UPDATE 2-Continental Resources raises 2012 capital budget

* 2012 capital expenditure revised higher to $3 billion

* Reports 8.2 percent increase in Bakken well costs

* Company cuts Bakken rig count to 19 from 26

By Selam Gebrekidan

NEW YORK, Aug 9 (Reuters) - Continental Resources Inc , a major driller in North Dakota's Bakken shale, on Thursday said it will increase its 2012 capital expenditures budget to $3 billion, up from a revised $2.3 billion announced in May, because of higher costs and ramped up activity in the shale outpost.

The capital budget revision is the second this year. Early in 2012, Continental had expected to drill 249 net wells with just $1.75 billion, but spent nearly that amount in the first half of the year. It now hopes to drill 330 net wells in 2012.

The Oklahoma-based company has cut the number of rigs it operates in the Bakken in North Dakota and Montana to 19 from 26 in the second quarter and said it is now seeing "anecdotal evidence" of cost reductions in its operations there.

President and Chief Operating Officer Rick Bott said Continental has reduced the time it takes to drill a well by 30 percent, which enabled the oil firm to spud more wells with fewer rigs.

"We looked at all our options and decided to accelerate our efforts ... where prudent," Bott said referring to the budget increase during the company's second-quarter earnings call.

The company did not disclose how it would fund the increase.

Continental has also increased its working interests in its Bakken and Anadarko Woodford shale wells in Oklahoma as other firms backed out, leading to higher expenses this year.

"The entire industry is wrestling with cost escalation, and has really chosen to focus on their own operations and not participate in wells others drill," Bott said, a d ding his company is on an opposite path.

He conceded that his company's well costs too are on the rise with each of its Bakken wells running an average $9.2 million in expenses, up from $8.5 million earlier in the year. Non-operated well costs stand at $11.3 million each.

Fracking stimulation costs are flat or falling but the costs of input materials, drilling and trucking are on the rise, the company said.

Continental is among the major producers in the prolific Bakken prospect in North Dakota, a shale outpost that produced more than 570,000 barrels-per-day of oil in May, according to state data.

The company has been rolling back drilling rigs in the Bakken shale over the last few months, feeding concerns that high costs and low oil prices are hampering production in the nation's biggest oil find in recent years.

But addressing analysts during its second-quarter earnings conference call, Continental executives eased concerns of production cuts and reported a 97 percent year-on-year increase in the company's Bakken output, which stood just over 53,000 barrels of oil equivalent per day (boepd) during the second quarter.

CEO Harold Hamm said half of his company's rigs are drilling on a pad system, allows it to drill up to four wells from a single rig pad and saves up to 10 percent of costs.

Continental's shares were up 4.28 percent at $72.55 on Thursday afternoon.