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Apache Announces Discovery of New Oil Field in Texas

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Leading independent energy player, Apache Corporation (APA - Free Report) , recently reported that it has discovered an important new resource play in the southern portion of the Delaware Basin in western Texas. The resource play has been named “Alpine High.”

The discovery, which has been confirmed by the company after two years of testing, is expected to contain about three billion barrels of oil and 75 trillion cubic feet of rich gas.

The overall formation includes as much as 450,000 acres and has around 4,000–5,000 feet of drilling potential in as many as five distinct sites including Bone Springs, Wolfcamp, Pennsylvanian, Barnett and Woodford.

The site – which cost Apache $1,300 per acre for 352,000 gross acres (307,000 contiguous net acres) – is expected to generate anywhere between $8 billion and $80 billion in revenues over the life of the wells.

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The Houston-based company has already drilled 19 wells in the area and has identified an additional 2,000–3,000 drilling sites in the Woodford and Barnett formations alone.

Apache intends to accelerate drilling in the discovery. In keeping with this plan, the company has raised its full-year 2016 capital budget by 11% to $2 billion. Per the company, the west Texas field has potential to become one of the largest discoveries in a decade and is likely to transform the company from its current position as the nation’s sixth-largest independent energy firm with a market capitalization of $20.1 billion.

Founded in 1954, Houston, TX-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.

Currently, Apache carries a Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.

. Some better-ranked players from the broader energy sector include NGL Energy Partners LP (NGL - Free Report) , Matador Resources Company (MTDR - Free Report) and Enviva Partners, LP (EVA - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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