Apache Corp. (APA), the second-largest U.S. independent oil and natural-gas producer by market value, has acquired 880,000 net acres in Kansas, Nebraska and Montana that hold an estimated 3 billion barrels of crude.
The company also had “one of the best shale wells we’ve seen” at British Columbia’s Liard Basin, which it estimates holds 48 trillion cubic feet of gas, Houston-based Apache said in a statement today. The 3 billion barrels of oil are in acreage the company has acquired in the Mississippian Lime and Williston Basin.
Apache is looking to the onshore U.S. and Gulf of Mexico to help boost output at least 34 percent in coming years. The company, which produced a daily average of 748,000 barrels of oil equivalent last year, plans to reach more than 1 million barrels a day by 2016. Apache’s U.S. onshore output will rise to 41 percent of production in 2016 from 21 percent in 2011. Egypt’s share will fall to 15 percent from 22 percent.
“Increasing its focus on North America, especially onshore oil, is a strong positive as it would improve the risk profile by reducing its reliance on Egypt,” Brian Youngberg, an analyst at Edward Jones in St. Louis, said in an e-mail today. He has a buy rating on Apache shares and owns none.
The company said 58 percent of its production will be petroleum liquids in 2016, compared with 50 percent last year.
“This is the time to drill more wells: We have captured a vast, liquids-rich resource base and drilling costs are declining,” G. Steven Farris, Apache’s chairman and chief executive officer, said in the statement. The company plans to preserve its “conservative financial structure -- which means living within our cash flow,” he said.
In the Liard Basin, Apache holds 430,000 acres in what it called “an outstanding new shale play.” The project may need a wellhead price of about $2.57 per thousand cubic feet of gas to meet commercial requirements, Apache said in a presentation slide.
Its holdings in Argentina’s Vaca Muerta formation have the potential for about 800 million barrels of oil equivalent, and some development is possible in 2013. The company said it has identified another 2.7 billion barrels of potential oil in Alaska and Kenya, where it expects to begin drilling this year.
The company doesn’t need to make large acquisitions as it seeks to develop its portfolio over several years, Farris told analysts and investors at a meeting in Houston today. Buying back shares isn’t a priority over drilling in important areas, he said. Apache will review its dividend annually, he said.
ConocoPhillips (COP) is the largest U.S. independent oil and gas producer by market value. Independent companies produce crude and gas and don’t own refineries.
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