Apache enjoys an advantaged position in the North Sea
The North Sea region plays an important role in the overall Apache portfolio by providing competitive investment opportunities across multiple time horizons, exposure to an asset base that is less sensitive to oil price volatility and potential reserve upside with high-impact exploration potential. With industry-leading production efficiency of 92 percent, approximately 50 percent lower operating costs and materially advantaged infrastructure and offtake capabilities, Apache's position in the North Sea is highly differentiated.
Forties field is proving very resilient, and Beryl area offers significant exploration upside
The Forties field has produced more than 2.6 billion barrels of oil and has recovered more than 50 percent of the resource in place over the past 40 years. With the size of the remaining resource estimated at nearly 2.5 billion barrels, even small incremental improvements in the recovery factor can result in significant reserve and production gains. Notably, every 1 percent increase in recovery factor equates to approximately 50 million barrels of additional recoverable reserves.
Beryl, is a geologically complex area with multiple fields and stacked pay potential providing significant exploration opportunity. Following the completion of the first 3-D shoot since 1997, Apache recently announced two exceptional discoveries in the area and is moving ahead with development and additional exploration efforts.
Since the acquisition of these two fields, Apache has invested nearly $2.6 billion in infrastructure and is now reaping the benefits of this investment as a higher percentage of capital dollars is now being directed to drilling and production. Over the past four years, Apache invested 44 percent of its capital on infrastructure, yet over the next five years, it is estimated the company will only spend 12 percent of its annual capital on infrastructure requirements. The result will be improving capital efficiency, and all else being equal, improving returns on capital employed.
Significant reserves potential underscores longevity and upside for the region
Apache estimates its total net unrisked reserve potential in the North Sea is 574 million to more than 1 billion barrels of oil equivalent, none of which was booked at year-end 2014. This potential represents an opportunity of four to seven times Apache's year-end 2014 proved reserves in the North Sea of approximately 145 million barrels of oil equivalent. Assuming historical development and exploration success rates, Apache believes it can sustain both reserves and production at current levels for at least another five years while generating significant free cash flow.