up 307,000 acres around Alpine and Pecos in southern Reeves County, Texas... acreage it believed held big oil and gas resources. Then on September 7, 2016, the company stepped forward. Apache announced its new discovery – the Alpine High. How good was Alpine High? Good enough for the company to spend two years of testing and buying acreage before the results were even in. Apache estimates the oil reserve holds 75 trillion cubic feet of rich gas. That’s gas with lots of liquids – liquids that can be stripped out to make butane, propane, and other -anes. And its official estimates say the Alpine High has 3 billion barrels of oil. But Apache thinks there’s more than that. Its estimates only account for two of the five possible formations stacked on top of each other. That’s industry talk for “upside.” Even at those conservative estimates, Apache has a winner on its hands. Drilling and completion will cost about $4 million. That’s about 20% less than other Midland Basin wells. The land was cheap, too, at about $1,300 per acre. I’m sharing my trip to Alpine because it is a reminder that good things can happen even in tough times like these . And as resource investors, we must always be looking for value . We can’t wait for good things to happen... because by then, the big opportunities will be gone. Yes, things are going to get worse before they get better. But remember, commodity prices follow a cyclical pattern. What goes down will eventually come back up. We’re going to get to the point when demand from countries that are evolving – like China and India – will completely overwhelm our ability to meet their needs with existing supply. This is the long-term trend that we’re interested in... It’s a supercycle . The current bear market in oil prices will make lots of people nervous about investing in this industry. Don’t make that mistake...
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