Also during this call, we will refer to EBITDAX, adjusted net income and other non-GAAP financial measures. We use these measures because we believe they are a good metrics to use in evaluating performance. Reconciliations of these measures to the most directly comparable GAAP measures are contained in our earnings release.Finally, during the second quarter, we began the divesture process of our California properties. Under GAAP, we disclosed the results from these properties as discontinued operations in our 10-Q and the statement of operations and balance sheet in our press release. All results discussed today reflect total operations including discontinued operations. On today’s call, I’m joined by Mike Starzer, our President and Chief Executive Officer; Gary Grove, our Executive Vice President, Engineering and Planning; and Wade Jaques, our Chief Accounting Officer and Controller. Mike will begin by discussing the highlights for the quarter, Gary will provide an operations update, and Wade will summarize our current financial condition. We are also joined by the members of our management team who will be available to answer questions during the Q&A portion at the end of the call. With that, I’d now like to turn the call over to Mike. Michael R. Starzer Thank you, James, and thanks to all of you for joining us for our second quarter conference call. I’m joined here in Denver by members of our management team who are looking forward to answering your questions later in the call. Jim Casperson, our CFO could not join us this morning, but we are in the very capable hands of our Chief Accounting Officer and Controller, Wade Jaques. As I have mentioned in each of our previous conference calls, we take great pride in doing what we say we are going to do and I am pleased to report that for the second quarter we did just that.
I know most of you have already read yesterday’s press release, but for those of you that did not had the opportunity, let’s start by recapping the highlights. In the second quarter of 2012 as compared to the second quarter of 2011, Bonanza Creek generated 144% increase in production to 8,944 barrels of oil equivalent per day.We increased revenues to 106% to $53.5 million and grew net income by 179% to $21.5 million. We further expanded adjusted net income by 149% to $12.5 million or $0.32 per diluted share and generated a 127% increase in EBITDAX to $36.9 million. In addition, we leased 5,639 net acres in our core operating area of the Wattenberg Field, and increased our 2012 CapEx budget by approximately $48 million to continue our horizontal Niobrara drilling and test additional drilling inventory potential. As the year-over-year metrics illustrate, Bonanza Creek is truly a different company today than it was a year ago. We head into the second half of 2012 having made a strategic acreage acquisition in the heart of our Wattenberg asset and are expanding the capital budget to take advantage of a number of exciting opportunities. I’d first like to talk about our performance and accomplishments during this quarter and then I will discuss our expectations heading into the second half of the year. Our solid performance was accomplished in a quarter that was a challenging both from a macro perspective as well as operationally. Softening commodity prices negatively impacted price realizations by 14% over the previous quarter, yet we still delivered a strong 69% cash margin, thanks to the low-cost nature of our operations and the oil weighting of our production stream. Further, we had a strong quarter despite June being affected by high line pressures in the Wattenberg field and mechanical issues in our Dorcheat gas processing facility in Arkansas. Our horizontal Niobrara program continues to confirm our expectations. It is remarkable to think that just one year ago we drilled our first horizontal well in the Wattenberg field, since then we have increased our type curve from 285,000 Boe to 312,000 Boe. We have decreased our spacing assumptions from 160 acres to 80 acres, and we’re seeing our neighbors testing horizontal wells on 48 acre spacing. Read the rest of this transcript for free on seekingalpha.com