Battalion Oil third quarter 2021 earnings call. As a reminder, today's conference is being recorded. Now I'll turn it over to the Manager of Finance, Chris Lang. You may begin.
Good morning. I'm joined by a few of my colleagues today that I'd like to introduce. Battalion's Chief Executive Officer, Richard Little, our Chief Financial Officer, Kevin Andrews, and our Chief Operating Officer, Daniel Rohling. This conference call contains forward-looking statements. For a detailed description of our disclaimer, see our earnings release issued yesterday and posted on our website. This conference call also includes references to certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable measure under GAAP are contained in our earnings release announcement released yesterday. We've also published an investor presentation, which can be found on our website and will be referenced during this webcast. Now our team will present a few scripted remarks followed by Q&A. With that, I'd like to turn it over to Rich to start things off. Rich?
Good morning, and thank you for joining us this morning. We are excited to share with you the results from our third quarter, which has been our best quarter this year. During the first half of 2021, we put significant effort into upgrading our central processing facility at Monument Draw. That was to allow for improved flow assurance and reduced downtime across the field. Our results this quarter put that on display. Despite completing our capital program in the second quarter, our total daily production increased 14% quarter-over-quarter, due in large part to our facility upgrade at Monument Draw and reduced well downtime.
Our operations team has been relentlessly focused on efficiently and cost effectively repairing, maintaining, and working over our field and facilities this year, and we're hopeful this success serves as a springboard for us as we move through the fourth quarter and into 2022. The robust production was well-timed as it allowed us to really take advantage of an improving commodity price environment. The increased production, together with an increased gas and NGL price in the second half of this year, provided a boost to our bottom line as we recorded adjusted EBITDA of approximately $23 million in the third quarter. That's a 63% increase over the second quarter. This increase in cash flow allowed us to accelerate our de-leveraging, pulling our net leverage ratio down to 2.5 times at quarter end.
With a strong third quarter behind us, we turn to the fourth quarter with a clear focus. Continue optimizing our operations as we prepare to return to development on our Monument Draw asset. On the production front, we remain diligent in our efforts to improve flow assurance and manage operating expenses despite a rising service cost environment. On the development side, as we work to finalize our 2022 capital program, we're taking important steps to mitigate cost increases by advance purchasing materials and protecting our cash flows through increased hedging activity. One final note as we touch on 2022. We recently entered into a rig contract and expect to start our next well in December of this year as we aim to get a jump on our 2022 program. As such, we are increasing our 2021 CapEx guidance range to $45 million-$55 million.
Now I'll pass it off to Kevin to walk through our financial results.
Thank you, Rich, and good morning, everyone. Let me walk you through a few financial highlights from the third quarter. Oil production in the third quarter averaged 17,728 barrels of oil equivalent per day compared to 15,571 barrels of oil equivalent per day during the second quarter of this year, a 14% increase quarter-over-quarter. This can primarily be attributed to facility upgrades at Monument Draw and reduced well downtime. Total revenue was $80.8 million for the third quarter of 2021, with oil representing 74%. We realized 98% of the average NYMEX oil price during the quarter and realized a $22.4 million loss from our hedge program.
We reported GAAP net income to common shareholders for the third quarter of 2021 of $13.1 million or $0.80 per basic share and $0.79 per diluted share. After adjustment for certain items, including the effect of net unrealized derivative losses and gain on extinguishment of debt, and I refer you to the press release for details of those adjustments, the company reflected net income of $9.7 million or $0.60 per basic share and $0.59 per diluted share. Adjusted EBITDA totaled $23.0 million for the third quarter of 2021.
During the nine months ended September 30, 2021, we incurred $41.9 million in oil and natural gas capital expenditures, of which $34.2 million related to drilling and completion costs and $5 million related to the development of our treating equipment and gathering support infrastructure. These amounts represent the majority of our previously announced 2021 capital budget. As Rich mentioned, we have since increased guidance of our 2021 capital budget by $5 million to reflect our decision to accelerate development of our 2022 capital program by starting a well in December. A few comments on liquidity and capitalization. As of September 30, 2021, the company had liquidity of $19.9 million, consisting of $1.9 million of cash on hand and $18 million of availability under our revolving credit facility.
Something we're particularly proud to report this quarter is that as a result of the robust cash flow we generated this quarter, the company was able to reduce its net indebtedness by $10.4 million between June 30 and September 30, 2021. A portion of our debt reduction in the quarter relates to our PPP loan. This quarter, we reported that effective August 13, 2021, the principal amount of the company's PPP loan was reduced to approximately $200,000 by the SBA. And the company recorded a gain on the extinguishment of the forgiven portion of the PPP loan and related accrued interest of $2.1 million. Regarding our credit facility, in September, the company entered into its fifth amendment to its senior secured revolving credit agreement, which among other things, modified the limits on swap agreements.
Additionally, while redeterminations of loan base occur semiannually on May first and November first, the lenders agreed to postpone the final determination until December of 2021. One final comment on the company's hedge position. While we did not enter into any new derivative contracts in the third quarter of 2021, subsequent to the quarter end, we have increased our hedging activity and have added on a substantial amount of crude oil and natural gas hedges at attractive prices, details of which can be found in our quarterly report on Form 10-Q. As we return to development, we expect to continue opportunistically layering in hedges to protect our future cash flows. Now, let me turn it back to Rich to offer some concluding remarks.
Thanks, Kevin. We're very proud of the results we've put up this quarter, and we're excited about how that sets us up for the future. We believe we operate one of the premier assets in the Southern Delaware, and we're eager to get back to work developing it. Once again, thank you for your interest in Battalion. That concludes our scripted remarks. I'll turn it back to the operator to facilitate Q&A.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pause for just a few moments to allow everyone an opportunity to signal for questions. Again, to ask a question, please press star one at this time. I'm showing we have no questions in the queue at this time. That concludes today's question and answer session. Speakers, at this time, I'll turn the conference back over to you for any additional or closing remarks.
Great. Thanks. I do want to thank everybody on the call for your interest in Battalion. We had a strong third quarter and feel like we're well-positioned going into fourth quarter in 2022. Because we have the time, before I hang up, I would like to take this opportunity to recognize and congratulate one of our latest honorees on Forty Under 40 from Hart Energy. Danny Rohling, our Chief Operating Officer, was recently recognized. I believe his edition came out today. Congratulations, Danny, and thanks for your service. With that, we've had a lot going on, and we are really looking forward to getting back to developing what we believe to be a premier asset in the Delaware. With that, I'll conclude the call. Thank you very much.
This concludes today's call. Thank you for your participation. You may now disconnect.