I probably would not have posted this story, except in light of the Anadarko-Chevron-OXY story.
From Bloomberg, Apache bets big on Permian gas liquids. It's a big story -- I am re-posting it as a stand-alone.
A ride through the Permian Basin’s little-drilled southwest corner
looks a bit like the rest of the shale patch. Mesquite dots the dry
landscape, and bumpy oilfield roads link well sites to the main
highways.
But there are a couple of big differences: The drilling rights to
about 300,000 acres in the field belong to a single company,
Houston-based Apache Corp. And unlike in much of the Permian, the
underlying rock here is far richer in natural gas than it is in oil.
Welcome to the Alpine High.
These two factors are shifting the focus for one of America’s oldest
oil producers in its flagship discovery. After falling oil prices at the
end of 2018 forced Apache to cut its budget, the company temporarily
stopped its hunt for oil in parts of the field. In the meantime, it’s
opening three plants to process the profusion of natural gas it’s found
into more marketable propane and butane.
The natural gas liquids “do add value,” said Ryan Luther, a senior
research associate for RS Energy Group Inc. Still, that value is only
about 40 percent that of a barrel of oil. "I wouldn’t ascribe a terrible
amount of value to the Alpine High relative to their other assets,” he
said.
In September 2016, Apache said it had made an "immense" find in the
Alpine High, with the promise of at least 3 billion barrels of oil in
place in two of the five formations. Apache Chief Executive Officer John
Christmann described the play as being like a “giant onion,” with the
company learning more and more about the discovery as it peeled back
each subsequent layer.
But initial tests for crude haven’t shown as prolific a result as
seen elsewhere in the Permian, and Apache now talks about crude oil
being a byproduct of its natural gas at a time when other drillers can’t
get rid of the fuel fast enough.
That’s spurring worry among some investors that Apache may be hanging
on to an iffy asset at a time when larger companies might be
considering acquisitions in the wake of the bidding war over Anadarko
Petroleum Corp. While several central Permian players have found their
way onto short lists of expected takeout targets, Apache has been
largely absent.
Much more at the link.
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