Apache strikes oil
U.S. oil and gas exploration company Apache Corp. (APA) announced the biggest oil discovery in Australia in the past 30 years.
APA announced that an exploration well, also called the “Phoenix South-1,” found oil in four locations from six samples. The results indicate that the reservoir could potentially hold 300 million barrels of oil. The well is located in the offshore Canning Basin in western Australia.
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Apache, along with its joint venture partner Carnarvon Petroleum, was actually drilling for natural gas. With the new discovery, international energy companies will likely cash in on what Apache considers a “new oil province for Australia.”
Australian oil production lagging
This discovery is significant for Australia. Australia needs to replace its decreasing oil reserves. According to British Petroleum (BP), oil production in Australia fell by 17% last year due to depleted reserves. The new discovery may give a much needed boost to Australian oil production.
Early estimates point to the Phoenix South-1 having reserves of almost 300 million barrels of oil. However, in a press release, Carnarvon announced that it’s too early to determine the volumes that will be recovered.
Apache will complete more appraisal drilling to determine the amount of oil that can be recovered. Apache and its partners plan to release the information by the end of 2014.
Market reaction and future plans
Following the news, shares in Carnarvon Petroleum Ltd. almost tripled to 24 Australian cents in Australian trading.
Carnarvon holds 20% stake in the WA-435-P block where the discovery was made. Apache owns a 40% stake in the block. It’s also the operator. Other partners include Japan’s JX Holdings Inc. and privately held Finder Exploration Pty Ltd. Each partner hold a 20% stake in the block.
After the discovery, Apache committed to drilling a second well in a neighboring permit. It will target a larger prospect named “Roc.” Apache believes that it could also contain lots of oil. The drilling is scheduled to take place in 2015.
To learn more about Apache and its operations, continue reading the following parts of this series.