Apache Corporation (NYSE:APA) estimates that oil and gas production will increase to over one million barrels of oil equivalent (BOE) per day by 2016, and hopes to generate this growth primarily off the company's extensive footprint in the United States.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Production Growth
Apache reported average production of 769,000 BOE per day in the first quarter of 2012, and has built up large positions in various conventional and unconventional resource plays in the U.S. The company plans to focus on oil and liquids opportunities in the Permian Basin in Texas and New Mexico and the Anadarko Basin in the Central or Midcontinent area. Apache expects production from the onshore U.S. to represent 41% of the company's total production by 2016, up from only 21% in 2011.

SEE: Oil And Gas Industry Primer

Permian Basin
Apache has 1.6 million net acres under lease in the Permian Basin and reported production of 101,000 BOEs per day from its operations here in April 2012. This makes the company one of the largest producers in the Permian Basin, second only to Occidental Petroleum (NYSE:OXY), which reported production of just over 200,000 barrels per day in 2011.

Apache has steadily ramped up development here over the last few years and plans to spend $1.9 billion in capital here in 2012, up from only $400 million in 2010. The company plans development of a number of different oil and gas plays over the next five years, including the Cline Shale, Wolfcamp Shale, Spraberry, Bone Spring and Yeso.

Apache estimates that Permian Basin production per share will grow at a compound annual rate of 13% from 2011 to 2016.

SEE: Accounting For Differences In Oil And Gas Accounting

Central Area
The Central region will be the fastest growing region for Apache, with the company estimating 24% compound annual growth in production per share from the 2012 exit rate to 2016.

Apache has 1.1 million net acres under lease here and reported production of 59,000 BOE per day in April 2012. The company will have an average of 25 rigs working in the second half of 2012 and will drill 240 wells during the year. Apache is targeting multiple formations here from 2012 to 2016 including the Granite Wash, Marmaton, Cleveland, Canyon Wash and Tonkawa plays.

SEE: Compound Annual Growth Rate: What You Should Know

Other U.S. Regions
Apache has also established new positions in several other onshore plays in the United States. The company has 580,000 net acres prospective for the Mississippi Lime and other formations in Kansas and Nebraska and 300,000 net acres prospective for the Bakken and Three Forks in Montana.

Petroquest Energy (NYSE:PQ) is also active in the Mississippi Lime and recently has started drilling or completing its first three wells here. The company expects to report results by the end of the second quarter of 2012.

Unit Corporation (NYSE:UNT) recently entered the Mississippi Lime through the acquisition of 60,000 net acres. The company recently finished completion operations on its first well and plans to drill up to three more wells here in 2012.

SEE: 5 Biggest Risks Faced By Oil And Gas Companies

The Bottom Line
Apache has a laser-like focus on oil and liquids and has built up a huge inventory of these opportunities in the onshore U.S. The company plans to harvest these plays to grow the company over the next five years.

At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Stock Analysis

    Fortinet: A Great Play on Cybersecurity

    Discover how a healthy product mix, large-business deal growth and the boom of the cybersecurity industry are all driving Fortinet profits.
  2. Stock Analysis

    2 Catalysts Driving Intrexon to All-Time Highs

    Examine some of the main reasons for Intrexon stock tripling in price between 2014 and 2015, and consider the company's future prospects.
  3. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  4. Savings

    Do Natural Gas Prices Always Follow Oil Trends?

    Prices for oil and natural gas are highly correlated. But investors should be aware of different factors affecting the prices of these commodities.
  5. Charts & Patterns

    Understand How Square Works before the IPO

    Square is reported to have filed for an IPO. For interested investors wondering how the company makes money, Investopedia takes a look at its business.
  6. Technical Indicators

    4 Ways to Find a Penny Stock Worth Millions

    Thinking of trading in risky penny stocks? Use this checklist to find bargains, not scams.
  7. Professionals

    Chinese Slowdown Affects Iron Ore Market

    The Chinese economy's ongoing slowdown is having a major impact on iron ore demand.
  8. Investing Basics

    Why do Debt to Equity Ratios Vary From Industry to Industry?

    Obtain a better understanding of the debt/equity ratio, and learn why this fundamental financial metric varies significantly between industries.
  9. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  10. 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.
  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 ...
  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

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!