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The Permian Gets the Lion’s Share of Apache’s 2017 Capex

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Apache’s capex budget in 2017

Apache’s (APA) capital expenditure in 2017 is forecast to be $3.1 billion, which is ~60% higher than its capex in 2016. It plans to spend 44% of its 2017 capex in the Delaware Basin and Midland Basin. Its total Permian investment is expected to be 63% of its 2017 spending.

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Effects of increased spending in the Permian

This increase in Permian spending is expected to lead to 55% Permian production in 4Q18, compared with 36% in 4Q16. Midland and Delaware production is expected to grow at a CAGR (compound annual growth rate) of over 50% between 4Q16 and 4Q18. Oil (DBO) production growth in these regions is expected to grow at a CAGR of 14%–21% between 4Q16 and 4Q18.

In Apache’s 4Q16 earnings presentation, it forecast that the growth would kick in in 2H17, following increased pad completions in the Midland and pipeline connection at Alpine High, which will be a part of its midstream infrastructure.

Plans for 2017

In 2017, Apache plans to operate four to six rigs in the Alpine High play, with 60–80 wells per year in the Woodford and Barnett plays. Apache plans to ramp up production in the Alpine High discovery in 2H17. By mid-2017, APA plans to have its infield gathering and processing infrastructure in place.

On September 7, 2016, Apache announced a major oil discovery in the Delaware Basin, Texas. Called the Alpine High, it is located in the southern portion of the Delaware Basin. Apache estimates that the acreage holds around 3 billion barrels of oil in the Barnett and Woodford regions and about 75 trillion cubic feet of rich gas.

The new Alpine High discovery is also expected to strengthen Apache’s Permian position, which has been one of the company’s long-term focuses. To learn more, read How Alpine High Affects Apache’s Permian Position. For more about how Apache performed in 4Q16 and fiscal 2016, read Apache’s 2017 Production Growth: The Permian Is Key.

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