Anadarko Petroleum Corp. has reduced its natural gas-operated rig count in the Marcellus Shale and in the Greater Natural Buttes of Utah to put more mechanical muscle into the oily Wattenberg field of Colorado, which is delivering the highest rates of return (ROR) in the U.S. onshore portfolio, said CEO Al Walker.

The Wattenberg horizontal (HZ) drilling program’s ROR exceeds 100% at today’s commodity prices, Walker told analysts during a quarterly earnings conference call on Tuesday.

“In the Wattenberg HZ program, the company is currently producing more than 28,000 gross boe/d from about 75 wells with about 75% of the wells producing from the Niobrara formation and the other 25% producing from the Codell formation.

“The company continues to achieve excellent results in its horizontal development program in both formations, with rates of return exceeding 100% at today’s commodity prices.”

U.S. exploration chief Chuck Meloy, who joined Walker on the call, said the Niobrara and Codell fields both “are performing extremely well. You’ve seen us increase our resource potential out there to 1-1.5 billion bbl.”

Eight rigs are running across the Niobrara and the Codell, which “have very similar characteristics with regard to production profile on a boe basis,” said Meloy. “One is a little more liquid-rich, [and] that’s why we’re drilling more Niobrara wells than Codell wells.

“But as we go into these areas and we want to develop, say, a section, we’re doing our best to complete the development in the section, just sort of ‘mow the grass’ as to where we’re going.”

Anadarko is experiencing “explosive growth in virtually every one of our significant U.S. onshore plays,” said Meloy. “It’s just the great spot to be in. We’re seeing records at Wattenberg, records in the Maverick production, Eagle Ford production. And we’re having our Permian Basin also popping on records.”

Meloy said “almost every one” of Anadarko’s onshore fields doubled output in 2Q2012 from a year ago. Drilling efficiencies also gave the company a big boost:

Although efficiencies are better, dry gas drilling is not a priority until prices strengthen, said Meloy. One of the company’s Marcellus wells in the Geneseo formation is producing up to 7 MMcf/d.

“It’s early days. It’s dry gas,” said Meloy. “We’ll put it in our portfolio and work it in. And I think the advantage it has is it’s a little shallower, a little cheaper to develop. But we’re not pushing that right now just because of the price utilization on gas matters.”

To begin actively producing in the Marcellus he said gas prices per Mcf need to be “between $4 and $5.”

Anadarko has a well backlog in the Marcellus of “around 200 wells,” he said “and it’s just getting clipped off on a steady pace. We’ve — both us and our nonoperated partners — have reduced the completion count or the completion crew count.

“And what we’re seeing is just a general slowing of the process up there that’s helping us manage our cost, get more efficiency out of the dollars we spend up there. And depending upon gas price and how those crews are operating, you could see 20 or 30 of those wells a quarter being put online…”

If gas prices “were to rebound, I think you’d see us accelerate that, and you can see the growth come again.”

Anadarko expects to complete an evaluation of its Utica Shale leasehold in early 2013, said Meloy.

“Essentially, we’re…still in our early phases of exploration. We have three wells on steady production. We’re completing three wells, and we’re drilling one right now. So we’ll have a total of seven. There’s a lot of activity around this. So we’ll give a lot of information with regard to our land position…in 2013.”