Apache’s new oil and gas discovery
On September 7, 2016, Apache Corporation (APA) announced a major oil discovery in in the Delaware Basin, Texas. The new resource play, Alpine High, is located in the southern portion of the Delaware Basin. APA estimates that its acreage holds around 3 billion barrels of oil in the Barnett and Woodford regions and about 75 Tcf (trillion cubic feet) of rich gas.
APA’s press release also noted that it “sees significant oil potential in the shallower Pennsylvanian, Bone Springs, and Wolfcamp formations.”
The new discovery is located near the Davis Mountains, an area that had been perceived as dominated by dry gas and having high clay content. Apache, however, has noted that the area was rich in wet gas and oil and had in fact, very low clay content.
APA’s updated capex plans
APA increased its 2016 capex (capital expenditure) by $200 million in a bid to accelerate development in the Alpine High resource play. For 2016, APA has raised its capex to ~$2 billion—of which capital spending on the development of Alpine High will account for ~25%. By comparison, 40% of APA’s total capital spending will be spent on infrastructure.
Apache’s Chief Executive Officer, John Christmann, stated the following in the press release: “With the contribution of Alpine High to our global portfolio of world-class international and North American assets, Apache clearly has more profitable growth opportunities than at any other time in the company’s 60-year history.”
In the next part, we’ll take an even closer look at APA’s Alpine High play.