Encana, Apache's Efforts in Permian, Eagle Ford Help to Offset Losses from Weaker Assets

Researched by Industrial Info Resources (Sugar Land, Texas)--Encana Corporation (NYSE:ECA) (Calgary, Alberta) and Apache Corporation (NYSE:APA) (Houston, Texas) are enjoying solid results from their investments in Texas, where production in the Permian Basin and Eagle Ford Shale is offsetting headwinds both companies are seeing in other regions. Industrial Info is tracking more than $1.17 billion in active projects involving Encana and Apache.

Encana announced it will direct almost all of its capital expenditures for 2018 (estimated at $1.8 billion) to its core assets, with about 70% going to the Permian Basin and Montney Shale. The company anticipates between 25% and 35% production growth from its core assets from the fourth quarter of 2017 to the fourth quarter of 2018, according to a press release, with "significant oil and condensate growth in the second half of the year."

Encana's Permian production in the fourth quarter exceeded 80,000 barrels of oil equivalent per day (BOE/d), which was 5,000 barrels above its target. Its work in the Eagle Ford Shale also outperformed, with production averaging 51,000 BOE/d in October alone. The company has five active drilling programs in the Karnes Trough section of the Eagle Ford Shale:

• a $54 million program in the Wessendorff A Unit Oil Lease, featuring 18 wells; see project report
• a $39 million program in the Nichols A Unit Oil Lease, featuring 13 wells; see project report
• a $18 million program in the Kotara-Ridley Unit Oil Lease, featuring 6 wells; see project report
• a $18 million program in the Long-Fischer Unit Oil Lease, featuring 6 wells; see project report
• a $12 million program in the Patsy-Clark Unit Oil Lease, featuring 4 wells; see project report

Encana also sold off most of its assets in Wheatland County, Alberta, including about 4,750 gas wells. The company is having more luck in British Columbia's Montney Shale, and is seeking permits for a $500 million liquids condensate terminal north of Dawson Creek, British Columbia. It would consist of a single, 9,000-barrel tank that would help carry condensate from Montney to multiple outlets. For more information, see Industrial Info's project report.

Apache's quarter was not as prosperous as Encana's, due to weak performance at its wells in the North Sea, where the company also incurred unscheduled downtime at the Forties Pipeline System. These factors contributed to the company's decision to drop its fourth-quarter non-U.S. production to between 138,000 and 140,000 barrels of oil equivalent per day. But solid growth in the Permian means Apache's domestic production is expected to be as high as 224,000 barrels of oil equivalent per day.

The Forties Pipeline System was closed from mid- to late December after a crack in the line was found near Aberdeen, Scotland. The under-performing wells were in the Beryl Field of the North Sea, where Apache is planning to begin construction in the coming months on the Alpha Offshore Platform in Block 9/18a. The project includes $30 million in subsea infrastructure, including wellheads and wellhead-protection structures; $30 million in production drilling, including three wells; and $20 million in pipeline and control umbilicals. For more information, see Industrial Info's project reports on the subsea infrastructure, drilling and umbilicals.

This spring, Apache expects to finish construction on $51.58 million in subsea infrastructure and $28.51 million in production drilling in the North Sea's Nevis Field, which will include two wells that will be tied back to the Beryl Field for export. For more information, see Industrial Info's project reports on the Nevis subsea infrastructure and drilling.

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