Anadarko Petroleum Corp. keeps drilling faster all the time, particularly in the Rocky Mountains, the southern and Appalachia regions, according to the company’s latest operations update. Second quarter earnings got a lift from record sales volumes of liquids production.

During the second quarter Anadarko marked record drilling cycle times in four Rockies asset areas, and costs per foot drilled improved from the previous quarter in all of the company’s Rockies asset areas, it said.

In the Eagle Ford Shale Anadarko drilled its longest lateral at 8,340 feet. In that South Texas play the company has now drilled 22 wells in less than 10 days, it said Monday.

“In the Marcellus [Shale], a drilling record was set at 13.2 days from spud to rig release, and there have now been 13 wells drilled in less than 18 days,” Anadarko said. “The average drilling cycle time in the Marcellus has improved by about 13 days when compared to 2010 drilling results.”

Performance also continues to improve in the Bone Spring play in the Permian Basin, the company said, where a recent drilling record was set at 22 days from spud to rig release.

“We’re very excited about how our drilling team has performed in each one of those assets. They’re doing a spectacular job, actually gaining more efficiency in every element of the well construction process,” Charles A. Meloy, senior vice president of worldwide operations, told financial analysts during a conference call Tuesday. “Our plan right now, we’re drilling more wells with the same rig count, on the order of 40% more in several of these plays. We’re actually getting that many more wells drilled with the same effort on a given rig count, which gives us a much higher net present value for the production because we get it on quicker and it costs less to drill any individual well.

“The aggregate capex [capital expenditure] is going up on a program basis in a given year because we are putting more tangibles in the ground. But our intangible costs are actually coming down.”

Anadarko said it achieved sales volume records during the second quarter in Wattenberg, Greater Natural Buttes, Wamsutter (operated), Bone Spring and the Marcellus Shale. In the Eagle Ford Anadarko closed on its $1.6 billion joint venture with a subsidiary of Korea National Oil Corp. (see Daily GPI, March 22) and exited the quarter with record gross sales of about 45,000 boe/d in the play, an increase of about 25% from the end of the prior quarter.

“We achieved record liquids sales volumes during the quarter, enhancing margins and generating excellent cash flows,” said CEO Jim Hackett. “Nearly all of the year-over-year volume growth was attributable to a 34,000 b/d increase in liquids volumes. These results contributed to strong discretionary cash flows of more than $1.8 billion — approximately $117 million above our capital expenditures, which included a one-time cash investment of $518 million associated with the acquisition of the Wattenberg plant.”

Earlier this year Anadarko bought BP America Production Co.’s 93% interest in the Wattenberg Processing Plant in northeast Colorado for $575.5 million (see Daily GPI, March 23).

During the second quarter sales volumes totaled 62 million boe, or 685,000 boe/d, averaging about 2.3 Bcf/d of natural gas, 225,000 b/d of oil and 72,000 b/d of natural gas liquids.

In the deepwater Gulf of Mexico Anadarko advanced two projects during the second quarter. The company finalized the Lucius unitization agreement and recently announced plans to develop the field with a truss spar (see Daily GPI, July 19). Sanctioning is expected later this year, with first production expected in 2014. And at the Caesar/Tonga project, Anadarko completed flow and reservoir tests on three wells.

“We expect the next six to nine months to be the most active period of deepwater exploration and appraisal drilling in our company’s history,” said Hackett. “Our exploration program is designed to deliver upon our goal of discovering more than 500 million boe of net risked resources this year. We are continuing to advance our deep inventory of high-impact prospects, and the new rig agreements reinforce our long-term commitment to the safety and success of our global exploration program.”

Anadarko reported second quarter net income of $544 million ($1.08/share) after the impact of special items, which cut net income by about $28 million (6 cents/share) after tax. For the year-ago quarter the company reported a net loss of $40 million (minus 8 cents/share), due in part to hedging.

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