Apache Corp. signed an exchange agreement with Altura Energy Ltd., a partnership of Amoco and Shell Oil, that allows it to avoid large expenditures needed to get more oil out of the properties it is giving up. Apache will receive Altura’s interests in the New Mexico Federal Unit (NMFU) and the Drinkard Unit of Lea County, NM, in exchange for Apache’s interests in West Texas’ Cogdell Canyon Reef Unit.

The agreement will add incremental reserves estimated at 18.2 MMBoe net to Apache. Current net production of properties Apache will obtain averages about 3,500 Boe/d. The Drinkard Unit is adjacent to NMFU, a primarily oil-producing area in which Apache has owned interests since 1991. Properties Apache will acquire represent about 60% natural gas and 40% oil. “The swap benefits Apache by immediately adding to production and reserves while providing upside potential,” said Apache CEO G. Steven Farris. “We also forego the significant capital outlays that would have been required to increase production and reserves at Cogdell Canyon through CO2 flooding. That’s not a problem for Altura because they already have access to CO2.”

Altura will obtain Apache’s 86% working interest in the Cogdell Canyon Reef Unit in Texas’ Kent and Scurry counties. Altura estimates implementation of a proposed CO2 flood in the unit could generate more than 30 MMBoe in incremental reserves. Current net production from the unit approximates 1,200 Boe/d. That is estimated by Altura to increase to 10,000 Boe/d with CO2 flooding. The interests Altura is receiving represent “only a very small amount of gas.”

Altura President Jim Posey said, “This exchange allows both companies to take advantage of their individual expertise and focus on their core work. With our vast experience as an operator of enhanced oil recovery projects, Altura has all the tools to make this a successful venture.” The deal also includes a cash payment from Apache to Altura of about $2 million. The transaction will be effective Dec. 1, 1997 and is expected to close Jan. 30. Altura was established in March 1997 as a limited partnership of Shell and Amoco.

Joe Fisher, Houston

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