Apache discovers 3 billion barrel ‘Alpine High’ play in Southern Delaware Basin

Apache has drilled 19 wells in Alpine High, with 9 currently producing in limited quantities due to infrastructure constraints

HOUSTON – Apache Corporation says it has discovered a huge field with reserves of three billion barrels of oil and 75 Tcf of natural gas in the southern Delaware Basin in West Texas.

The discovery was announced Wednesday after “two years of extensive geologic and geophysical work, methodical acreage accumulation, and strategic testing and delineation drilling.”

Apache’s Alpine High acreage lies in the southern portion of the Delaware Basin, primarily in Reeves County, Texas.

The announced reserves lie in the Barnett and Woodford formations, but Apache also sees significant oil potential in the shallower Pennsylvanian, Bone Springs and Wolfcamp formations.

Only 19 wells have been drilled in the Alpine High, a corner of the Permian that’s short on infrastructure to process and transport oil and gas, according to Benjamin Shattuck, principal analyst at industry consultant Wood Mackenzie Ltd.

That could increase costs in the 62-year-old company’s bid to develop what could be a “transformational” find, he said.

Shares for Apache were up 14 per cent in New York, the biggest intraday gain since Nov. 2015. The stock was up to $57.75, or 12 per cent at 9:40 a.m, according to Bloomberg.

“Today’s announcement is the culmination of more than two years of hard work by the Apache team. While other companies have focused on acquisitions during the downturn, we took a contrarian approach and focused on organic growth opportunities. These efforts have resulted in the identification of an immense resource that we believe will deliver significant value for our shareholders for many years,” said John J. Christmann IV, Apache’s chief executive officer and president.

Key highlights of the discovery:

• Apache has secured 307,000 contiguous net acres (352,000 gross acres) at an attractive average cost of approximately $1,300 per acre.
• Alpine High has 4,000 to 5,000 feet of stacked pay in up to five distinct formations including the Bone Springs, Wolfcamp, Pennsylvanian, Barnett and Woodford.
• 2,000 to more than 3,000 future drilling locations have been identified in the Woodford and Barnett formations alone. These formations are in the wet gas window and are expected to deliver a combination of rich gas and oil. Initial estimates for the Woodford and Barnett zones indicate a pretax, net present value (NPV) range of $4 million to $20 million per well, at benchmark oil and natural gas prices of $50 per barrel and $3 per thousand cubic feet (Mcf), respectively. Expected well costs in development mode for a 4,100 foot lateral are estimated to be approximately $4 million per well in normally pressured settings and $6 million per well in over-pressured settings.
• 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.