Apache Corp. (NYSE: APA) is maintaining focus on multi-well pad drilling and full-field development in the Midland Basin, which led the company’s 11% quarter-on-quarter production growth in the Permian during third-quarter 2017.

The Houston-based company, one of the largest acreage holders and producers in the Permian, said it produced 161,000 boe/d in the Permian. Success was attributed mainly to the Midland Basin drilling program and a production ramp-up at Alpine High, the emerging Delaware Basin play where the company has identified thousands of economic drilling locations with gas, wet gas and oil potential. Third-quarter Alpine High production averaged 13,300 boe/d.

Rising crude prices helped Apache produce a $63 million profit for the third quarter, compared with a loss of $607 million a year ago. Revenue jumped to about $1.6 billion from about $1.4 billion. In all, the company produced 448,000 boe/d, Apache reported this week.

Apache CEO John Christmann said the company is benefiting from the strategic testing, optimization and development planning it initiated in 2015 and 2016 as it ran a “lean capital program.”

“Going forward we anticipate continued capital efficiency gains in both the Midland and Delaware basins,” Christmann said during the company’s Nov. 2 earnings call. “This is particularly true at Alpine High as we move further into multi-well pad development, continue to extend average lateral length, utilize more smart completions and further optimize our landing zone targeting and well spacing.”

U.S. shale players have been fine-tuning and testing techniques as they work to add value during times of lower commodity prices. Many have streamlined portfolios by shedding noncore assets—including Apache with its Canada divestment—to focus more on assets capable of delivering higher returns. To survive these so-called “lower for longer” times, Apache—like some of its peers—have worked to live within cash flow, spending less and growing producing.

“For most of the last three years the E&P industry has been engaged in excess spending to drive short-term oil growth,” Christmann said. “Today we’re seeing a return of the fundamentals of capital discipline and focus on long-term returns. We welcome this change and believe it is very constructive to the long-term health of our industry.”

Tim Sullivan, executive vice president of operations support for Apache, highlighted some Midland Basin wells in the Wildfire Field. Here, Apache completed several wells with 1½-mile long laterals at the June Tippet 12-13 pad, which featured four completions in the Lower Spraberry and three completions in the Wolfcamp B. Each well had average 30-day peak initial production (IP) rates of more than 1,000 boe/d.

The Wildfire Field’s Lynch A unit and the Powell Field’s CC4045, both six-well pads, also saw favorable results with their 1½-mile and 2-mile long laterals. The former targeted the Lower Spraberry, with an average 30-day peak IP rate of 1,142 boe/d, mostly oil, while CC4045 targeted the Wolfcamp B1 and B3 formations.

“These wells have been online for about four weeks and are trending toward an average 30-day peak IP rate of 1,300 boe/d with 80% oil,” Sullivan said of the Powell Field wells in Upton County. “We plan to drill three additional wells on this pad in early 2018. These excellent Midland Basin well results are reflective of our integrated approach to determine optimal landing zones, pattern spacing, lateral length and completion design.”

Optimization benefits the company has proven in other unconventional plays await Apache at Alpine High, according to Christmann, who describe Alpine as a “compelling world-class resource.”

“Once ramped up to its production potential Apache will benefit for decades from high returns and cash flow from a significant portion of our capital employed,” he said.

Since Alpine was announced in September 2016, Apache’s 307,000 net-acre Alpine High position has grown to 366,000. The company delivered in October a detailed update on Alpine, saying it has identified an emerging oil play, a dry gas play with more than 1,000 highly economic locations and an even larger wet gas play with more than 3,500 highly economic locations.

Currently, Apache is prioritizing 2018 activity and eyeing which areas of its capital program to cut back spending. Christmann said spending could be lower next year with portfolio-wide capital allocation similar to 2017. The Permian Basin will likely get the bulk.

“Internationally, we will continue to invest to maintain current levels of free cash flow. At recent oil and gas prices this spend is in the $700 to $800 million range,” Christmann said.

Apache has international assets in Egypt and the North Sea, where its CB-1 well recently hit more than 260 ft of net pay at the Callater Field.

Christmann also mentioned that Apache shifted some capital from its international regions to the U.S. in second-half 2017 to “take advantage of attractive portfolio opportunities in the Permian Basin.” However, he added that the capital allocation shift is minor. “It’s more geared toward some of the pad testing and things we’re doing in the Midland Basin.”

Velda Addison can be reached at vaddison@hartenergy.com.