Apache Corporation (NYSE:APA) will conduct extensive horizontal development of various oil and liquid plays in the mid-continent area over the next five years as the company seeks to grow the company's production and reserve base.
TUTORIAL: The Industry Handbook: The Oil Services Industry
Apache Corporation has approximately one million gross acres under lease spread mostly across the Texas and Oklahoma panhandle areas. The company is pursuing various plays here including the Granite and Hogshooter Washes.
Apache Corporation reported total company production of 732,000 barrels of oil equivalent (BOE) per day during the first quarter of 2011, with 42,000 BOE per day from the mid-continent area.
Apache Corporation sees many opportunities in the mid-continent as the company recently added $110 million in capital to its 2011 program here. This brings its total budget for the exploration and development of the mid-continent area to $560 million in 2011. (Learn more about investing tips in Five Quick Research Tips For Busy Investors.)
Apache Corporation has 200,000 gross acres under lease with exposure to the Granite Wash and is targeting the Caldwell, Marmaton and several other formations on its acreage. The company will operate an average 6.5 rigs during 2011 and drill 40 wells here, with another 200 planned from 2012 to 2015.
Wells here cost approximately $9 million and have produced an average of 6.6 million cubic feet of natural gas equivalents during the first 30 days of production.
Other companies involved in the Granite Wash include Penn Virginia (NYSE:PVA), which reported total production from here of 3.1 Bcfe in the first quarter of 2011. The company plans to drill 9.7 net wells here in 2011. (Learn more in Natural Gas Industry: An Investment Guide)
Forest Oil (NYSE:FST) has 101,000 net acres and completed nine wells into the Granite Wash in the first quarter of 2011. The company has tested 10 formations in the Granite Wash and found them all productive.
Apache Corporation also likes the Hogshooter Wash and is deploying three rigs here in 2011. The company's development program calls for 14 wells in 2011, and 100 more from 2012 to 2015. Apache Corporation has reported six well completions so far in this play with production rates ranging from 1,050 to 2,050 BOE per day.
Other Mid-Continent Plays
Apache Corporation also has other areas that it is developing in the mid-continent region. The company is involved with the Cleveland sand and two other horizontal oil plays and plans to drill 167 wells here from 2011 to 2015.
The Cleveland sand is attracting other operators due to the economics of this play. EOG Resources (NYSE:EOG) has a 60,000 net acre position in 2010 and reported several successful wells in May 2010.
Apache Corporation has a new venture in North Texas where it has plans to drill six wells in 2011. If the wells meet the company's expectations, another 100 are planned from 2012 to 2015. (Oil and gas investments can provide unmatched deduction potential for accredited investors, check out Drilling For Big Tax Breaks.)
Apache Corporation is counting on the horizontal development of its large inventory of oily plays in the mid-continent area to generate production and reserve growth over the next five years.
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