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Image courtesy of Apache Corporation.

Apache Corporation has discovered a new resource play in the Delaware Basin holding billions of barrels in oil reserves.

The Houston-based company said Wednesday that it has confirmed the discovery of a significant new resource play that the company has dubbed the Alpine High.

Apache’s Alpine High acreage lies in the southern portion of the Delaware Basin, primarily in Reeves County, Texas.

The company estimates that its acreage position holds 75 trillion cubic feet of rich gas and 3 billion barrels of oil in the Barnett and Woodford formations alone.

Apache said it also sees significant oil potential in the shallower Pennsylvanian, Bone Springs and Wolfcamp formations.

The company said that Alpine High has 4,000 to 5,000 feet of stacked pay in up to five distinct formations including the Bone Springs, Wolfcamp, Pennsylvanian, Barnett and Woodford.

Apache has identified 2,000 to more than 3,000 future drilling locations in the Woodford and Barnett formations alone.

“These formations are in the wet gas window and are expected to deliver a combination of rich gas and oil,” Apache said.

Initial estimates for the Woodford and Barnett zones indicate a pretax, net present value range of $4 million to $20 million per well, at benchmark oil and natural gas prices of $50 per barrel and $3 per thousand cubic feet.

Expected well costs in development mode for a 4,100 foot lateral are estimated to be about $4 million per well in normally pressured settings and $6 million per well in over-pressured settings.

Apache has drilled 19 wells in the play, with nine currently producing in limited quantities due to infrastructure constraints.

That figure includes six wells in the Woodford, one well in the Barnett and one well each in the shallower Wolfcamp and Bone Springs oil formations.

Apache has secured 307,000 contiguous net acres, with 352,000 gross acres, in the play at an average cost of $1,300 per acre.

To accelerate the delineation and development of the Alpine High play, Apache is boosting its 2016 capital spending by about $200 million for the year and raising its full-year capital guidance to about $2 billion.

Capital spending on the Alpine High play in 2016 will represent more than 25 percent of Apache’s total capital spending program.

“Today’s announcement is the culmination of more than two years of hard work by the Apache team. These efforts have resulted in the identification of an immense resource that we believe will deliver significant value for our shareholders for many years,” Apache’s chief executive officer and president John J. Christmann IV said.