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. Economics

    Investing Opportunities as Central Banks Diverge

    After the Paris attacks investors are focusing on central bank policy and its potential for divergence: tightened by the Fed while the ECB pursues easing.
  2. Stock Analysis

    The Biggest Risks of Investing in Pfizer Stock

    Learn the biggest potential risks that may affect the price of Pfizer's stock, complete with a fundamental analysis and review of other external factors.
  3. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  4. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  5. Markets

    PEG Ratio Nails Down Value Stocks

    Learn how this simple calculation can help you determine a stock's earnings potential.
  6. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  7. Investing

    What’s the Difference Between Duration & Maturity?

    We look at the meaning of two terms that often get confused, duration and maturity, to set the record straight.
  8. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  9. Stock Analysis

    When Will Dick's Sporting Goods Bounce Back? (DKS)

    Is DKS a bargain here?
  10. Investing News

    How AT&T Evolved into a Mobile Phone Giant

    A third of Americans use an AT&T mobile phone. How did it evolve from a state-sponsored monopoly, though antitrust and a technological revolution?
  1. What does low working capital say about a company's financial prospects?

    When a company has low working capital, it can mean one of two things. In most cases, low working capital means the business ... Read Full Answer >>
  2. Do nonprofit organizations have working capital?

    Nonprofit organizations continuously face debate over how much money they bring in that is kept in reserve. These financial ... Read Full Answer >>
  3. Can a company's working capital turnover ratio be negative?

    A company's working capital turnover ratio can be negative when a company's current liabilities exceed its current assets. ... Read Full Answer >>
  4. Does working capital measure liquidity?

    Working capital is a commonly used metric, not only for a company’s liquidity but also for its operational efficiency and ... Read Full Answer >>
  5. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
  6. Can working capital be too high?

    A company's working capital ratio can be too high in the sense that an excessively high ratio is generally considered an ... Read Full Answer >>

You May Also Like

Trading Center