Houston Business Journal Features Alpine High Midstream

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Editorials
3/22/2018

Apache CEO: Alpine High to become cash-positive in 'near term'
Houston Business Journal
By Joshua Mann
Tuesday, Feb. 27, 2018

The president and CEO of Houston-based Apache Corp. (NYSE: APA) said he thinks the company's Alpine High project will be cash-positive in the near future, despite a slower acceleration of the company's efforts there than expected.

The producer first announced its oil and gas discovery at Alpine High in the Permian Basin in September 2016, and it has been among the company's primary talking points ever since. It was a new discovery for the industry, so the company managed to sweep up its 340,000-acre position in the play at relatively little cost. That, combined with a low drilling cost, should turn around strong margins for the project, John Christmann, Apache's president and CEO, said at Hart Energy's DUG Executive Conference on Feb. 26.

Alpine High should turn cash-positive in the "pretty near term," Christmann said.

That success has also drawn competition into the area, though, Christmann said. When Apache started, it was nearly alone in its search for oil and gas in the region. Now, though, other companies have snatched up acreage and are starting to drill their own wells.

"Anybody who thinks we're off there by ourselves now is really mistaken," Christmann said.

Business to this point hasn't been completely without trouble, though. The company's development operations have been slowed down by a number of factors, from rising costs to delays in surface use and right-of-way agreements, Christmann said. The company also saw some construction delays as Hurricane Harvey disrupted the transportation of equipment from Houston.

"I think it's important that you stick to your economics," Christmann said. "You don't just get things up and running at any cost. We have to stay focused on the returns."

The company's previous targets for the fourth quarter of 2018 are now more likely to come online somewhere in the second half of 2019, Christmann said. At the end of 2017, Apache had 37 percent fewer wells online than it originally expected.

Midstream progress

Apache had spent about $700 million on its Alpine High midstream network, but it still has more work to do.

"We are working through lots of options in terms of how we will partner or fund this off our balance sheet on a go-forward basis," Christmann said.

Apache's natural gas trunkline, which will make up the spine of the company's midstream network through the basin, is partly operational, and Christmann said it would be complete sometime in 2018.
 

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LATEST FROM APACHE

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HOUSTON , Sept. 13, 2018 (GLOBE NEWSWIRE) -- The board of directors of Apache Corporation (NYSE, Nasdaq: APA) has declared the regular cash dividend on the company's common shares. The...

LEARN MORE +

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Kinder Morgan Texas Pipeline LLC (KMTP), a subsidiary of Kinder Morgan, Inc. (NYSE: KMI), and EagleClaw Midstream Ventures, LLC (EagleClaw), a portfolio company of Blackstone Energy Partners, today announced a...

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