Alpine High Play Continues to Evolve

Apache Corporation (NYSE: APA) continues to work through proving out its Alpine High oil discovery in west Texas’ Permian Basin that it estimates could hold more than 15 billion barrels of oil and gas.

In an article written by Tom Terrarosa at TheStreet, he writes that there has been speculation that Apache could soon part ways with its non-Alpine-High assets in the Permian or elsewhere, and while the company has not since announced a material divestiture, it has indeed been quietly shipping off noncore assets in recent months.

Apache is shopping an acreage package in the Central Basin Platform, a sub-formation of the Permian Basin. Apache was also said to be one of the sellers in Parsley Energy’s Jan. 10, $607 million asset purchase. Apache had previously tapped bankers to market the assets involved in the sale, according to street rumors.

For Apache the company is banking on the Alpine High and currently developing midstream assets to support the oil play. At the moment, the company has drilled just a handful of evaluation wells, which are shorter in depth and don’t require the extensive capital that full horizontal wells do — Delaware Basin wells cost more than $5 million on average in 2015 — but the play is widely expected to one day involve the drilling of several thousand wells.

David Blackmon, a contributor to Forbes wrote in his article titled “The Alpine High: A Big Deal Last September, An Even Bigger Deal Today” that the evolution of the Alpine High today sits at about the same place as the Eagle Ford Shale sat in mid-2010 , when operators in that area were drilling test wells involving 5-stage frac jobs and 3,000′ foot horizontal laterals, and were issuing celebratory press releases announcing oil wells that tested at initial flow rates of 1,000 barrels per day (bpd). Today, Eagle Ford operators are drilling wells with 2 mile or more laterals, frac jobs involving 30 or even more stages, and would want to commit harikari if a new well in the fairway of the play tested at only 1,000 bpd.

Not surprisingly, Apache remains in the evaluation phase related to the Alpine High today, six months later. It’s a big field located beneath a large geographical area, and will require quite a few test wells designed to evaluate the rock and delineate the extents of the resource.

Bottom line: Reports of the demise of the Alpine High have been highly exaggerated. If it was a big deal last September, it’s an even bigger deal today.

Sources: The Street.com |How Apache May Be Quietly Funding Its Massive Alpine High Discovery|by Tom Terrarosa|March 14, 2017

Forbes.com|The Alpine High: A Big Deal Last September, An Even Bigger Deal Today|by David Blackmon|March 2, 2017


Compiled and Published by GIB KNIGHT

Gib Knight is a private oil and gas investor and consultant, providing clients advanced analytics and building innovative visual business intelligence solutions to visualize the results, across a broad spectrum of regulatory filings and production data in Oklahoma and Texas. He is the founder of OklahomaMinerals.com, an online resource designed for mineral owners in Oklahoma. ☞Email:g.knight@oklahomaminerals.com

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