Apache is planning to drill 18 additional long-reach horizontal laterals at Van Gogh later this year with first production anticipated by the end of the first quarter of 2009.
The Theo 3-H well was drilled in 1,205 feet of water to a measured depth of 10,598 feet with a 4,554-foot-long horizontal section in the Top Barrow formation. The test was limited by the capacity of downhole and surface equipment.
"The Theo 3-H horizontal well confirms our assessment of the productivity of the Top Barrow Sand reservoir," said G. Steven Farris, Apache's president and chief executive officer. "The Van Gogh development is one of six projects in Apache's core growth areas of Australia, Canada and Egypt that are projected to add aggregate production of 108,000 barrels of oil equivalent per day over the next four years."
Apache owns 52.5 percent of the $500 million Van Gogh development, which will utilize a floating production, storage and offloading (FPSO) vessel with processing capacity of 63,000 barrels per day and storage capacity of 620,000 barrels. Apache's project economics were based on a net production forecast of 20,000 barrels per day at a flat price of $45 per barrel. The current price for Tapis blend, the Asia-Pacific benchmark crude oil, is approximately $76 per barrel, about $8 above West Texas Intermediate, the U.S. benchmark.
The BHP-Billiton-operated Pyrenees development -- which is anticipated to receive a formal go-ahead by late June -- is expected to add 20,000 barrels of oil per day to Apache's net production during 2009.
Apache currently is drilling the Julimar East-1 appraisal well 3.6 miles (6 kilometers) northeast of the Julimar-1 natural gas discovery, which flowed a combined 85 million cubic feet of gas per day in tests of two Triassic channel sands. The Julimar East-1 will appraise the channels tested in the discovery well and target additional deeper Triassic sands.
"Julimar is one of the 10 high-potential prospects and plays on the 'hit parade' of our 2007 exploration program in Apache's core growth areas," Farris said.
Rising demand in Australia has pushed up natural gas prices, with recent contracts at US $4 to $5 per thousand cubic feet (Mcf), compared to Apache's average price of $1.65 per Mcf in 2006.
Apache is Australia's most active offshore operator with interests in 11.9 million acres. An increase in exploration activity as well as development of Van Gogh and Pyrenees, has increased Apache's capital program in Australia to $500 million in 2007 from $187 million in 2006.
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