Apache makes huge oil discovery off Australia’s coast

August 18, 2014, 5:19 PM UTC
contract armin harris
Kyle Bean for Fortune

U.S. oil producer Apache has announced an oil discovery that could be one of the largest Australia has seen in decades and may help boost the value of the company’s international assets.

Located between 13,648 feet and 14,763 feet below sea level, the company said the Canning Basin might hold as many as 300 million barrels of oil based on six oil samples taken at the site. The Phoenix South-1 well is located in Western Australia, about 110 miles north of Port Hedland in 435 feet of water.

Apache was careful to say Monday that further “drilling and evaluation” is planned for 2015 to confirm the extent of the find, but it expressed optimism that it could be sitting on top of a major oil discovery.

“Although evaluation is at an early stage, Phoenix South-1 is an exciting result,” said Thomas E. Voytovich, Apache’s executive vice president and chief operating officer – International. “The oil and reservoir quality we have seen point to a commercial discovery. If these results are borne out by further appraisal drilling, Phoenix South may represent a new oil province for Australia.”

Apache has a 40 percent interest in the area that includes Phoenix South-1. Australian oil and gas explorer Carnarvon Petroleum has 20 percent, while Finder Exploration holds a 20 percent stake, and JX Nippon another 20 percent.

The stock of Carnarvon soared 200 percent on the Australian Stock Exchange after the news of the discovery was announced. In a statement, the company described the find “as most significant developments in Australian oil and gas in recent times.”

“This is the most significant new oil play in the North West Shelf since the Enfield discovery opened up the Exmouth Basin almost 20 years ago,” Carnarvon’s Managing Director Adrian Cook said in a statement. “The implications on the rest of our acreage are still being assessed, but the potential is extraordinary. Despite some initial challenges and setbacks, this well has delivered a significantly better outcome than any of us could have imagined.”

The news of the discovery comes as Apache has been offloading some of its international assets. Over the past year it has announced plans to sell $10 billion in assets and so far has divested from a project in Egypt, exited Argentina and sold two Gulf of Mexico developments. It also announced earlier this year plans to exit the LNG business and said it will sell off stakes in projects in Canada and Australia.