Apache Corp said it's confirmed a major new oil and natural gas reserve area in Texas, upping its spending plans in response. Photo by photostock77/Shutterstock
HOUSTON, Sept. 7 (UPI) -- U.S. shale player Apache Corp. said it increased its spending plans for the year to help the development of what it says is the next big thing in Texas.
After more than two years of testing and research, the company said it confirmed a significant discovery on the southern part of the Delaware shale basin in Texas that it dubbed Alpine High. Apache said it estimates in-place reserves of around 75 trillion cubic feet of natural gas and 3 billion barrels of oil.
"While other companies have focused on acquisitions during the downturn, we took a contrarian approach and focused on organic growth opportunities," President and CEO John J. Christmann IV said in a statement. "These efforts have resulted in the identification of an immense resource that we believe will deliver significant value for our shareholders for many years."
In response to the development, the company said it was increasing its target spending program for the year by around $200 million to reach a full-year threshold of $2 billion. Alpine High development will account for about 25 percent of total spending for Apache.
Apache last year was the target of an all-stock takeover offer from rival Anadarko Petroleum Corp. Taking a multi-billion dollar quarterly loss last year, Apache brushed off "rumors" of the bid, which Anadarko said was summarily rejected by the takeover target.
R.T. Dukes, a research director at Wood Mackenzie, said in response to emailed questions that Apache might need a significant amount of infrastructure and will have to compete in a crowded shale playing field to advance with Alpine High.
"The announcement alone is very bold," he said. "The recoverable oil and whether one of the targets is a true oil play is a big question."
Apache, nevertheless, said it's already drilled 19 wells into the basin. Nine of those are already in production, though the company acknowledged volumes were limited because of infrastructure constraints.
The company added that Alpine High was more or less economic at current prices for oil and natural gas.