Will Alpine High pan out? Analysts weigh in

A drilling rig sits north of the Davis Mountains Friday, Sept. 16, 2016 in Balmorhea. Houston-based Apache Corporation recently announced the discovery of an estimated 15 billion barrels of oil and gas in the area and plans to drill and use hydraulic fracturing on the 350,000 acres surrounding the town. Apache has leased the mineral rights under the town and nearby state park, but has promised not to drill on or under either. While some residents worry that the drilling could affect the spring at the state park and impact tourism, others are excited for the potential economic boom the oil discovery and drilling could bring. ( Michael Ciaglo / Houston Chronicle )
A drilling rig sits north of the Davis Mountains Friday, Sept. 16, 2016 in Balmorhea. Houston-based Apache Corporation recently announced the discovery of an estimated 15 billion barrels of oil and gas in the area and plans to drill and use hydraulic fracturing on the 350,000 acres surrounding the town. (Michael Ciaglo / Houston Chronicle)

The investment community is torn on Apache Corp.’s new find in West Texas.

Plenty are unconvinced that Alpine High, as the Houston company is calling it, will produce as advertised.

Apache has announced finds before that petered out, said Andy McConn, a senior analyst at the energy research firm Wood Mackenzie. It pushed fields in the Texas panhandle and in South Texas’ Eagle Ford. “Both those plays really fell out of favor,” McConn said. “I’m a bit skeptical, just because of that history.”

More wells need to be drilled to prove the field, agreed Hassan Eltorie, an analyst at energy research firm IHS Markit. Pipelines need to be built. “We’ll get a lot better vision six months to a year from now,” Eltorie said.

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But some insist Apache has found something other exploration and production companies couldn’t.

“I think Apache has done some of the best homework of any E&P I’ve followed in some time,” John Herrlin, head of oil and gas research for the investment bank Societe Generale, told me recently.

“Next year, once the pipeline is in place,” Herrlin said, “Wall Street will have a different appreciation.”

Apache stock rose in early trading on Tuesday to $64.71, but has since fallen with the price of oil, to $62.93.

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