Region overview

Apache entered the North Sea in 2003 after acquiring an approximate 97-percent working interest in the Forties field (Forties). Since acquiring Forties, Apache has actively invested in the region having produced and sold oil volumes in excess of the proved reserves initially recorded. Forties, which Apache acquired with 45 producing wells, now has 75 producing wells with a substantial inventory of future drilling locations.

In 2011, the North Sea region produced 20 million barrels of oil equivalent (MMboe) of which approximately 99 percent was crude oil. The region represents 7 percent of our total worldwide production and 13 percent of Apache’s oil and gas production revenues. In 2011, the region’s production decreased 4 percent compared to the prior year as natural well decline and unplanned maintenance downtime exceeded gains from drilling. The drilling program, however, was successful and benefited greatly from a new 4-D seismic interpretation derived from the latest 3-D seismic survey acquired over Forties in 2010. The data highlighted many areas of bypassed oil in the reservoir and provided better definition of existing targets. In 2011, 14 wells were drilled in Forties, of which 11 were productive. Two of the highest producing wells were the Charlie 4-3 well, which commenced production in June at a rate of 12.6 thousand barrels per day (Mbpd), and the Charlie 2-2 well, which was completed in March with an initial rate of 11.9 Mbpd. These rates were some of the highest in the Forties since 1990.

In addition, the region acquired an 11.5 percent non-operated interest in the Nelson field in early 2011, and on Dec. 30, 2011, closed on the acquisition of Mobil North Sea Limited from Exxon Mobil Corporation. The assets acquired include operated interests in the Beryl, Nevis, Nevis South, Skene and Buckland fields; operated interest in the Beryl/Brae gas pipeline and the SAGE gas plant; non-operated interests in the Maclure, Scott and Telford fields; and Benbecula (west of Shetlands) exploration acreage. These major legacy assets bring the region quality reservoirs with significant remaining reserve life, high production efficiency, and a portfolio of low-risk exploitation projects. Beginning in 2012, production from the former Mobil North Sea fields will add to the percentage of Apache's current output that is indexed to the premium Brent crude oil benchmark price. These acquisitions expand Apache’s presence in the North Sea and increase its portfolio of future drilling locations.

Estimated proved reserves recorded at the end of the year for the acquired properties totaled 61 million barrels of oil equivalent (MMboe), bringing Apache’s total estimated proved reserves at year-end 2011 to 197 million barrels (MMbbls) of crude oil in this region, or approximately 7 percent of our worldwide year-end estimated proved reserves.

In 2012, Forties will see another year of active drilling with two platform rigs operating the entire year along with a partial year of jack-up drilling at the Echo platform. Construction of the Forties Alpha Satellite Platform is underway and is projected to be complete by the third quarter of 2012. This platform will sit adjacent to the main Alpha platform and provide an additional 18 drilling slots along with power generation, fluid separation, gas lift compression, and oil export pumping. The region will also work to integrate the acquired Mobil North Sea properties and plans to drill three wells on these properties during the year along with well recompletions and workovers.