Earlier drillers in Apache’s Alpine High came up dry, analysis says
Tuesday September 27, 2016
One of those firms has now put the skepticism on paper.
The Houston office of  IHS Markit, a research firm, said in an analysis published Monday that other oil wells drilled in the same area have come up dry, or close to it.
Imre Kugler, a senior consultant at IHS, called Apache's new find significant†but concluded that previously drilled wells have been hit or miss,†he said. Several Permian Basin specialist companies left the area 10 years ago after drilling a handful of unsuccessful wells. And while oil drilling and production has advanced markedly since then, well performance is critical,†he said.
You don't have as much of a cushion or tolerance for failure or poor performance at today's prices as you did at $120 a barrel,†Kugler said.
The IHS Markit analysis says Apache should break even on oil production at $55 to $65 per barrel, significantly higher than Apache's own estimates.
The company didn't immediately respond to a request for comment, but it is well aware of the history of that corner of the basin. Apache executives have said since the announcement that they have discovered a section other drillers didn't explore and didn’t understand.
Alpine High, they said, is economical at current crude prices, which settled at $45.93 on Monday.