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Apache says Alberta’s Zama field has a ‘lot of running room’ U.S. independent excited by “opportunities” in Canada after spending almost C$2.5 billion on three acquisitions over two years Gary Park PNA Canadian Correspondent
Ladyfern is hogging the spotlight, but Zama is competing for the attention of Apache Canada Ltd., which is unfurling plans for its stable of high-profile Canadian acquisitions.
The Calgary-based subsidiary of Apache Corp. views Zama in northwestern Alberta as a “very good area” for natural gas exploration after drilling 45 exploration wells this year, said Apache Canada president Floyd Price.
With its Canadian output more than doubling over the last year, the Houston-based independent now produces more oil and gas outside of the United States, with about 53 percent coming from Canada, Egypt, Poland and China.
Among its new gems is a 37 percent stake in northeastern British Columbia’s Ladyfern field, which Apache said is now producing at about 320 million cubic feet per day and could ultimately peak at 1 billion cubic feet per day.
G. Steven Farris, Apache’s president and chief financial officer, told a conference call during the summer that his company has a “tremendous inventory” of drilling opportunities in Canada, including at least two Ladyfern lookalikes west of the original discovery.
In fact, Apache expects to complete 550 wells in Canada this year compared to the 580 it drilled around the world in 2000.
“We’re going to drill more in Canada this year than we have in any other area in Apache’s history,” Farris said.
Zama hottest prospect Among its overlooked, but hottest prospects is Zama, where it holds 650,000 acres acquired a year ago for about C$760 million from Phillips Petroleum Co. in what Calgary-based Waterous & Co. rated the “largest single Canadian asset ever made available in a public offering.”
At the time of the purchase, Zama was yielding 90 million cubic feet per day of gas and 7,500 barrels per day of oil from reserves of 71.6 million barrels of oil equivalent and was seen by Apache as a stepping stone into new exploration areas just across the borders into British Columbia and the Northwest Territories.
The Phillips deal came only three weeks after Apache spent about C$930 million to buy Fletcher Challenge Energy Canada Ltd., paying about US$5.66 per barrel for 338 million barrels of oil equivalent, and a year after it spent C$770 million acquiring Shell Canada Ltd.’s conventional oil and gas holdings in Western Canada.
Canadian production sizeable share of output Out of those transactions, Apache established a powerful Canadian base, with about 500 employees, has raised its Canadian production to 328 million cubic feet per day of gas and 31,000 barrels per day of oil — a sizable share of its combined daily output of 1.17 billion cubic feet of gas and 155,000 barrels of oil.
While most of the Canadian attention has been concentrated on its partnership with Murphy Oil Company Ltd. in Ladyfern, the Zama play has operated in the shadows.
Price said Zama does not have “the big Ladyfern-type reserves, but it does have a lot of running room and lends itself to technology.”
Last winter, Apache Canada shot 300 square kilometers of 3-D seismic in the area, identified 70 different opportunities, bought an additional 120,000 acres and has had an 88 percent success rate from 45 exploratory wells. It plans another 40 to 50 wells in 2002 and another 300 square kilometers of seismic.
Although Apache won’t comment on the reserve potential, Farris said Ladyfern is “quite possibly, on a gross basis in North America, the largest thing we’ve ever found ... keep your eyes on B.C. and northern Alberta.”
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