John Christmann, chief executive of Houston’s Apache Corp., said this week that the company’s top priority next year is the newly discovered Alpine High oilfield in West Texas.
Alpine High, Christmann said, is transformational to Apache and will provide incremental earnings by the end of 2018 that the company has never before seen.
“Things will change significantly for us in the back half of ’18,” he said. “It’s going to be a different profile than we’ve probably had in our history.”
Christmann, speaking to investors during Apache’s third-quarter earnings call, said he was aiming to run four to six rigs in the oilfield next year and build out a pipeline system. The region, surrounding the small town of Balmorhea, has no such infrastructure now.
But Christmann also said that he didn’t want the company to get ahead of itself. Investment, he said, should not outpace a “comprehensive understanding” of the geology nor the company’s ability to get oil and gas to market.
Analysts on the call were skeptical of the company’s ability to pump as much oil and gas as it expected.
Christmann insisted test wells have confirmed that oil and natural gas liquids are present in as much as 5,000 vertical feet of rock, he said, in five underground ribbons — the Bone Springs, Wolfcamp, Pennsylvania, Barnett and Woodford formations. “It’s such a thick column, all we have to do is move up hole and we’ll have more oil,” he said.
The chief executive hinted that Apache may drill more than the 2,000 to 3,000 wells it first anticipated. The company’s initial estimates of well counts only considered two of the five formations, he said. The company also has about 20,000 more contiguous acreage now.
Apache, one of the largest oil and gas companies in the U.S., narrowed losses in the third quarter thanks largely to the increase in oil prices.
It reported on Thursday losses of $607 million, 85 percent or $3.5 billion better than losses in the third quarter last year. The company posted $1.60 in losses per share, in comparison to $10.95 in losses per share over the same period last year.
Revenues dipped 6 percent or $88 million to $1.4 billion. Expenses fell dramatically: Apache cut 60 percent or $3.6 billion to end the quarter spending $2.3 billion, largely because it did not have to write down oil reserves.
Oil production fell 7 percent or 20,000 barrels per day to 271,000 barrels per day. Gas production fell 8 percent or 90 million cubic feet per day to 1.1 trillion cubic feet per day. Total production, including natural gas liquids, fell 6 percent or 30,000 barrels of oil equivalent per day to 520,000 barrels of oil equivalent per day.