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

Mid-Continent
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.)

Granite Wash
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.

Hogshooter Wash
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.)

Bottom Line
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.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  2. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  3. Mutual Funds & ETFs

    ETF Analysis: iShares Morningstar Small-Cap Value

    Find out about the Shares Morningstar Small-Cap Value ETF, and learn detailed information about this exchange-traded fund that focuses on small-cap equities.
  4. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  7. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  8. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  9. Mutual Funds & ETFs

    ETF Analysis: WisdomTree SmallCap Earnings

    Discover the WisdomTree Small Cap Earnings ETF, a fund with a special focus on small-cap and micro-cap stocks with positive earnings.
  10. Mutual Funds & ETFs

    ETF Analysis: iShares US Regional Banks

    Obtain information and analysis of the iShares US Regional Banks ETF for investors seeking particular exposure to regional bank stocks.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Profit Margin

    A category of ratios measuring profitability calculated as net ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis ...
  4. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
  5. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing ...
  6. Net Present Value - NPV

    The difference between the present values of cash inflows and ...
RELATED FAQS
  1. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. What is the difference between the return on total assets and an interest rate?

    Return on total assets (ROTA) represents one of the profitability metrics. It is calculated by taking a company's earnings ... Read Full Answer >>
  6. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!