Apache Corp. stock was among the top gainers Wednesday after the oil and gas company revealed an “immense” oil and gas reserve in a relatively unknown corner of west Texas.
Apache APA, +6.70% estimated that its more than 300,000 contiguous acres in the region hold about 3 billion barrels of oil and 75 trillion cubic feet of natural gas. It called the field Alpine High.
Alpine High is located in the Delaware Basin, the southwest corner of the Permian Basin. The Permian itself is mostly located in west Texas, with a small area straddling southeastern New Mexico.
Texas estimates the Permian already has produced 29 billion barrels of oil, and says industry experts estimate it to contain “recoverable oil and natural gas resources exceeding what has been produced over the last 90 years.”
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Thus far, however, the Delaware Basin had been the relative slacker in the Permian, which accounted for nearly 20% of total U.S. oil production a few years back. Formations like Spraberry and Wolfcamp had been way more prolific as seen in this map from the Energy Information Administration:
Until recently experts considered the area a poor candidate for hydraulic fracturing, a process that uses water mixed with sand and chemicals to unlock oil and gas trapped in rock. Analysts at UBS said the area has received “minimal focus from the industry to date.”
Apache stock rose more than 7%, on track for its highest close since mid July and was the No. 2 gaining stock in the S&P 500 index. SPX, -0.01%
The company said it was increasing its 2016 capital spending plan by $200 million to $2 billion. Developing Alpine High will eat more than 25% of Apache’s total spending program.