Continental Resources (NYSE:CLR) raised production growth guidance for 2012 on the back of the company's aggressive development of the Bakken and Woodford plays. The company also hiked capital spending for the year as it faced rising costs in its operational area.

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Production Growth
Continental Resources reported production of 94,852 barrels of oil equivalent (BOE) per day during the second quarter of 2012, up 76% on a year over year basis. This production continued to grow and reached 100,000 BOE per day in June 2012.

The strong results has compelled Continental Resources to raise production growth guidance for 2012, with the company expecting growth to range from 57 to 59%, up from the previous range of 47 to 50% growth.

This is phenomenal growth and puts Continental Resources in the top growth tier in the oil and gas industry. Another fast growing operator is Range Resources (NYSE:RRC), which reported year over year production growth of 42% in the second quarter of 2012 as the company moved to develop the Marcellus Shale and other plays in the United States. The company also raised its 2012 production growth estimate and now expects growth of 35% for the full year.

SEE: Oil And Gas Industry Primer

Capital Spending
The increase in production growth guidance for Continental Resources was accompanied by a $700 million increase in capital spending in 2012, bringing the total budget to $3 billion for the year.

Continental Resources indicated that the extra funds would be used to accelerate development of the Bakken and to increase working interests in wells here and in the Anadarko Basin, where the company is developing the Woodford Shale.

The company also said that the company is facing higher drilling and completion costs for Bakken wells in 2012, with operated wells averaging $9.2 million. CLR is seeing even higher costs for non-operated Bakken wells, with an average cost of $11.3 million.

Continental Resources has reduced its operated rig count from peak levels reached in late 2011 and early 2012. The company is currently operating seven rigs in the Anadarko Basin, down from the previous level of 16, and has reduced its Bakken rig count from 26 to 19.

This cost trend goes contrary to what some other operators are experiencing in the onshore United States. Concho Resources (NYSE:CXO) reported that the company saw a softening of prices for drill pipe, pressure pumping equipment and land rigs in the Permian Basin during the most recent quarter.

SEE: Oil: A Big Investment With Big Tax Breaks

Other Capital Spending Hikes
Other companies have also announced higher capital spending in 2012 as they seek to accelerate development of various oil and gas properties. Callon Petroleum Company (NYSE:CPE) raised its 2012 capital budget by $13.5 million, or approximately 10%, boosting total spending to $152.5 million for the year. The company is active in the Permian Basin and will use the extra funds on infrastructure needed to transport and process production as well as leasehold acquisitions to set up for future growth.

The Bottom Line
Continental Resources is growing even faster than it expected and will no doubt achieve its long-term goal of tripling production by 2016. Unfortunately, the company is plagued by higher costs and will have to spend more to accomplish this over the next few years.