Natural gas futures for 2022 through 2026 have rallied approximately $0.75, which has translated to a meaningful increase to our near-term free cash flow projections.
For example, if we were to replace only China's new build coal power plants with natural gas, we would eliminate approximately 370 million tons of CO2 equivalent per year.
The United States represents about 1/4 of global natural gas supply.
Appalachia alone represents almost 10%.
What that means is that global demand has looked all around the world and, instead, we need almost 1/10 of our natural gas coming from Appalachia.
These are the main reasons that global natural gas prices rose over $20 per dekatherm during the quarter, with the back end of the futures curve having also revved nearly $1 in the past six months.
In 2021, we are now expecting to deliver approximately $950 million in free cash flow generation.
In 2022, our preliminary estimates are $1.9 billion, with 65% of our gas hedged.
As our hedges roll off in 2023, we see free cash flow generation potential growing even further to approximately $2.6 billion, equating to an approximate 30% free cash flow yield for a company that expects to be investment grade, highlighting how robust the free cash flow generation is from our business.
As such, we are updating our 2021 through 2026 cumulative free cash flow projection to over $10 billion, a 40% increase since our July estimate and materially above our current market cap.
Bottom line is we are projected to have approximately $5.6 billion in available cash through 2023.
And if 100% of that cash was allocated to shareholder returns, we would still be left with leverage of sub 1.5 times.
Sales volumes for the second quarter were 495 Bcfe, at the high end of our guidance range.
Our adjusted operating revenues for the quarter were $1.16 billion.
And our total per unit operating costs were $1.25 per Mcfe.
During the third quarter of 2021, we incurred several onetime items totaling approximately $116 million, which impacted our financial results and free cash flow generation.
First, we purchased approximately $57 million of winter calls and swaptions to reposition our hedge book to provide upside exposure to rising fourth quarter '21 and all of 2022 prices, which I'll discuss in more detail in a moment.
Second, we incurred transaction-related costs, mostly from Alta of approximately $39 million.
And finally, we incurred approximately $20 million to purchase seismic data covering the area associated with the Alta assets, which hit exploration expense.
Our third quarter capital expenditures were $297 million, in line with guidance.
Adjusted operating cash flow was $396 million.
And free cash flow was $99 million.
Rising commodity prices and actions taken to unwind fourth quarter hedge ceilings have resulted in an increase to our fourth quarter free cash flow expectations of approximately $200 million.
But at the midpoint, we expect fourth quarter sales volumes to be 525 Bcfe, total operating cost of $1.25 per Mcfe, capital expenditures of $325 million and free cash flow generation of $435 million.
First, we successfully sold down 525 million a day of MVP capacity, which when combined with 125 million a day previously sold down, amounts to approximately 50% of our original capacity.
Going forward, we believe that retaining our remaining $640 million a day of MVP capacity provides appropriate diversity to our transportation portfolio.
During the quarter, we were also successful in securing 205 million a day of Rockies Express capacity, with access to the premium Midwest and Rockies markets.
As part of the agreement, the parties agreed to significantly discount the reservation rates during the first 3.5 years of the contract, which results in a material uplift to price realization and margins during that period.
In the aggregate, we expect these arrangements to lower our go-forward firm transportation costs by approximately $0.05 per Mcfe, while simultaneously improving realized pricing.
In essence, we removed approximately 28% and 13% of tax for ceilings for the balance of 2021 and all of 2022 and lowered our floor percentages by 11% and 9%, respectively.
These actions resulted in a onetime cost of approximately $57 million in the third quarter and approximately $18 million in the fourth quarter, with the current market value sitting at well over three times the execution cost.
For our 2023 hedge book, which sits at under 15%, we expect to hedge with a more balanced and opportunistic approach as we have reduced debt and achieved our investment-grade metrics in 2022.
Last, we remain relatively unhedged on our liquids volumes for 2022 and 2023 at less than 15%, which represents about 5% of our volumes and 7% of our revenues.
Pro forma the full year impact of Alta and the removal of margin postings, our year-end 2021 leverage sits at 1.8 times and is expected to decline to 0.9 times by year-end 2022 and 0 leverage by year-end 2023 without the impact of shareholder returns.
If you add all our free cash flow through 2023, plus the $700 million in current cash margin posting, we are looking at $5.6 billion in cash available for shareholder returns and leverage management.
As of September 30, our liquidity was $1.2 billion, which included approximately $0.7 billion in credit facility borrowings largely related to margin balances tied to our hedge portfolio.
As of October 22, our margin balance sits at approximately $0.4 billion and our liquidity will end October at around $1.5 billion.
We continue to make progress on lowering our letters of credit postings under the credit facility, which dropped approximately $0.1 billion during the third quarter to $0.6 billion, and it declined another $0.1 billion through October 22.
From mid-2020, we have effectively cut our letters of credit in half from approximately $0.8 billion to an anticipated $0.4 billion by year-end 2021.

Summary:
Sales volumes for the second quarter were 495 Bcfe, at the high end of our guidance range.