While much of the U.S. energy focus in 2011 was on natural gas supply surges due to hydraulic fracturing, the nation's largest independent oil producer, Anadarko Petroleum, remained bullish on liquids, producing a record 248 million barrels of oil equivalent of crude oil, natural gas and natural gas liquids from its U.S. and overseas holdings.

Fourth-quarter earnings by the Woodlands, Texas-based company beat analysts' projections by 37 percent, driving the company's stock price up 3.4 percent to $85.69, its highest intraday gain since 1986, when Anadarko's stock began trading on the New York Stock Exchange.

The 6 percent rise in year-to-year production came on strong performance from Anadarko's onshore and offshore operations, highlighted by major production gains in Colorado's Wattenberg field, the Eagle Ford Shale in south Texas and the Greater Natural Buttes area of Utah, executives said during a conference call yesterday to discuss fourth-quarter and annual earnings and performance data.

Shale plays accounted for a significantly larger share of Anadarko's total production in 2011, making up 10 percent of total sales volume, up from just 1 percent two years ago, and 5 percent of the company's total proved reserves. The company ended the year with an estimated 2.54 billion BOE of proved reserves.

"By continuing to focus capital investments on our liquids-rich opportunities, we achieved 10 percent year-over-year growth in liquids sales volumes," said Jim Hackett, Anadarko's chairman and CEO. "The depth and performance of our portfolio continues to keep us on the path toward meeting our strategic objectives."

Yet even with strong production and sales, Anadarko reported a net annual loss from continuing operations of $2.649 billion, or $5.32 per diluted share. The loss stemmed in large part from Anadarko's $4 billion payment to settle claims in the 2011 Deepwater Horizon rig disaster in the Gulf of Mexico.

Those challenges aside, Anadarko executives said they were enthusiastic about the company's recent gains in the Wattenberg field north of Denver, where it recently announced a net resource potential of between 500 million and 1.5 billion BOE (Greenwire, Nov. 15, 2011). The company is operating five horizontal drilling rigs in the Wattenberg field, which overlies the highly productive Niobrara Shale formation.

"We're very excited about horizontal Wattenberg opportunity in Colorado," Hackett said. "It's not every day you find a potential 1.5-billion-barrel field in your own backyard."

Similarly, the company said it had achieved strong results from its Eagleford Shale drilling units during 2011, exiting the year with gross volumes of about 77,000 BOE per day, with a liquids yield of more than 65 percent.

Building offshore capacity

While U.S. offshore production was slowed in recent months by the Obama administration's Gulf of Mexico drilling moratorium following last year's Deepwater Horizon disaster, Anadarko said it expects to return to pre-moratorium drilling activity off the Gulf Coast this year, while at the same time pursuing its significant offshore production platform in Algeria, Ghana and Mozambique.

The firm's El Merk development in Algeria is about 88 percent finished and "significant oil volumes" are possible by the end of 2012, according to Anadarko's earnings statement.

Officials touted exploration successes off Mozambique, where recent drilling has led to a tripling of the estimated recoverable natural gas reserves to between 15 trillion and more than 30 trillion cubic feet, making the area one of the world's most important gas discoveries in a decade.

Anadarko and its development partners also continue to work to develop offshore production in Ghana, where the company has seen lower-than-expected production from its Jubilee oil field but recent promising results from its deepwater Tano and West Cape Three Points blocks.

Back home, Anadarko said, it has resumed an active deepwater exploration and appraisal program in the Gulf of Mexico and made its first post-moratorium discovery at the Cheyenne East prospect. The well is being tied back to the Independence Hub facility, with production expected during the first quarter of 2012.

In addition, first production is expected at the Caesar/Tonga development by midyear, and Anadarko recently received the drilling permits for its Spartacus prospect, located near the $2 billion Lucius development in the deepwater Gulf.