Apache Gives Up On Alpine High Play After Losing Billions

By Mitch Borden

Houston-based Apache Corporation is pulling out of a pocket of Far West Texas they had once hoped would be a lucrative opportunity. In 2016, the company struck oil at the base of the Davis Mountains in an area they called the “Alpine High Play.”

But now, the company — which has lost billions developing the ranchland of Southern Reeves County into a bustling oil patch — is moving on.

A pump jack works quietly in the Alpine High Play. (Mitch Borden/ Marfa Public Radio)

In the years since the Alpine High Play was discovered, it went from being one of Apache’s prized gems to a dud. Company President and CEO John Christmann explained this to investors on a conference call Thursday.

There had been a lot of potential around the West Texas oil field when Apache had first discovered it, Christmann said.

“You know when the Alpine High was announced in 2016 we had great hope for what it could mean for Apache.” He continued, “It had all the ingredients of an impact play — large scale – low cost of entry and we had acquired the heart of the play.”

But then challenges began cropping up with the discovery — leading to the oil patch going belly up. Apache informed investors in its 2019 4th quarter financial report that the company had lost $3 billion over the course of a few months last year — pointing to the Alpine High as the epicenter for most of those losses.

Multiple factors played a role in Apache turning away from their once big find. For one thing, natural gas prices bottomed out last year making the vast quantities of gas produced by Apache’s wells in the region unprofitable. Plus, the play hasn’t been as productive as Apache had once predicted.

“We anticipated a meaningful uplift in well productivity and a significant decrease in well cost.  We were able to drive the price [to drill and operate oil wells] down below our goals, but the uplift in productivity did not materialize,” according to Christmann.

Even though the Alpine High has not performed as well as Apache would have wished, the rest of the company’s Permian Basin operations are performing well. The Houston oil company reported record-breaking returns from its Permian wells in the fourth quarter of 2019, pumping 103,000 barrels of oil a day.

Even with these positive results from its shale operations, Apache has announced that it is turning more of its focus and funding to drilling operations off the shore of the South American country Suriname.

By the end of 2019, the company pulled all of their drilling rigs from the Alpine High Play and an Apache spokesperson stated in an email to Marfa Public Radio there are no plans for future drilling projects in the region.

Currently, Apache has around 200 active wells in Southern Reeves County and the company stated it will continue to operate them for now.

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About Mitch Borden

Mitch Borden is Marfa Public Radio's Permian Basin Reporter. If you have any questions about West Texas' energy industry or the Permian Basin email him at mitch@marfapublicradio.org.
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