"Argentina is our latest core. Last year, we stepped up to the plate and sent a billion dollars to Argentina through two different acquisitions," Plank said.
Apache second quarter last year completed the acquisition of Pioneer Natural Resources' (NYSE: PXD) operations in Argentina for US$675mn with estimated proved reserves of 22Mb of liquid hydrocarbons and 297Bf3 (8.4Bm3) of natural gas.
In the third quarter, Apache acquired additional interests in seven concessions in Tierra del Fuego province from Pan American Energy for US$429mn.
While many investors had questioned Apache's substantial investments in Argentina, Plank said they were beginning to pay off.
"Timing is everything and we were able to purchase these assets with an assumed price of US$1-1.20 per thousand cubic feet for natural gas," he said.
"As it turns out, Argentina is now very short on gas. They have just this month re-shifted how much fixed priced gas you have to deliver to the market and our average price ought to go to US$1.50 from US$1 per thousand cubic feet. It's only 50 cents, but it's a third of what we paid for the gas."
Apache can sell natural gas at market prices after it produces 140Mf3/d. The company has increased production of natural gas 20% and is looking at free-market contracts ranging from US$3.10-3.90 per thousand cubic feet over the next three years.
"It's no secret it is very difficult to operate in a country where they are constantly changing the rules on you, but because they've done that, there's a lot of low hanging fruit," Plank said. "Argentina is starting to work."
In Argentina, the company produced an average of 11,041b/d of oil and 207Mf3/d of natural gas in 1H07, according to an Apache statement.
The company received an average of US$43.26/b for oil and US$1.08 per thousand cubic feet in the first half of 2007.
Apache has E&P activities in the US, Canada, Argentina, the UK, Egypt and Australia. The company aims to add nearly 100,000b/d of new production to its current average output of 545,000b/d in the next 4-5 years.
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