The shale driller believes it is sitting on 3 billion barrels of oil. Matthew DiLallo Sep 7, 2016 at 4:30PM The oil market downturn forced many producers to cut back investment spending significantly. As a result, most producers curtailed exploration spending, and instead focused their limited capital dollars on investments that would yield production and cash flow in the very near term. Apache (NYSE:APA), on the other hand, took a different approach, quietly pouring money into an exploration project in an area that most of its peers had overlooked. The result is the discovery of the oil-rich Alpine High resource play in western Texas. Drilling down into Alpine High Apache's Alpine High is in the southern portion of the Delaware Basin, which is on the west side of the Permian Basin. The company's acreage is on the map in the below slide: Apache methodically secured 307,000 contiguous net acres in the play over the past two years at an average cost of just $1,300 an acre. That position represents the vast majority of the play. Furthermore, the company acquired that land for a fraction of the price its peers are paying for acreage in the Permian Basin these days. For example, Parsley Energy (NYSEE) recently acquired 30,000 acres in the Southern Delaware Basin for $280.4 million in cash, or roughly $9,000 an acre. In addition to that, Parsley Energy bought just over 9,000 net acres in the Midland Basin for a whopping $400 million, or more than $43,000 an acre. Oil companies like Parsley Energy have been very active in acquiring acreage in the Permian this year, resulting in the average selling price jumping to more than $25,000 an acre for land in prime drilling areas. Apache, on the other hand, was able to secure the drilling rights to Alpine High for a bargain price because the industry had several misconceptions about the region, including the view that it was a gas play and that it had too much clay. Apache, however, found it to not only be rich in oil and NGLs but that it did not have much clay at all. What that meant is that it was not only easy to frack, but also produced large volumes of higher-value hydrocarbons. Furthermore, oil and gas saturated the rocks in this region, with Apache's initial estimate that its acreage alone contains 75 trillion cubic feet of gas and 3 billion barrels of oil. That resource estimate, however, covers just two of the five distinct rock formations underlying its acreage position, with the company seeing significant oil potential in the other three formations as well. Where does Apache go from here? Now that the word is out on Alpine High's potential, Apache plans to accelerate the development of its acreage position right away. As such, it is increasing its 2016 capex budget by $200 million, raising it to $2 billion. The company plans to spend more than a quarter of that capex on the Alpine High play. Longer term, Apache estimates that it can drill between 2,000 to 3,000 future wells on its acreage just targeting two of the five formations, which is enough inventory to last it over 20 years. That said, it plans to continue testing the play to see if it can develop all five zones as well as to define the extent of the play, which could significantly extend the development time frame. However, the company has one notable obstacle to overcome before it can unleash the full potential of the Alpine High, which is the lack of infrastructure in the region. Because of that, the company will spend 40% of its Alpine High capital on infrastructure this year, including installing temporary processing capacity. It plans to establish an Alpine High midstream enterprise to ensure it has the infrastructure it needs as well as to control the pace of the field's development. Because of that, it does not anticipate expanding to full-field development until 2018. Once that happens, the company has the potential to generate enormous production growth from Alpine High for years to come. Apache proved that there's still plenty of potential oil discoveries for companies willing to take a calculated risk. While it took a lot of hard work and effort, the company now has a major growth driver that can create tremendous value for its investors in the years ahead. Best of all, Apache did not have to pay that much for the discovery, which puts it well ahead of its acquisitive peers that are bidding up acreage to secure their future growth.
$1300 an acre is a near steal after the lessons taught in the Marcellus play. Do we know how deep the pay rock is found?
I was in the Permian Basin in the 80's at the time the world deepest well was drilled there took a year I think it was Moran brothers big triple diesel electric rig TD was about 30,000 foot, I was almost killed not to far from there. My point being We have oil more that all of the middle east and the gulf is loaded as well as Texas Louisiana and Oklahoma. each has plenty of oil The fracking lie is being touted as bad well all it is is sand in an emulsification of gel some hydrochloric acid in some cases same as your stomach only more strength and the "fracture zone is nowhere near the water layer by thousands of feet, also there are 3 casings of pip[e held in place with concrete to three different diameters of pipe to differing depths Surface, intermediate, and production. --- can something go wrong well hell yea but if we have no oil we go back to the dark ages no mechanical means of farming and ranching so where are you going to get food bread milk medicine power if we just lost diesel over half of the people would be dead in months NO air travel no trains no buses diesel transports no ships because they might get here but if the cannot refuel that are not leaving. If a well is on a pump there is no natural gas to push it up, if there is gas the oil companies want that too. Oil is natural it is not some magic substance from it we get oils greases diesel gasoline lighter fluid 3-in 1 oil sulfur and a host of others then there are some of the Nobel gases as well as butane, isobutane, ethane methane and propane also helium so without drilling your little brat balloons would drag the ground hydrogen is also around. There is nothing that oil and fuel does not play an integral roll if it's made moved or recycled it takes power and that comes from fuel solar has a few generations to go before it will not cover you whole home and yard to run your AC vehicle washer dryer and all those pesky medical devices that keep your cranky old parents alive. I tire of hearing all the loads of crap about clean energy, we live in an ENTROPIC world everything is dying even the sun the oldest tree is finally dying the natural laws of physics cannot be changed, gravity will fall in on itself and we will go super nova nothing repeat nothing last or lives forever except stupid people we can never seem to rid ourselves of them That does not mean we stand still and not try to look for a better energy source no matter what it may be but there is no panacea no magic beans no perpetual motion machine (that can power a million homes) we probably can get there we have some fantastic minds working on the problem the issue is they are looking in the wrong place/s I know but like telling people there was a great ape in Africa or the Panda no one believed you until they tripped over them and someone drug it in and stuck it under their nose. is it easy no but we already have the technology to accomplish this by degrees and each would lessen the need for fossil fuels by increments. Face it when we started drilling for oil we dumped most of the byproducts now we use all of it we can capture and with more efficiency we are doing better but as I said it took us since 1859 to get here have some damn patients and if we nuke each other before well we gave it the old college try.
Found a partial answer to my question. As expected, gas and oil are found at varying depths, from 4 to 5 K feet down to 10K. Those depths are not a problem and 15K feet laterals are routine in the Marcellus, no reason to think otherwise in the Permian. The limits are on drill stem material strengths when punching into hard shales. The more interesting question is the ROI of drilling costs. 10 million per hole is not unheard of in this nekka, in today's dollars. Development and treatment are extra, depending completely on what comes up. Sour gas would not be fun, and would not return on the investment nearly as fast as if pipeline quality.
Much of this should take the pressure off the Alaskan drilling push, especially the north slope area, and while that will hurt Alaska, in the long run, Alaska has other highly valuable treasures that could/should be leveraged for the State's future! Care must be taken, and if properly done, Alaska can profit for a long time to come! It dosnt always have to be about oil! I say pump every ounce of oil out of Texas and the gulf, then worry about other areas where technology can better protect those areas! Glad I'm going to be paying for "Traveling Fuel" to move the folks back north, now all we gotta do is get the fuel compnies to stop lying about screwing up production of the wrong fuels to raise the profits during the travel seasons, and get the fake flex out of the prices!
Now if they would move those rigs 200 miles east on I 20! The oil has been found. The pipeline was built last year. Now offer me a contract @10,000 an acre!
I sent this to someone who I do private chat with on here about investing, Oil is not going to get cheaper and the USA has the largest stockpile of shale oil in the world. It was purposely not used when much of it was discovered in the 1920's and 1930's because the President thought we needed to keep our reserves. there are alot of oil wells drilled and capped for this reason. Plus, harvesting shale oil isn't profitable unless Crude is over $60 a barrel. Just as a random fact, $60 a barrel means gass prices at the pump are about $3 a gallon
yes but do you own the mineral rights under your land, much of east Texas the mineral rights are owned by someone else. Your deed will tell you.
