Apache (APA) Strikes Oil in Canning Basin, Off Australia - Analyst Blog

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U.S. energy firm, Apache Corporation ( APA ) announced that it has struck oil in the Canning Basin, off the shore of Western Australia. The discovery, at the Phoenix South-1 well, marks the company's first find in the region and is believed to be a significant one.

Preliminary estimates indicate about 300 million barrels of oil in the area, based on six light oil samples collected from the region. Moreover, the company stated that the oil and reservoir quality are indicative of a commercial discovery, which could mean a new oil province in Australia.

Apache is the operator and 40% owner of the WA-435-P permit where the discovery well is located. The other partners are Carnarvon Petroleum, Finder Exploration and JX Nippon, which have 20% stake each. The company also holds stake in the permit WA-437-P. Further, Apache intends to acquire stake as well as ownership of two other nearby permits, WA-436-P and WA-438-P, and has exercised its option for the same. The additional acquisitions would bring Apache's total acreage in the region to over 5 million acres.

Apache, encouraged by the Phoenix South-1 results, believes that the region comprises a large number of undrilled prospective locations that could hold significant oil accumulations. The company added that more drilling and evaluation activities have been planned for the next year.

Notably, this Houston, TX based company has been planning to sell its international operations following pressure from the activist hedge fund Jana Partners LLC, which recently disclosed a $1 billion stake in the U.S. energy company. This new find should enhance the value of its properties, fetching more money from potential buyers.

Currently, Apache caries a Zacks Rank #3 (Hold). Meanwhile, one can consider better-ranked players from the oil and gas exploration and production industry like Cheniere Energy, Inc. ( LNG ), Clayton Williams Energy, Inc. ( CWEI ) and Sanchez Energy Corporation ( SN ). All these stocks sport a Zacks Rank #1 (Strong Buy).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: APA , C , CWEI , SN , LNG

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