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Apache Corp (NYSE: APA)’s Huge Oil Discovery In Australia

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By on Company, Energy & Solar

Yesterday, United States gasoline company Apache Corp (NYSE: APA) announced that they had discovered as many as 300 million barrels of crude oil in an exploration well off the coast of Western Australia. This is one of the largest oil discoveries in decades.

The discovery was made on the Phoenix South 1 well in the Canning Basin. This discovery could reopen a frontline for oil exploration that some foreign energy companies gave up on years ago when those oil wells dried up.

According to Thomas E. Voytovich, the senior executive of Apache’s international operations, the quality of the latest discovery of oil and reservoir suggest a commercial discovery. If the results are increased by more appraisal drilling, that area may become a new oil province for Australia.

According to analyst Simon Andrew from Hartleys, the entire process of determining the actual volumes of oil that can be recovered from the discovery will take two to three months.

The country has been in dire need of new sources of oil to replenish its quickly disappearing reserves from its existing fields. Oil production from Australia dropped to 416,000 barrels per days by 17 percent, which is the lowest level the country has seen since 1972.

Other companies in the natural gas space, such as Chevron Corp (NYSE: CVX), have made discoveries that have set the stage for billions of dollars of investment in infrastructure for exports to Asia, where demand for cleaner fuel is rising.

The 300 million barrels of fuel that was estimated to have been found in the Phoenix South 1 well is a high number compared to other recent discoveries in the country. For example, Chevron owns a well, called Barrows Island, which has produced about 322 million barrels of fuel since it went live in the 1960s.

According to test results performed by Apache, there are a confirmed number of 4 distinct oil columns located in the seabed rocks. These seabed rocks range in thickness of 85 feet to 151 feet. Six light oil samples were pulled from three intervals of testing so far.

The company operates in the WA-435-P block, which is where the latest oil was discovered. Apache owns a 40 percent stake in the license, as well as the adjacent WA-437-P block.

Other investors of the well include Carnarvon Petroleum Ltd and Finder Exploration Pty Ltd. After the announcement about the discovery was made, Carnavon’s stock grew by more than three times.

The area surrounding Phoenix South includes multiple big structures that could also harbor large amounts of oil. The company plans to drill more wells in that area next year.

By the close of the market yesterday, Apache’s shares dropped $0.18 to $98.50.

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