U.S.energy firm Apache Corp. (APA) announced positive results from an offshore natural gas site (Spar-2) in Western Australia’s Carnarvon Basin, building on the integrated energy company’s leading position in this hydrocarbon-rich area. Situated in the WA-4-P permit area, the Spar-2 well encountered 58 million cubic feet (MMcf) of natural gas and 950 barrels of condensate per day.
Apache’s Australian subsidiary plans to supply gas from the Spar Field and nearby Halyard Field (located only 2 kilometers from Spar) to Western Australia’s domestic gas market through an existing Apache-operated pipeline. Halyard, with volumes of approximately 50 MMcf per day (gross), is expected to be on line during the second half of 2011, while first production from Spar is anticipated in late-2012. Apache has a 55% operated interest in both the prospects, with the other partner being Santos Ltd. – Australia’s third largest gas producer.
Apache believes that the thickness and quality of the reservoir sandstone and high flow rates – established above pre-drill estimates – augurs well for the company. Additionally, the proximity to Apache’s existing infrastructure will cut the time and/or cost required to develop the project and provide gas supplies to the expanding Western Australia market.
Founded in 1954, Houston, Texas-based Apache is one of the world’s leading independent energy companies engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids.
Apache currently retains a Zacks #3 Rank (short-term Hold rating), in line with its closest peers Anadarko Petroleum Corp. (APC) and Devon Energy Corp. (DVN). We are also maintaining our long-term Neutral recommendation on the stock.
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