Region overview

Since entering the Canadian market in 1995, Apache Canada Ltd. has grown into one of the country’s top oil and gas producers.

Apache holds approximately seven million gross acres across the provinces of British Columbia, Alberta, and Saskatchewan. The region’s large acreage position provides portfolio diversification as well as significant drilling opportunity. Canada represented approximately 19 percent of Apache’s worldwide proved reserves at year-end 2012 and approximately 16 percent of 2012 worldwide production.

In 2012, Apache drilled or participated in drilling 169 wells in Canada, with a continued focus on increasing oil and liquids-rich gas production. Reservoir modeling and state-of-the-art horizontal drilling technology advanced several oil plays in the Viking, Glauconite, Dunvegan, and Sparky formations, and success with multi-stage fracture completions continues to increase the scope of oil and liquids-rich gas drilling opportunities.

Drilling in 2013 will continue to focus on conventional oil and liquids-rich gas plays.

FIRST-Quarter 2013 Update

• First-quarter 2013 production in Canada was 110,368 barrels of oil equivalent (Boe) per day, down from the fourth quarter of 2012 as continued decreases in dry natural gas drilling resulted in natural gas declines. Natural gas production decreased from 550 million cubic feet per day (MMcfd) to 519 MMcfd in the first quarter of 2013 compared to the fourth quarter of 2012.
• Deferred production totaled 4,100 Boe per day for the first quarter due to unplanned third-party downtime and other third-party infrastructure issues.
• The region continued its transition to more oil and liquids-rich gas developments.
• During the first quarter, the region operated an average of 11 drilling rigs and drilled 82 gross (66 net wells).

DUNVEGAN

• Apache continued to build on its success developing the Dunvegan oil program. The region drilled 10 wells (seven operated and three non-operated) in the first quarter. This play targets significant oil accumulations.
• Through a detailed understanding of the geology, Apache has successfully high graded its operated drill locations, delivering test rates averaging almost 200 barrels per day (Bpd)
• Wells in this play are currently expected to deliver an average of 160,000 Boe reserves per well with 79 percent derived from liquids.

BLUESKY (LIQUIDS-RICH HORIZONTAL PROGRAM)

• In the first quarter of 2013, Apache drilled nine wells (eight operated and one non-operated) with production rates ranging from 1.5 to 8.0 MMcfd. The average liquid yield for the play was 45 barrels (Bbls) / million cubic feet (MMcf) with 44 percent from condensate.

 Bluesky has made a significant impact in the Kaybob area which saw overall production grow by approximately 50 percent over the past two years.

VIKING

• In the Brownfield area, Apache drilled three horizontal Viking wells which came on production in the first quarter 2013.
• Production for the first-quarter horizontal program was approximately 300 Bpd with all wells expected to be on production in July after the spring break up.
• Apache also drilled 12 vertical wells with seven of these wells currently on production. The four remaining wells will be tied-in to either primary or secondary zones.

SPARKY

• In total 12 horizontal wells were drilled in the first quarter 2013 with eight of these currently on production.
• Production, which was drilled in late 2012, commenced at a six well pad in South Glazier and initial production is in line with expectations.
• Apache has recently expanded the play to the east and anticipates further expansion to the west in late 2014.

HOUSE MOUNTAIN WATERFLOOD

• In the first quarter of 2013, eight producers and two injectors were drilled at House Mountain (Phase 4 Program).
• Total Phase 4 Program gross production of 1,395 Bpd with cumulative to date production of 76,504 Bbls.

VIRGINIA HILLS NON-UNIT WATERFLOOD

• During the first quarter of 2013, Apache drilled seven horizontal wells of which five have been completed, two producing and two more on production at the end of April.
• Cumulative production to date is 7,625 Bbls of oil with production of 254 Bpd gross.

KITIMAT LNG PROJECT (50-percent APA)

• On Feb. 11, 2013, Apache announced that the transaction with Chevron Canada Ltd. had closed with Apache Canada receiving net proceeds of $405 million.
• Under the terms of the transaction, Apache will operate the upstream development, and Chevron will operate the plant and pipeline.
• During the first quarter, Kitimat Upstream maintained production and continued active drilling resulting in two tenure wells, one in Liard and one in Horn River, with both wells encountering expected reservoir quality.
• A 102-square-mile 3D seismic program was completed in Horn River during the first quarter.
• Apache also acquired a special extension for a third year in a row on approximately 57,000 acres for 13 expiring drilling licenses in the north Liard Basin.

Enhancing recovery

Apache derives benefit from the Earth and we take our environmental responsibility seriously. We support the identification and development of cost-effective emission-reduction projects that are economic to implement, yet result in significant reductions in greenhouse gases. Apache operates two CO₂ enhanced oil recovery (EOR) projects in Canada, in Zama, Alberta, and Midale, Saskatchewan. This is the most of any producer in Canada.

Committed to reducing the use of surface water in hydraulic fracturing, Apache partnered to design and build an innovative water treatment plant in the Horn River Basin. The plant recovers and re-uses fracture stimulation fluids to create a sustainable cycle of water use. Apache also works with stakeholders, First Nations and government to reduce our overall environmental footprint and maximize efficient infrastructure development.

Outreach

Apache Canada Ltd. is proud to support the communities in which we work. Apache develops resources essential to economic growth and improved living standards. Along this path, we build enduring relationships with the communities in which we operate through our commitments to environmental stewardship, sustainable development, education and civic improvement.

Apache’s corporate giving program is region-based and employee-driven. In each of our communities, Apache employee committees determine which programs and projects will receive Apache funding.

The same sense of urgency, commitment and dedication that drives Apache’s operational progress is apparent in our employees’ participation in their communities through their involvement with their children’s education, participation in youth activities and support for local charities and community institutions.