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Good day and welcome to the Contango Third Quarter 2020 Results Conference Call. Today's conference is being recorded.
At this time, I would like to turn the conference over to Wilkie Colyer. Please go ahead.
Thank you. Good afternoon and thank you for joining us for our third quarter 2020 earnings conference call. My name is Wilkie Colyer, and I'm the Chief Executive Officer of Contango.
Joining me this afternoon on the call are Farley Dakan, the Company's President; Chad Roller, the Company's Chief Operating Officer; Joe Grady, the Company's Chief Financial Officer; and Chad McLawhorn, the Company's General Counsel.
Hopefully, everyone has had an opportunity to read through this afternoon's press release, including the cautionary statements regarding forward looking information and non-GAAP measures that apply to the statements on this call. Also, I will make reference to a presentation posted to our website in the Events & Presentations tab called Central Oklahoma LOE Reductions. So please pull that up if you'd like to follow along.
Last time we spoke with you just a few short weeks ago, we announced our merger with Mid-Con Energy Partners. This merger at scale, substantial long live and low decline of oil reserves, it increases our exposure to oil and what we consider to be an attractive forward strip that rationalizes costs out of the combined entity, enhances liquidity and free cash flow generation as a growth asset to our portfolio in Pine Tree, and requires very little in the way of maintenance capital spending.
We were able to structure this transaction in a manner that allows us to keep a simple capital structure comprised of only bank debt and equity, which allows us to maintain optionality as we continue to pursue additional opportunities. Our supportive lending group led by JPMorgan and supportive shareholder base are major competitive advantages in this environment. We continue to be diligent on the head new front.
For the balance of this year, we have 71% of our forecasted PDP oil production hedged at $55.12 and 67% of forecasted PDP gas production hedged at $2.57. Next year we are 69% hedged on oil PDP at $51.71 and 58% hedged on gas PDP at $2.49. Recently, we entered into additional 2022 hedges bringing us to 37% hedged on oil PDP at $42.04 through Q3 of 2022 and 65% hedged on gas PDP and $2.59 through Q3 of 2022. Not included in these numbers are the oil engines we will inherit from Mid-Con when we close on that transaction late this year or early next.
In terms of results, I think we did a great job of managing business in a tough environment. And if you please open up that slide deck that I mentioned Contango Central Oklahoma LOE Reductions and turn to Slide 3.
So Slide 3 executing our business plan, Central Oklahoma year end 2020 preview. We've been able to reduce LOE substantially during this year and lease operating expenses are 48% lower than the previous year prior to taking over operations. So if you look at the top right chart, you'll see in March of 19 when this was owned by White Star, the assets were running at about $4.5 million a month.
In October of 2019 about $2.9 million a month and that was the month before we took over operations. Since then we've reduced LOE by 48% to about $1.5 on a go-forward basis. And that's gross, total production expenses like dollar per month.
That LOE reduction is expected to result in over 50% of the value increase, or $41.7 million increase in PDP PV-10 for the Central Oklahoma region. By the way, this is the subset of assets that we purchased from White Star as part of those assets.
For year-end reserves, we're expecting UCF year-end 2019 reserves were normalized to the same pricing. So viewing the bar chart down at the bottom, year-end '19 UCF at 72.7 that's year-end 19 at basically, today's strip, you see there's some roll-off from production, and that's free cash flow, essentially, some minor revision, but look at that LOE reduction, that's about three times the roll-off of production or free cash flow during that year. So very, very material increase to our reserve base just by going in and cost cutting on these assets.
So the White Star acquisition and specifically the subset of assets categorized in Central Oklahoma, is a case study in how we approach inorganic growth. We were able to purchase the asset for a significant discount to PDP at bench strip via 363 sales process. We then hedged that production to mitigate near term price risk.
Finally, we were able to cut significant cost out of the field level OpEx without any degradation in operating performance or production, further enhancing returns. While the price tag is lower today than it was at closing, the price paid and actions taken post closing provide a margin of safety against downward price movements.
We believe that this process is repeatable, particularly with regard to assets owned by non-natural entities, such as banks, bondholders, or other creditors, which continued to be a focus for us.
Our net results came in at or better than we guided to during our last earnings call with production at the top end of guidance and costs plus LOE and G&A, below the low-end of guidance. In short, we executed on the internal things we can control to either add value or at least not detract from value while we continue to look for inorganic opportunities to grow accretively.
On that front, the pipeline of opportunities we're evaluating continues to be as strong as it ever has been. It appears to us that bid ask spreads have narrowed as volatility has subsided somewhat in the WTI forward curve. We're seeing almost unprecedented opportunities to add assets to our portfolio, via bank and liquidations, pre and post reorganization combinations, bilateral trades and acquisition of credit securities.
Our flexible mandate and multi-basin approach allows us to be value reactive to the best opportunities and our simple capital structure and low leverage both now and in the future give us the ability to play offence at a time when many of our competitors are unable to do so.
Thanks for your time this afternoon and for your interest in Contango. With that operator, I will open up the lines for questions.
Thank you. [Operator Instructions] It appears we have no questions at this time. I would like to turn the conference back to your hosts for any additional or closing remarks.
Thank you, and thanks everybody for taking time to hop on the call and hear about our third quarter earnings. We continue to be really excited about where we're at in the current environment and look forward to updating you guys in the near future. Thank you again and have a great evening.
And that concludes today's presentation. Thank you for your participation. You may now disconnect.