OREANDA-NEWS. May 16, 2013. Apache Corporation (NYSE, Nasdaq: APA) announced updated well results from drilling in the Tonkawa and Granite Wash formations of the Texas Panhandle and Western Oklahoma.

Tonkawa initial production rates climb 70 percent

Flow rates from Apache's first seven Tonkawa wells drilled and producing for 30 days in 2013 averaged 662 barrels of oil equivalent (boe) per day, a 70 percent increase from wells drilled in the play a year ago. For all seven 2013 wells, after processing for natural gas liquids, the 30-day initial production (IP) rate averaged 428 barrels of crude oil, 103 barrels of NGLs, and 789 thousand cubic feet (Mcf) of natural gas per day.

"Production from recently drilled Tonkawa wells is exceeding our expectations," said Rob Johnston, vice president of Apache's Central Region. "At the same time, we have reduced drilling and completion costs for Tonkawa wells by approximately USD1.5 million per well, or 20 percent, from a year ago. This combination of higher IP rates and lower costs is improving rates of return and boosting the prospectivity of our substantial Tonkawa acreage."

Apache currently has nearly 318,000 acres in the Tonkawa and nearly 2,800 identified well locations in the play remaining in its drilling inventory. An accelerated Tonkawa drilling program is currently under way, with the rig count expected to double to 10 by July. 

Granite Wash wells delivering higher initial production rates at lower cost

In the Granite Wash, flow rates from the company's first six wells drilled and producing for 30 days in 2013 averaged 1,495 boe per day. For all six wells, after processing for NGLs, the initial 30-day IP rate averaged 291 barrels of crude oil, 469 barrels of NGLs, and 4.4 million cubic feet of natural gas per day.

"We're realizing more robust production from the Granite Wash than we expected a year ago. With wells online for 30 days, our average flow rate is 20 percent higher," Johnston said.

"Drilling and completion efficiency has also improved significantly," he said. "We have decreased costs by 15 percent from a year ago, representing savings of USD 1.3- USD 2 million per well, depending on the formation's depth and reservoir characteristics. We expect to be able to capture additional cost savings in the year ahead, as we incorporate more lessons learned from being the most active driller in the play and analyzing data from the 120-plus Granite Wash wells we've operated as well as results from other operators in the area. The more we drill, the more we learn and the better the economics of the Granite Wash play get."

Johnston noted that the depositional thickness of the Granite Wash play on Apache's acreage in Texas and western Oklahoma averages an estimated 2,700 feet (gross). Because Granite Wash reservoirs are sandier than shale-based formations, they can provide for more prolific wells. Like shales, they provide more predictability and repeatability than conventional oil and gas plays.

Apache currently has more than 350,000 net acres in the Granite Wash and in excess of 22,800 identified well locations in this play remaining in its drilling inventory. 

In both the Tonkawa and Granite Wash plays, operating improvements include more effective well designs and operations, such as using new drilling bit technology and cementing procedures to reach target depths more quickly; replacing diesel with natural gas for rig fuel, which is cleaner and less expensive; and pad drilling, which reduces trucking and rig mobilization costs. On the completion side, Johnston cited the region's ability to achieve the same results with fewer and smaller wellbore fracture stimulations, pumping less fluid and proppant, and recycling more completion fluid. The combined benefits provide meaningful enhancements to the overall rate of return for Apache. The company expects to drill about 100 wells in each play during 2013.