Profile: Apache Corp (APA)
6 Dec 2013
Apache Corporation (Apache) is an independent energy company, which explores for, develops, and produces natural gas, crude oil, and natural gas liquids. As of December 31, 2011, Apache had exploration and production interests in six countries: the United States, Canada, Egypt, Australia, offshore the United Kingdom in the North Sea, and Argentina. During the year ended December 31, 2011, it participated in drilling 1,087 gross wells, with 1,005 (92%) completed as producers. As of December 31, 2011, in addition to its completed wells, several wells had not reached completion: 39 in the United States (28.44 net); 50 in Canada (42.69 net); 23 in Egypt (21.75 net); six in the North Sea (4.91 net); one in Australia (0.33 net), and three in Argentina (3.00 net). On January 31, 2012, a subsidiary of Apache Energy Limited acquired 49% interest in Burrup Holdings Limited (BHL). In January 2012, Apache acquired Exxon Mobil Corporation's Mobil North Sea Limited assets including the Beryl field and related properties. In November 2013, the Company sold one-third minority participation in its Egypt oil and gas business to Sinopec International Petroleum Exploration and Production Corporation.
Apache’s North American asset base consists of operations in the Permian Basin, the central United States, the Gulf Coast areas of the United States and operations in Western Canada. During 2011, the Company’s North America assets contributed 55% of its production and 46% of its oil and gas production revenues. As of December 31, 2011, 69% of its estimated proved reserves were located in North America. It has 10.3 million gross acres across the United States, approximately half of which is undeveloped. Its United States assets are located in the Permian, Central, Gulf of Mexico Shelf, Gulf of Mexico Deepwater, and Gulf Coast Onshore. During 2011, 50% of its United States production and 62% of its United States reserves were oil and liquids. During 2011, 38% of Apache’s equivalent production and 43% of Apache’s total reserves were in the United States.
The Company’s Gulf Coast assets are primarily located in and along the Gulf of Mexico, in the areas onshore and offshore Texas, Louisiana, Alabama, and Mississippi. The Gulf of Mexico Shelf region has approximately 3 million gross acres covering 622 offshore blocks with nearly 80% of the blocks held-by-production. The region contributed 14% of its worldwide production and 15% of worldwide revenue during 2011. During 2011, the region drilled or participated in 35 wells with a 71% success rate. The Central region includes more than 2,500 producing wells and controls over one million gross acres primarily in western Oklahoma and the Texas panhandle. During 2011, total region production was up 14% as it drilled or participated in drilling 108 wells, 94% completed as producers. During 2011, it drilled 12 wells in the Cherokee formation and 10 wells in the Cleveland formation with an average 30-day gross production rate of 350 billion per barrel and 500 million cubic feet per day. In March 2011, Apache acquired 92,400 net acres in the Whittenburg basin of Oldham County, Texas, which is emerging as a potential new oil play for Apache.
The Company’s Permian region controls over three million gross acres with exposure across the Permian Basin. As of December 31, 2011, Apache has operating more than 12,000 wells in 152 fields, including 45 waterfloods and six carbon dioxide (CO2) floods. Total region production was up over 38%. During 2011, gross oil production in Deadwood exceeded eight million barrel per day and 17 million cubic feet per day. Apache continued horizontal redevelopment of its waterflood units during 2011, with the drilling of 38 operated horizontal wells. Its natural gas is sold primarily to local distribution companies (LDCs), utilities, end-users, and integrated major oil companies. Apache primarily markets its United States crude oil to integrated major oil companies, marketing and transportation companies, and refiners.
Apache has 7.5 million gross acres across the provinces of British Columbia, Alberta, and Saskatchewan. . As of December 31, 2011, its Canadian region represented approximately 26% of its estimated proved reserves. During 2011, it drilled or participated in 143 wells in Canada. Its oil assets consist of a range of opportunities from Southeast Saskatchewan to Northwest Alberta. It utilized advanced reservoir drilling technology to exploit unswept oil in existing waterflood projects in the House Mountain, Leduc, Snipe Lake, and Provost areas. The Company’s Canadian natural gas marketing activities focus on sales to LDCs, utilities, end-users, integrated major oil companies, supply aggregators, and marketers. It sells the majority of its Canadian gas on a monthly basis at first-of-the-month or daily prices. Its Canadian crude oil production is sold to integrated major companies, refiners, and marketing companies based on a West Texas Intermediate (WTI).
Apache’s international assets are located in Egypt, Australia, offshore the United Kingdom in the North Sea, and Argentina. During 2011, international assets contributed 45% of its production and 54% of its oil and gas revenues. As of December, 31, 2011, 31% of its estimated proved reserves were located outside North America. As of December 31, 2011, it controlled 9.7 million gross acres. Only 18% of its gross acreage in Egypt has been developed, with gross production of 217 millions of barrels per day and 865 million cubic feet per day, or 104 millions of barrels per day and 365 million cubic feet per day net to Apache. Its operations in Egypt are conducted pursuant to production-sharing agreements, in 24 separate concessions. During 2011, it maintained an active drilling and development program, drilling 221 exploration, development, and injector wells, resulting in 33 new field discoveries. During 2011, the Company continued its drilling in the Faghur basin having 10 new field discoveries that tested in aggregate over 33 million barrel per day and 25 million cubic feet per day. As of December 31, 2011, it drilled 21 wells on this acreage and had gross production by over 7 million barrel per day and 39 million cubic feet per day.
Apache’s holdings in Australia are focused offshore Western Australia in the Carnarvon basin. Production operations are located in the Carnarvon and Exmouth basins. As of December 31, 2011, in total, it controlled approximately 8.8 million gross acres in Australia through 35 exploration permits, 16 production licenses, and 10 retention leases. Approximately 90% of its acreage is undeveloped. During 2011, the region had net production of 38 million barrel per day of oil and 185 million cubic feet per day of natural gas, contributing 10% of Apache’s worldwide production revenue, 9% of worldwide production and 11% of estimated proved reserves. In June 2011, Apache’s Halyard-1 gas discovery well commenced production into the domestic gas market. During 2011, it participated in drilling nine wells, of which five were productive. Ongoing exploration activity at Apache’s Julimar and Brunello complex resulted in the discovery of a deeper Mungaroo gas pool encountering 362 feet of net pay. This 65% working interest Balnaves Deep well is associated with continuing field. During 2011, the Company and its partners announced it will proceed with the Chevron-operated Wheatstone LNG development project (Wheatstone) in Western Australia. Apache has a 13% interest in the project.
Apache has an approximate 97% working interest in the Forties field (Forties). During 2011, the North Sea region produced 20 million cubic feet equivalent of which approximately 99% was crude oil. The region represents 7% of its total worldwide production and 13% of Apache’s oil and gas production revenues. During 2011, 14 wells were drilled in Forties, of which 11 were productive. During 2011, in addition, the region acquired an 11.5% non-operated interest in the Nelson field. The assets include operated interests in the Beryl, Nevis, Nevis South, Skene, and Buckland fields; operated interest in the Beryl/Brae gas pipeline and the SAGE gas plant; non-operated interests in the Maclure, Scott, and Telford fields, and Benbecula (west of Shetlands) exploration acreage. The Company has interests in 34 concessions, exploration permits, and other interests totaling 3.7 million gross acres in four of the main Argentine hydrocarbon basins: Neuquen, Austral, Cuyo, and Noroeste. During 2011, Argentina produced 6% of its worldwide production and held 4% of its estimated proved reserves.
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