Apache Corporation
(
APA
) announced that, along with co-partners, it will go ahead with the
development of the deepwater Lucius project in the Gulf of
Mexico.
The project is located in the Keathley Canyon area - including
portions of the blocks 874, 875, 918 and 919 - and about 200 miles
southeast of Houston at a water depth of 7,000 feet.
Apache holds 11.7% working interest in the Lucius venture
through its subsidiary Apache Deepwater LLC.
Anadarko Petroleum Corporation
(
APC
) acts as the operator of the project with 35% interest. Other
partners are
Plains Exploration & Production Company
(
PXP
) (23.3%),
Exxon Mobil Corporation
(
XOM
) (15%),
Petrobras
(
PBR
) (9.6%) and Eni Petroleum (5.4%), an affiliate of
E SpA
(
E
).
The companies will develop Lucius with a truss spar floating
production facility that has a production capacity of 80,000
barrels of oil and 450 million cubic feet of natural gas per day.
Currently, the spar is being manufactured at Technip's facility in
Pori, Finland. The field is expected to generate its first
production in 2014, from six initial wells.
Lucius stands as an important venture for the companies as this
is expected to open doors for further drilling activities in the
Gulf region.
Houston, Texas-based Apache is one of the world's leading
independent energy companies engaged in the exploration,
development and production of natural gas, crude oil and natural
gas liquids.
We remain optimistic about Apache's production growth over the
next few quarters based on its vast domestic and overseas
operations. Next year, the company will likely start producing from
three deepwater projects - the Bushwood (Garden Banks 463) and Wide
Berth (Green Canyon 490) and Mandy (Mississippi Canyon 199).
We also like Apache's geographically diversified reserve base,
its balanced exposure to natural gas and crude oil and multi-year
trends in reserve replacement, enabling management to allocate
capital and resources to high-return projects.
However, we see limited upside potential for Apache, considering
its sensitivity to gas/oil price volatility, drilling disturbances,
geo-political risks and project timing delays. As such, we expect
Apache to perform in line with the broader market and, therefore,
maintain our Neutral recommendation, for long term.
Apache currently retains a Zacks #3 Rank, (short-term Hold
rating).
APACHE CORP (
APA
): Free Stock Analysis Report
ANADARKO PETROL (
APC
): Free Stock Analysis Report
ENI SPA-ADR (
E
): Free Stock Analysis Report
PETROBRAS-ADR C (
PBR
): Free Stock Analysis Report
PLAINS EXPL&PRD (
PXP
): Free Stock Analysis Report
EXXON MOBIL CRP (XOM): Free Stock Analysis
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