3 ( ii ) b amended and restated bylaws reflecting changes made to the company 's certificate of incorporation to remove certain outdated and redundant provisions that existed in our prior bylaws with respect to corporate governance , shareholder and director meeting procedures , and indemnification procedures . changes to the bylaws include , among other things : ( i ) amendments to reflect the new story_separator_special_tag of financial condition and results of operations the following discussion and analysis should be read in conjunction with our financial statements and related notes and the other information appearing in this report . as used in this report , unless the context otherwise indicates , references to “ we , ” “ our , ” “ ours , ” and “ us ” refer to earthstone energy , inc. and its subsidiary collectively . as an oil and natural gas producer , our revenue , cash flow from operations , other income and profitability , reserve values , access to capital and future rate of growth are substantially dependent upon the prevailing prices of crude oil and natural gas . declines in commodity prices will materially and adversely affect our financial condition , liquidity , ability to obtain financing and operating results . lower commodity prices may reduce the amount of crude oil and natural gas that we can produce economically . prevailing prices for such commodities are subject to wide fluctuation in response to relatively minor changes in supply and demand and a variety of additional factors beyond our control , such as global , political and economic conditions . historically , prices received for crude oil and natural gas production have been volatile and unpredictable , and such volatility is expected to continue . most of our production is sold at market prices . generally , if the commodity indexes fall , the price that we receive for our production will also decline . therefore , the amount of revenue that we realize is to a large extent determined by factors beyond our control . liquidity and capital resources story_separator_special_tag improvements and leasehold acreage . these projects were funded entirely with internally generated cash flow . as of march 31 , 2012 , we have afes totaling $ 5,574,000 for our share in completion costs of new wells in which we share a working interest . at present cash flow levels , we expect to have sufficient funds available for our share of both the outstanding afes and any additional acreage , seismic and or drilling cost requirements that might arise from our existing opportunities . we may alter or vary all or part of any planned capital expenditures for reasons including , but not limited to changes in circumstances , unforeseen opportunities , the inability to negotiate favorable acquisition , farmout , joint venture or divestiture terms , commodity prices , lack of cash flow , and lack of additional funding . we are continually evaluating drilling and acquisition opportunities for possible participation . typically , at any one time , several opportunities are in various stages of evaluation . our policy is to not disclose the specifics of a project or prospect , nor to speculate on such ventures , until such time as those various opportunities are finalized and undertaken . we caution that the absence of news and or press releases should not be interpreted as a lack of development or activity . divestitures/abandonments on january 31 , 2012 , we completed the divestiture and sale of the company 's working and or override interests in 38 wells in weld county , colorado to an unrelated third party for $ 5,900,000. after customary adjustments and expenses , the net proceeds from the transaction were $ 5,404,000. the adjusted purchase price was impacted by commissions , sales costs and post effective date revenue and expense modifications to the purchase price . the wells were considered non-core properties for the company , given the company 's focus on other areas , primarily the williston basin . impact of inflation and pricing we deal primarily in u.s. dollars . inflation has not had a material impact on the company in recent years because of the relatively low rates of inflation in the united states . however , the oil and natural gas industry can be cyclical and the demand for production places pressure on the economic stability and pricing within the industry . typically , as prices for oil and natural gas increase , associated costs rise . conversely , cost declines are likely to lag and may not adjust downward in proportion to declining prices . changes in prices impact our revenues , estimates of reserves , assessments of any impairment of oil and natural gas properties , as well as values of properties being acquired or sold . price changes have the potential to affect our ability to raise capital , borrow money , and retain personnel . while we do not presently expect business costs to materially rise , higher prices for oil and natural gas could result in increases in the costs of materials , services and personnel . 22 other commitments other than the aforementioned outstanding afes , we do not have any other commitments beyond our office lease and software maintenance contracts . see note 6 to the consolidated financial statements . results of operations selected financial information the following provides selected financial information and averages for the years ended march 31 , 2012 and 2011. certain prior year amounts may have been reclassified to conform to the current presentation . story_separator_special_tag replace_table_token_6_th 1 due to the timing and accuracy of sales information received from a third party operator as described in “ volumes and prices ” below , sales volume amounts may not be indicative of actual production or future performance . 2 amount does not include water service and disposal revenue . for the year ended march 31 , 2012 , this revenue amount is net of $ 156,000 in well service and water disposal revenue , which would otherwise total $ 11,712,000 in revenue for the year ended march 31 , 2012 , compared to $ 107,000 to total $ 8,206,000 for the year ended march 31 , 2011 . 3 overall lifting cost ( oil and gas production expenses and production taxes ) 4 averages calculated based upon non-rounded figures 23 the year ended march 31 , 2012 compared with the year ended march 31 , 2011 overview . net income for the year ended march 31 , 2012 , was double that of the previous year at $ 3,279,000 compared to $ 1,602,000 for the year ended march 31 , 2011. the increase in the sales price per barrel of oil equivalent ( “ boe ” ) and rise in sales volumes , offset by increases in production costs and general and administrative ( “ g & a ” ) expense , resulted in the increase in net income . revenues . oil and natural gas sales revenue increased $ 3,457,000 ( 43 % ) for the year ended march 31 , 2012 , as compared to the year ended march 31 , 2011 , due to an overall 15 % higher realized price per boe , and 20 % overall increase in sales volumes . volumes and prices . on an equivalent barrel basis , sales were 146,000 boe for the year ended march 31 , 2012 compared to 122,000 boe for the year ended march 31 , 2011. oil sales volumes increased 16 % from 93,613 barrels for the year ended march 31 , 2011 to 108,653 barrels for the year ended march 31 , 2012 , while the average price per barrel increased 29 % from $ 74.06 for the year ended march 31 , 2011 to $ 95.73 for the year ended march 31 , 2012. the rise in oil volumes resulted from production from the 24 newly producing wells offset , expectedly , by declines in existing wells . natural gas sales volumes increased 32 % from 172,386 mcf for the year ended march 31 , 2011 to 226,760 mcf for the year ended march 31 , 2012 , while the average price per mcf dropped 25 % , from $ 6.76 for the year ended march 31 , 2011 to $ 5.09 for the year ended march 31 , 2012. production expenses . production expenses are comprised of the following items : replace_table_token_7_th oil and natural gas production expense increased $ 953,000 ( 27 % ) for the year ended march 31 , 2012 , as compared to the year ended march 31 , 2011. the two principal components of oil and gas production expense are routine lease operating expenses ( “ loe ” ) and workovers . routine expenses typically include such items as daily well maintenance , utilities , fuel , water disposal and minor surface equipment repairs . workovers primarily include downhole repairs and are generally random in nature . although workovers are expected , they can be much more frequent in some wells than others and their associated costs can be significant . therefore , workovers account for more dramatic fluctuations in oil and gas expense from period to period . 24 loe , production taxes , and transportation and other expenses increased $ 596,000 ( 32 % ) , $ 351,000 ( 60 % ) , and $ 73,000 ( 34 % ) , respectively , for the year ended march 31 , 2012 , as compared to the year ended march 31 , 2011. all fluctuate with sales revenue , which increased 43 % year over year . production taxes as a percent of oil and natural gas sales revenue were comparable year over year at 8.1 % versus 7.2 % . workover expense decreased $ 67,000 ( 8 % ) for the year ended march 31 , 2012 , as compared to the year ended march 31 , 2011. the overall lifting cost ( oil and natural gas production expense plus production taxes ) per boe increased 6 % from $ 28.83 for the year ended march 31 , 2011 to $ 30.59 for the year ended march 31 , 2012. this increase resulted from the increase loe described above . this lifting cost per equivalent barrel is not indicative of all wells , and certain high cost wells could be shut-in should oil prices drop below certain levels . other expenses . depletion and depreciation expense decreased $ 49,000 ( 4 % ) for the year ended march 31 , 2012 as compared to the year ended march 31 , 2011 due to the disposition of d-j basin properties in 2012 , somewhat offset by new wells . depletion expense per boe decreased from $ 9.24 for the year ended march 31 , 2011 to $ 7.27 for the year ended march 31 , 2012. general and administrative ( “ g & a ” ) expense rose $ 561,000 ( 37 % ) for the year ended march 31 , 2012 , as compared to the year ended march 31 , 2011. eighty percent of this increase relates to personnel costs , as additional management , staff and a board member were added in 2012. state franchise taxes resulted in 15 % of the rise in costs . the sum of various other administrative costs account for the remaining fluctuation in the expense . as a percent of total sales revenue , g & a expense remained steady at 18 % both years

liquidity outlook . our primary source of funding is the net cash flow from the sale of our oil and natural gas production . the profitability and cash flow generated by our operations in any particular accounting period will be directly related to : ( a ) the volume of oil and gas produced and sold , ( b ) the average realized prices for oil and gas sold , and ( c ) lifting costs . at the current price of oil , we believe the cash generated from operations , along with existing cash balances , should enable us to meet our existing and normal recurring obligations during the next year and beyond . overview of our capital structure . we recognize the importance of developing our capital resource base in order to pursue our objectives . however , subsequent to our last public offering in 1980 , debt financing has been the sole source of external funding . in addition to our routine production-related costs , general and administrative expenses and , when necessary , debt repayment requirements , we require capital to fund our exploratory and development drilling efforts and the acquisition of additional properties as well as the enhancement of held and newly acquired properties . we have received numerous inquiries regarding the possibility of funding our efforts through equity contributions or debt instruments . given strong cash flows , and the relatively modest nature of our current drilling projects , we have thus far declined these overtures . our primary concern in this area is the dilution of our existing shareholders .


 Write a concise suspicious activity report of the following text delimited by triple backquotes. Return your response as a formal report which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.
     ```liquidity outlook . our primary source of funding is the net cash flow from the sale of our oil and natural gas production . the profitability and cash flow generated by our operations in any particular accounting period will be directly related to : ( a ) the volume of oil and gas produced and sold , ( b ) the average realized prices for oil and gas sold , and ( c ) lifting costs . at the current price of oil , we believe the cash generated from operations , along with existing cash balances , should enable us to meet our existing and normal recurring obligations during the next year and beyond . overview of our capital structure . we recognize the importance of developing our capital resource base in order to pursue our objectives . however , subsequent to our last public offering in 1980 , debt financing has been the sole source of external funding . in addition to our routine production-related costs , general and administrative expenses and , when necessary , debt repayment requirements , we require capital to fund our exploratory and development drilling efforts and the acquisition of additional properties as well as the enhancement of held and newly acquired properties . we have received numerous inquiries regarding the possibility of funding our efforts through equity contributions or debt instruments . given strong cash flows , and the relatively modest nature of our current drilling projects , we have thus far declined these overtures . our primary concern in this area is the dilution of our existing shareholders .
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 Suspicious Activity Report : 3 ( ii ) b amended and restated bylaws reflecting changes made to the company 's certificate of incorporation to remove certain outdated and redundant provisions that existed in our prior bylaws with respect to corporate governance , shareholder and director meeting procedures , and indemnification procedures . changes to the bylaws include , among other things : ( i ) amendments to reflect the new story_separator_special_tag of financial condition and results of operations the following discussion and analysis should be read in conjunction with our financial statements and related notes and the other information appearing in this report . as used in this report , unless the context otherwise indicates , references to “ we , ” “ our , ” “ ours , ” and “ us ” refer to earthstone energy , inc. and its subsidiary collectively . as an oil and natural gas producer , our revenue , cash flow from operations , other income and profitability , reserve values , access to capital and future rate of growth are substantially dependent upon the prevailing prices of crude oil and natural gas . declines in commodity prices will materially and adversely affect our financial condition , liquidity , ability to obtain financing and operating results . lower commodity prices may reduce the amount of crude oil and natural gas that we can produce economically . prevailing prices for such commodities are subject to wide fluctuation in response to relatively minor changes in supply and demand and a variety of additional factors beyond our control , such as global , political and economic conditions . historically , prices received for crude oil and natural gas production have been volatile and unpredictable , and such volatility is expected to continue . most of our production is sold at market prices . generally , if the commodity indexes fall , the price that we receive for our production will also decline . therefore , the amount of revenue that we realize is to a large extent determined by factors beyond our control . liquidity and capital resources story_separator_special_tag improvements and leasehold acreage . these projects were funded entirely with internally generated cash flow . as of march 31 , 2012 , we have afes totaling $ 5,574,000 for our share in completion costs of new wells in which we share a working interest . at present cash flow levels , we expect to have sufficient funds available for our share of both the outstanding afes and any additional acreage , seismic and or drilling cost requirements that might arise from our existing opportunities . we may alter or vary all or part of any planned capital expenditures for reasons including , but not limited to changes in circumstances , unforeseen opportunities , the inability to negotiate favorable acquisition , farmout , joint venture or divestiture terms , commodity prices , lack of cash flow , and lack of additional funding . we are continually evaluating drilling and acquisition opportunities for possible participation . typically , at any one time , several opportunities are in various stages of evaluation . our policy is to not disclose the specifics of a project or prospect , nor to speculate on such ventures , until such time as those various opportunities are finalized and undertaken . we caution that the absence of news and or press releases should not be interpreted as a lack of development or activity . divestitures/abandonments on january 31 , 2012 , we completed the divestiture and sale of the company 's working and or override interests in 38 wells in weld county , colorado to an unrelated third party for $ 5,900,000. after customary adjustments and expenses , the net proceeds from the transaction were $ 5,404,000. the adjusted purchase price was impacted by commissions , sales costs and post effective date revenue and expense modifications to the purchase price . the wells were considered non-core properties for the company , given the company 's focus on other areas , primarily the williston basin . impact of inflation and pricing we deal primarily in u.s. dollars . inflation has not had a material impact on the company in recent years because of the relatively low rates of inflation in the united states . however , the oil and natural gas industry can be cyclical and the demand for production places pressure on the economic stability and pricing within the industry . typically , as prices for oil and natural gas increase , associated costs rise . conversely , cost declines are likely to lag and may not adjust downward in proportion to declining prices . changes in prices impact our revenues , estimates of reserves , assessments of any impairment of oil and natural gas properties , as well as values of properties being acquired or sold . price changes have the potential to affect our ability to raise capital , borrow money , and retain personnel . while we do not presently expect business costs to materially rise , higher prices for oil and natural gas could result in increases in the costs of materials , services and personnel . 22 other commitments other than the aforementioned outstanding afes , we do not have any other commitments beyond our office lease and software maintenance contracts . see note 6 to the consolidated financial statements . results of operations selected financial information the following provides selected financial information and averages for the years ended march 31 , 2012 and 2011. certain prior year amounts may have been reclassified to conform to the current presentation . story_separator_special_tag replace_table_token_6_th 1 due to the timing and accuracy of sales information received from a third party operator as described in “ volumes and prices ” below , sales volume amounts may not be indicative of actual production or future performance . 2 amount does not include water service and disposal revenue . for the year ended march 31 , 2012 , this revenue amount is net of $ 156,000 in well service and water disposal revenue , which would otherwise total $ 11,712,000 in revenue for the year ended march 31 , 2012 , compared to $ 107,000 to total $ 8,206,000 for the year ended march 31 , 2011 . 3 overall lifting cost ( oil and gas production expenses and production taxes ) 4 averages calculated based upon non-rounded figures 23 the year ended march 31 , 2012 compared with the year ended march 31 , 2011 overview . net income for the year ended march 31 , 2012 , was double that of the previous year at $ 3,279,000 compared to $ 1,602,000 for the year ended march 31 , 2011. the increase in the sales price per barrel of oil equivalent ( “ boe ” ) and rise in sales volumes , offset by increases in production costs and general and administrative ( “ g & a ” ) expense , resulted in the increase in net income . revenues . oil and natural gas sales revenue increased $ 3,457,000 ( 43 % ) for the year ended march 31 , 2012 , as compared to the year ended march 31 , 2011 , due to an overall 15 % higher realized price per boe , and 20 % overall increase in sales volumes . volumes and prices . on an equivalent barrel basis , sales were 146,000 boe for the year ended march 31 , 2012 compared to 122,000 boe for the year ended march 31 , 2011. oil sales volumes increased 16 % from 93,613 barrels for the year ended march 31 , 2011 to 108,653 barrels for the year ended march 31 , 2012 , while the average price per barrel increased 29 % from $ 74.06 for the year ended march 31 , 2011 to $ 95.73 for the year ended march 31 , 2012. the rise in oil volumes resulted from production from the 24 newly producing wells offset , expectedly , by declines in existing wells . natural gas sales volumes increased 32 % from 172,386 mcf for the year ended march 31 , 2011 to 226,760 mcf for the year ended march 31 , 2012 , while the average price per mcf dropped 25 % , from $ 6.76 for the year ended march 31 , 2011 to $ 5.09 for the year ended march 31 , 2012. production expenses . production expenses are comprised of the following items : replace_table_token_7_th oil and natural gas production expense increased $ 953,000 ( 27 % ) for the year ended march 31 , 2012 , as compared to the year ended march 31 , 2011. the two principal components of oil and gas production expense are routine lease operating expenses ( “ loe ” ) and workovers . routine expenses typically include such items as daily well maintenance , utilities , fuel , water disposal and minor surface equipment repairs . workovers primarily include downhole repairs and are generally random in nature . although workovers are expected , they can be much more frequent in some wells than others and their associated costs can be significant . therefore , workovers account for more dramatic fluctuations in oil and gas expense from period to period . 24 loe , production taxes , and transportation and other expenses increased $ 596,000 ( 32 % ) , $ 351,000 ( 60 % ) , and $ 73,000 ( 34 % ) , respectively , for the year ended march 31 , 2012 , as compared to the year ended march 31 , 2011. all fluctuate with sales revenue , which increased 43 % year over year . production taxes as a percent of oil and natural gas sales revenue were comparable year over year at 8.1 % versus 7.2 % . workover expense decreased $ 67,000 ( 8 % ) for the year ended march 31 , 2012 , as compared to the year ended march 31 , 2011. the overall lifting cost ( oil and natural gas production expense plus production taxes ) per boe increased 6 % from $ 28.83 for the year ended march 31 , 2011 to $ 30.59 for the year ended march 31 , 2012. this increase resulted from the increase loe described above . this lifting cost per equivalent barrel is not indicative of all wells , and certain high cost wells could be shut-in should oil prices drop below certain levels . other expenses . depletion and depreciation expense decreased $ 49,000 ( 4 % ) for the year ended march 31 , 2012 as compared to the year ended march 31 , 2011 due to the disposition of d-j basin properties in 2012 , somewhat offset by new wells . depletion expense per boe decreased from $ 9.24 for the year ended march 31 , 2011 to $ 7.27 for the year ended march 31 , 2012. general and administrative ( “ g & a ” ) expense rose $ 561,000 ( 37 % ) for the year ended march 31 , 2012 , as compared to the year ended march 31 , 2011. eighty percent of this increase relates to personnel costs , as additional management , staff and a board member were added in 2012. state franchise taxes resulted in 15 % of the rise in costs . the sum of various other administrative costs account for the remaining fluctuation in the expense . as a percent of total sales revenue , g & a expense remained steady at 18 % both years

