Apache Corp. is pushing forward in Egypt with plans to complete about 60 wells and run up to a dozen rigs in the second-half of 2015 as oil prices continue to fall amid a worldwide oversupply.
The company’s operations in Egypt have been among the bright spots during dark times for the oil and gas sector. Low commodity prices have forced some companies to idle wells and reduce spending worldwide amid an oversupplied market, and Apache is no exception. But what company executives called good inventory—including the Berenice and Ptah fields believed to hold nearly 50 million barrels of oil equivalent in 2P reserves—add to optimism.
When it comes to Egyptian assets being economic in today’s lower commodity price environment, two factors rise above the rest for Apache.
“The structure of existing production-sharing contracts largely insulates these assets from large swings in commodity prices,” Apache spokesman Rory Sweeney told Hart Energy in a statement. “With extensive gathering, transportation and processing infrastructure in place, cycle times are short. These two key factors, when coupled with high production rates, attractive drill and completion costs and low operating expense, allow the Western Desert to deliver robust economics at current commodity prices.”
He pointed out that recent wells highlighted in second-quarter 2015 had initial 30-day production rates that ranged from 2,400 boe/d to more than 6,000 boe/d.
Apache partly attributed its success to drilling and completion programs in the Berenice and Ptah areas, located in the Faghur Basin. The second-quarter highlights noted the Ptah-5X encountered 50 feet of pay in the Paleozoic Shifah reservoirs, while the first development well in the field logged 48 feet of net pay in the Alam El Bueib (AEB) 3D/3E sands and 164 feet of net pay in the Paleozoic Shiffah. The Berenice 5 well, the fourth development well drilled in the Berenice Field since January, logged 93 feet of net pay in the AEB 3D/3E.
Currently, nine wells are producing about 25,000 boe/d total in the Berenice and Ptah fields from the Cretaceous AEB formation and the Paleozoic, Sweeney said. He added, “Further delineation and development, including about a dozen additional wells, are expected to be necessary to recover the nearly 50 MMboe of 2P reserves from Ptah and Berenice.”
Apache’s exploratory success rate in Egypt during the second quarter was 78%, the company said. That is nearly 25 percentage points higher than the company’s historical success rate.
The rate was higher—96%—for development wells drilled in the Khalda area, where 21 such wells were drilled in the second quarter bringing the total to 41 for the year, Apache said.
But the area is not without challenges.
“The Faghur Basin is an area with a complex structural history that combined the presence of stacked, high-quality reservoir rocks with efficient trapping styles from the Cretaceous to the lower Paleozoic,” Sweeney said. “Fault-dependent structural traps and subtle, yet prolific, stratigraphic traps have been the primary targets in this black-oil-and-gas-condensate-rich area of the Western Desert.”
Apache attributed the exploration success in Egypt to high quality 3-D seismic and its nearly two decades of experience in acquiring, processing and interpreting the data.
Speaking during the Aug. 6 earnings call, Apache CEO John Christmann said that although Apache drilled fewer wells than last year in Egypt, technical work is unlocking basins. “We’re just getting better, and we've got a better handle on the system,” he said.
In all, Apache—with partners for assets in Egypt—produced about 99,975 barrels per day of oil in second-quarter 2015, which was 13% more than the same time a year earlier. Gas production also increased, rising 10% to 405,544 Mcf/d. The output, when combined with its North Sea production, was enough for Apache to raise its international guidance 5% to 8% on a pro forma basis for 2015.
“Our strategy in this low oil and gas price environment is to continue working on our cost structure, continue investing in acreage and 3-D seismic, and continue key play delineation and target testing, ” Christmann said, “such that when it is time to ramp up our drilling program, we will be doing so in the most efficient manner possible, which will maximize program rates of return and net present value.”
Apache plans to complete 60 wells and run 11 or 12 rigs in the second half of 2015, Sweeney said.
Velda Addison can be reached at email@example.com.
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