate to future results are forward-looking statements that are based on current expectations. Actual results may defer materially from those expressed or implied by these forward-looking statements, because of the number of risks and uncertainties affecting our business, including those discussed in our quarterly and annual SEC filings, and in the cautionary statements contained in our press release and on our website. With that being said, I will turn the call over to Mr. Mel Riggs. Mel? Mel Riggs Thanks, Patty and thanks to everyone for dialing into this call. Format for today is going to be first of all Mike Pollard, our CFO will give us an insight for kind of recap of our financial results. And then after that, Mr. Williams will talk about kind of what has been happening operationally and what he sees into the future and then, we will have questions. We have got a several members of our – to provide the script named. We’ve got several other key members of our management team here today to help answer questions if necessary. So, with that I’ll turn it over to Mike. Michael Pollard Thank you, Mel. For the second quarter of 2012, we reported consolidated net income of $32.8 million or $2.70 per share versus net income of $42.7 million or $3.51 per share for the second quarter of 2011. Cash flow from operations net of changes in working capital was $44.9 million versus $86.4 million in 2011. For the six months ended June 30, 2012, we reported consolidated net income of $40.6 million or $3.34 per share versus net income of $34.8 million or $2.86 per share for the same period in 2011. Cash flow from operations was $97.3 million versus a $119.7 million for 2011.
Oil and gas sales for the second quarter of 2012 decreased to $6.4 million with price variances accounting for a $17.8 million decrease and production variances accounting for an $8.9 million increase. Our average realized oil price decreased to $88.06 per barrel versus a $100.07 in 2011, and our average realized gas price dropped to $3.25 per Mcf versus $5.56 Mcf in 2011.Oil and gas sales this quarter also includes $2.5 million of non-cash amortized deferred revenue attributable to a volumetric production payment. Our combined oil and gas production for the second quarter of 2012 was 1,411,000 BOE, which is roughly 15,500 BOE per day. That is up 6% as compared to the 2011 quarter. Oil production averaged 10,626 barrels per day up 9% and gas production averaged 23.4 million cubic feet down 6%. Oil and NGLs make up about 75% of our total production. Our growth rate in oil production is improving as we work through some of our startup drilling and completion issues in the Delaware Basin, Wolfbone play. New production from our vertical drilling program is improving as we are better able to greater target locations in intervals and we’re also very encouraged with the early results from a horizontal drilling program. Production cost rose 24% to $32.3 million in the second quarter of 2012 from $26.1 million in the 2011 quarter. Most of the increase resulted from higher lifting costs associated with more producing wells and rising cost of field services. Due largely to the lack of infrastructure in Reeves County we’re experiencing higher than normal lifting cost, particularly costs associated with saltwater disposal. We’re nearing completion of an SWD system, which should significantly reduce our costs in Reeves County as we go forward. Read the rest of this transcript for free on seekingalpha.com