Apache takes bullish view of Western Canada, says Schmidt

Gary Park

Coalbed methane and a partnership with ExxonMobil are key elements in Apache’s ambitious plans for its Canadian holdings.

The Houston-based company expects to spend US$450 million, or 20 percent of its total budget, drilling in Canada this year and, provided commodity prices continue at a high level, the same in 2005, said Apache Canada President Brian Schmidt.

He said that if the parent company sees oil and gas prices slide “they will pull the capital budget in real quick. If prices are sustained, we will react with an increased budget.”

Schmidt told a Peters & Co. conference that Canada “ranks very well with other regions,” despite the exodus of U.S.-based companies from the Western Canada Sedimentary basin over the past year.

Current daily output is 320 million cubic feet of gas and 28,000 barrels of oil, net of royalties, including 30 million cubic feet of coalbed methane, up from 12 million last year.

Adding to the momentum was the May deal by Apache and ExxonMobil to take joint ownership of some U.S. and Canadian assets.

The ground-breaking deal commits Apache to drill and operate more than 250 wells in Western Canada over a two-year period on 300,000 acres where ExxonMobil owns an interest.