Overview

Apache is Australia’s most active offshore explorer. Since 1997 we have made 20 commercial oil and 10 commercial gas field discoveries.  In Australia, our exploration activity is focused in the offshore Carnarvon, Gippsland and Browse basins, where at the end 2008, Apache holds 4.3 million net acres in 30 exploration permits, 11 production licences and six retention leases. Production operations are concentrated in the Carnarvon and Exmouth basins, the location of Apache’s 11 production licenses, all of which are Apache operated. Australia held 12 percent of our year-end estimated proved reserves. During the year, the region participated in drilling 46 wells, which generated 25 productive oil wells and nine productive gas wells. 

Our growth strategy includes development in the Carnarvon basin and in areas adjacent to this core area. As of the end of 2008, our Van Gogh and Pyrenees projects in the Exmouth basin were under active development. We had also initiated a development project related to our 2008 Halyard discovery and began appraising our Julimar discovery. We completed planned development drilling at our Reindeer field.
 
Van Gogh is Apache operated, while Pyrenees is operated by BHP Billiton. Van Gogh development drilling and sub-sea production equipment installation is nearly complete, with first oil production slated for late 2009 through a floating production storage and offloading (FPSO) tanker. Additional development drilling is planned in 2009 prior to the start of production. Pyrenees development drilling is expected to commence in 2009 with first oil production expected in the first half of 2010. Production from each field is estimated at 20,000 barrels per day (Bpd) net to Apache.
 
In April 2008, we drilled the Halyard-1 well, which tested 68 million cubic feet per day (MMcfd) of gas and was completed as a producer. The Halyard field is expected to be tied-in to the nearby East Spar gas facilities once a market for the gas is under contract. Apache holds a 55-percent interest in the field. Additional appraisal in 2009 is necessary on the Julimar-Brunello gas discovery before proceeding with a development plan. Based on current geological mapping, we believe this could be a multi-trillion-cubic-feet (Tcf) discovery. Apache owns a 65 percent interest in and operates the Julimar-Brunello complex.
 
During the fourth quarter of 2008, Apache completed a three-well development drilling campaign at the Reindeer field. On Jan. 6, 2009, we secured a 154 billion cubic feet (Bcf), seven-year gas sales contract. The gas will be supplied through a new 65-mile offshore pipeline and a new onshore gas processing facility at Devil Creek. Construction of pipeline and processing infrastructure is scheduled to commence in 2009 with first production anticipated in 2011. Apache owns a 55-percent interest in the field.