APA Corporation is actively operating in the Midland Basin as part of its broader multi-basin strategy in the Permian. Their Midland Basin operations have been characterized by strong well permitting, drilling, and completions activities, particularly in core blocks where they are focusing on optimized well performance and production growth.
APA Overall Strategy
- Multi Basin Operations: Midland & Delaware Basins: APA Corporation continues drilling wells across these two basins, showcasing solid multi-basin operations.
- Outstanding Q2 Performance: Higher-than-expected oil production: APA’s performance in the Permian exceeded expectations, especially with strong oil production in Q2 2024.
- Callon Acquisition: Integration ahead of schedule: The integration of Callon Petroleum assets is progressing faster than anticipated, contributing positively to overall operations.
- Rig Activity: 9-10 rigs: APA plans to maintain an average rig count of 9-10 rigs in the Permian Basin for the remainder of 2024.
- Drilling Focus: Longer laterals and high-grading locations: APA is concentrating on drilling longer lateral wells and optimizing drilling sites to maintain high productivity in the Permian Basin.
- Frac Crews: 3-4 frac crews in 2H 2024: APA will deploy 3-4 frac crews in the Permian to ensure well completions keep pace with their drilling activities.
- Technological & Operational Efficiencies: Enhancements in completions efficiency: APA is leveraging new technologies and design improvements to reduce drilling, completions, and facility costs while lowering lease operating expenses (LOE). Artificial lift optimization is one of the key drivers of these efficiencies.
APA Midland Basin Block Development Strategy
APA Corporation’s operations in the Midland Basin are a testament to the power of a focused, block-by-block development strategy. By concentrating drilling and completion efforts in key blocks, the company maximizes operational efficiency, reduces costs, and maintains a steady stream of production.
As we move through the second half of 2024, APA’s combination of advanced technology, efficient rig and frac crew deployment, and a well-segmented drilling strategy will likely continue to drive success in the Permian Basin, ensuring strong returns and continued growth.
The relationship between the blocks in APA Corporation’s Midland Basin operations can be understood by examining the following factors:
1. Geographical and Operational Clusters:
- Blocks that are geographically close and are part of a key operational cluster for APA. The proximity of these blocks likely allows APA to optimize its resources, such as moving rigs and frac crews between wells with minimal downtime.
- These blocks could represent APA’s primary development area, where they are focusing their resources to maximize production in a highly productive zone.
2. Well Development Progress:
- Blocks with high spud and completion counts, are advancing more rapidly through the drilling lifecycle, indicating that APA prioritizes these areas for near-term production goals.
3. Production Strategy:
- Blocks with a high count of permits and wells spud suggest that these areas are undergoing continuous, concentrated development, possibly due to favorable geology, well economics, and infrastructure availability.
4. Strategic Spread of Operations:
- APA’s distribution of activity across blocks implies a strategic diversification of risk. While concentrating resources in Blocks offers high production returns, having permits, spuds, and completions across other blocks ensures future potential is being tapped in other areas.
5. Efficiency of Operations:
- The relatively short time span between spud dates (14 days) across all blocks reflects APA’s operational efficiency, with certain blocks driving this trend by clustering wells. This helps minimize rig movement and completion delays, enhancing productivity in these core blocks.
Blocks seem to be interrelated through geographic proximity, production priority, and strategic operational planning. Blocks are core focus areas, likely due to higher production potential and efficient resource use, while other blocks serve as a longer-term development or backup plan to maintain continuous activity across APA’s Midland Basin portfolio.
Top Blocks Overview
APA’s Midland Basin: Block 40T4S, 41T4S, 40T3S
Blocks 40T3S, 41T4S, and 40T4S, highlighting their strategic importance in Midland Basin operations:
- Block 40T3S: Exhibits consistent activity with 15 permits and 15 drilling records since 2023, moving wells efficiently through the drilling to completion phases.
- Block 41T4S: Has higher permit approvals (25), but drilling (6 records) is progressing at a slower pace, suggesting early-stage well development. The completions (11) indicate a transition into production.
- Block 40T4S: Displays the strongest activity, with 27 permits and 23 drilling records since 2023, though only 6 completions. This block seems to be ramping up for significant production as more wells transition to completion.
Overall, APA is focusing heavily on these blocks, particularly Block 40T4S and 41T4S, for future production growth.
Block 37T4S – APA’s Midland Basin Operations
Well Permits & Drilling Activity
- Well Permits:
- Block 37T4S received 17 well permits in 2024.
- Among the most active blocks in APA’s portfolio.
- Drilling Records:
- 17 drilling records since 2023.
- Reflects APA’s commitment to development and resource extraction.
Completions and Production
- Completions:
- 19 completions in 2023, among the top-performing blocks.
- Consistent well completions show a healthy pace from drilling to production.
APA’s Block Y – Overview of Midland Basin
Permitting and Drilling Activity
- Well Permits: 15 permits in 2024
- Drilling Records: 20 wells drilled since 2023
- Status: Among top blocks for drilling and permitting activity in the Midland Basin
Summary
- Key Area: Block Y is a critical focus for APA in the Midland Basin
- Performance: Strong drilling and completion activity contribute to production growth
- Strategic Fit: Part of APA’s high-grading strategy to optimize returns
Conclusion:
APA Corporation’s Midland Basin operations play a pivotal role in its overall Permian Basin strategy. With strong well permitting, drilling, and completions activity, APA is focused on maintaining high productivity while driving down costs through operational efficiencies. The integration of new assets, the deployment of advanced technologies, and a consistent rig and frac crew deployment are helping APA solidify its presence in this highly competitive region.
