Apache Corp. (NYSE: APA) said two recent hydrocarbon discoveries illustrate the continuing reserve upside to be found across the company's 6.8 million gross acres in Egypt's Western Desert. 

  • The Herunefer-1X discovery, located in the Matruh Basin in the eastern portion of Khalda Offset Concession, encountered pay in the Alamein, Alam El Buieb-6 (AEB), Masajid, Upper Safa and Lower Safa formations. Tests from the Lower Safa and Upper Safa intervals flowed at a combined rate of 49 million cubic feet (MMcf) of gas and 7,700 barrels of condensate per day. The estimated cost to drill and complete the well was $6 million.
  • The BAT-1X discovery, located in the northern Shushan Basin in the Khepri-Sethos Development Lease, tested at a rate of 31 MMcf of gas and 390 barrels of condensate per day from a thick Paleozoic Shiffah sandstone interval. The well, which was drilled to a total depth of 15,555 feet, also encountered pay in the Cretaceous Upper Bahariya, Lower Bahariya, Alamein, AEB-3C and AEB-3D formations. The estimated cost to drill and complete the well was $5.25 million.

Both discoveries were drilled by Khalda Petroleum Co., an Apache-operated joint venture with the Egyptian General Petroleum Co. Apache operates in Egypt in partnership with Sinopec International Petroleum Exploration and Production Corp., which owns a one-third interest in Apache's Egypt oil and gas business. The Apache-Sinopec partnership has a 100% contractor interest in both fields.

"Herunefer-1X is the first of a series of exploration wells planned for the Matruh Basin area this year," said Thomas M. Maher, Apache Egypt Region vice president. "The basin remains an attractive focus area for exploration and development and has been relatively under-explored. We have identified a number of untested structural features, and trends have been mapped and identified, with the potential for stacked targets and high-condensate-yield gas objectives."

Apache plans to construct a new, 7.5-mile (14 km) pipeline that will connect to the existing transportation grid at the Jade area manifold. From Jade, the production can be delivered to either the Salam or Tarek gas plants.  

"BAT-1X is a potentially large discovery and the latest in Apache's pursuit of stratigraphic traps and Paleozoic subcrop plays," Maher said. "Our understanding of this play concept has evolved since the 2007 Hydra Field discovery. We now recognize that these traps and subcrop plays were key geologic elements in more than 20 previous Western Desert field discoveries."

Houston-based Apache plans to drill several trend exploration wells in 2014 to evaluate and appraise the BAT discovery. Alternatives for delivering the production to market are under evaluation.

Additional production facilities were installed at Hydra Field during the first quarter. The field is currently producing 180 MMcf of gas and 8,600 barrels of condensate per day from six wells. One additional well was recently completed and is being connected to production facilities.