Apache (NYSE:APA) is depending on various oil and liquids plays in the Midcontinent area of the United States to help the company increase oil and gas production to more than 1 million barrels per day by 2016.
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Apache has a long operating history in the Central region and has 1.1 million net acres under lease across Texas, Oklahoma and Kansas. The company plans to ramp up activity here during the second half of 2012 and will operate an average of 25 rigs in this region and drill 240 wells during the year.
It estimates that oil and gas production from the central region will grow at double digit rates over the next five years and reach approximately 160,000 barrels of oil equivalent (BOE) per day by 2016.
Most of this production growth will come from the development of various Granite Wash formations in Texas and Oklahoma. The company is also transitioning its development program to horizontal drilling in the central area and will drill virtually no vertical wells in 2012.
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Apache has been active in the Granite Wash for several years and has drilled and completed 92 horizontal wells here over the last three years. The company plans to increase activity in 2012 and will drill 79 wells during the year.
It is targeting a number of formations that make up the Granite Wash, including the Caldwell, Skinner, Atoka and Granite Wash "B" and "C" benches. The company estimates it has nearly 23,000 locations to choose from on its acreage.
Apache has improved efficiency here since entering the play and has reported recent wells with an estimated ultimate recovery of 1.1 million BOE, compared to only 606,000 BOE for wells drilled in 2010. The company has also seen an increase in the liquids content of wells drilled and completed in 2012, with approximately 44% of production composed of oil and other liquids. In 2010, the average well had a liquids content of 22%.
Apache is also developing other formations in the central area in 2012 as it looks to boost oil and liquids production. These include the Marmaton, Tonkawa, Cleveland Sand and Canyon Wash plays.
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Other Granite Wash Players
QEP Resources (NYSE:QEP) has exposure to the Granite Wash and estimates that it has 103 billions of cubic feet equivalent (Bcfe) of resource potential from this play on the company's 25,300 net acre position.
SM Energy (NYSE:SM) also has acreage prospective for the Granite Wash and plans to spend between $60 million and $70 million for the development of this play in 2012.
Devon Energy (NYSE:DVN) has 63,700 net acres and reported average production of 19,000 BOE per day from the Granite Wash during the first quarter of 2012.
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The Bottom Line
Apache Corporation has found a horde of oil and gas plays in the central U.S. that produces crude oil and other liquid hydrocarbons and plans to leverage these areas to meet production growth goals set by the company.
At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.