Apache Discovers Large Play In Southern Delaware Basin

Apache has been prospecting Delaware Basin acreage for more than two years, conducting extensive geologic and geophysical work, methodical acreage accumulation, and strategic testing and delineation drilling. “While other companies have focused on acquisitions during the downturn, we took a contrarian approach and focused on organic growth opportunities,” said John J. Christmann IV, Apache president and CEO. “These efforts have resulted in the identification of an immense resource that we believe will deliver significant value for our shareholders for many years.

Apache has secured 307,000 contiguous net acres at an average cost of about $1300 per acre. Alpine High has 4000 to 5000 feet of stacked pay in up to five distinct formations, including the Bone Springs, Wolfcamp, Pennsylvanian, Barnett, and Woodford. Two thousand to more than 3000 future drilling locations have been identified in the Woodford and Barnett formations alone. Apache notes these formations are in the wet gas window and are expected to deliver a combination of rich gas and oil. Apache has drilled 19 wells in the play, with nine currently producing in limited quantities due to infrastructure constraints. This includes six wells in the Woodford, one well in the Barnett, and one well each in the shallower Wolfcamp and Bone Springs oil formations.

To accelerate the delineation and development of the Alpine High play, Apache is increasing its 2016 capital spending by about $200 million. Capital spending on the play will represent more than 25% of the company’s total capital budget this year. “Our announcement…represents a significant addition to our already deep and highly economic Permian Basin position,” Christmann added. “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.”