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You should be aware that certain factors may affect us in the future and could cause actual results to differ materially from those expressed in these forward-looking statements.Such factors include the risks set forth in our Form 10-K we filed in March and in our other filings with the SEC. We urge you to consider these factors and remind you that we undertake no obligation to update the information contained on this call to reflect subsequent events or circumstances. I’m pleased to announce that today once again we have reported record first half production, oil and gas revenues, and total revenues, with strong cash flow from our operating activities. We remain well-positioned to move forward with the most active capital program in our history. I’ve divided my remarks today into two sections. First, I’ll talk about production, revenues and non-cash charges. Then I’ll talk about cash flow, liquidity and capital resources. Let’s start with production. Our production in the second quarter was down just a bit from last year. Total oil and gas production for the quarter was 1.1 billion cubic feet equivalent, an average of about 12 million cubic feet equivalent per day. That’s a 2% decrease from the second quarter of last year. Total production for the first six months of 2012 was 2.3 billion cubic feet equivalent, an average of about 12.6 million cubic feet equivalent per day. That’s about 6% higher than last year. The main reason for the decrease in the second quarter was that the operator shut in our Roszkow well for two weeks in May, instead of the usual two weeks in September. But for that, production would have been slightly up quarter-over-quarter. The good news is that now, only our three KSK wells will be shut-in during September. Roszkow and Zaniemysl should continue to produce without interruption for the balance of the year.
Looking forward, we note that our total day -- total net daily production rate was about 14.8 million cubic feet equivalent per day at June 30. We expect to see this rate maintained during the third quarter, except for the planned maintenance shut-in of the KSK wells. This should yield about a 14 million cubic feet equivalent per day production rate for the full quarter.As I mentioned, we posted record oil and gas revenues during the first half of this year. Oil and gas revenues were $15.8 million for the first six months of 2012, compared to $14.9 million for the same period of 2011, an increase of 6%. Total revenues for the first six months of 2012 were $17.1 million, compared to $16.3 million in the first six months of 2011. Regarding pricing, as we mentioned in our earnings release earlier today, the Polish low-methane tariff, which serves as the reference price for our gas sales agreements, was significantly higher during the first half of 2012, compared to the same period of 2011. This was due to two price increases approved by the Polish utility regulator since mid-2011. However, period-to-period strength in the U.S. dollar against the Polish zloty decreased our U.S. dollar denominated gas prices. Despite the two prices increases, as a result of the fluctuation in exchange rates our natural gas prices in Poland only increased 8% year-over-year. I’d like to spend a few minutes discussing currency issues. Our functional currency in Poland is the Polish zloty. Despite the fact that everything we do in Poland is zloty-based, including the generation of revenues, our operating costs, drilling costs, the construction of production facilities, overhead costs and so on, we are required for U.S. financial reporting purposes, to convert everything we do in Poland into U.S. dollars. For example, our zloty-based natural gas revenues are 28% higher this year compared to last, rather than the 7% increase in U.S. dollar denominated natural gas revenues we reported in our 10-Q today. Read the rest of this transcript for free on seekingalpha.com