This Oil & Gas Stock Could Jump $28 By 2013

| About: Apache Corporation (APA)

Apache (NYSE:APA) is showing signs of prosperity, recently acquiring land in an upscale area of Houston, TX gobbling up nearly a third of the land in the BLVD Place project. Apache currently resides in Post Oak Central, but the recent purchase is likely to be the new home of the company, where it will be surrounded by prime real estate, fancy shops, and fine dining establishments.

Much of the company's profit rise is based on what Barron's magazine touts as the improvement of Apache's organic growth and development of last year production replacement at 104%. Also, with success in the North Sea, as well as Egypt spilling over to plays in the Permian Basin, the company is snowballing toward even greater profits. With a market cap of $32.43 billion, Apache might not be in the same ballpark as Exxon Mobil (NYSE:XOM) and BP (NYSE:BP). But it is giving competitors Anadarko (NYSE:APC), Total (NYSE:TOT), and ConocoPhillips (NYSE:COP) a good run. Based on the lone fact that Apache has been great at raising its capital expenditure for growth while staying within its own cash flow parameters, I believe this to be a company to buy and hold for a great long ride.

Apache has been drilling aggressively for oil. Recently, the company announced that at the Beryl Field in the U.K. North Sea, one of Apache's extension wells had initial production rates higher than any oil well drilled since 2001. A spokesperson for the company said that they had found virgin reservoir pressure in two of three zones containing more than 300 feet of net true vertical pay. Apache is the operator of Beryl Field and owns 50%, with Enterprise Oil Ltd. owning 22.78%, Hess Ltd. (22.22%), and OMV (U.K.) Ltd. with 5%. The well, B72, was drilled as a deviated well from the Beryl Bravo Platform and logged a total of 619 feet measured depth (305 feet TVD) of net oil pay in three separate Jurassic aged reservoir units. The well was completed in the high quality Beryl-I reservoir, which was found at original pressure of 5220 psi and commenced production at a rate of 11,625 barrels of oil per day (b/d) and 13.1 million cubic feet (MMcf) of natural gas per day.

The company is playing it smart with its balanced exposure to natural gas and crude oil, and multi-year trends in reserve replacement and production growth creating a large geographically diversified reserve base. It has close to 10 million acres located in various concessions across Egypt, where it has been involved since the mid 1990s. Apache is only scratching the service there with only 18% of this acreage is developed, giving the company plenty of room for growth. The company has drilled 15 development wells so far this year, and has nine additional wells underway, and is planning 27 additional development wells in the Faghur Basin this year. Closer to home, with more than 12,000 wells I 152 fields, Apache is one of the largest operators in the Permian Basin. Production for this region was up over 38% as a result of the prior-year acquisitions from BP and an aggressive drilling program. The company averaged running 25 rigs during 2011, drilling or participating in 507 wells. The Permian region's year-end 2011 estimated proved reserves was equivalent to 25% of Apache's total proved reserves or 751 million barrels of oil equivalent (MMboe).

Apache appears to be doing a lot of things right. The company recently received the Citizen of the Year award from the Oil and Gas Investor Magazine for its Apache Foundation's Trees campaign as well as many other community and sustainability programs. Under the Trees campaign, started in 2005, the company has donated more than 2 million trees to 218 nonprofit and community groups, with a goal to give away 3 million. While a good gesture toward improving and protecting the environment, it helps tremendously to bolster the company's public image. Building on protecting the environment practices, Apache is enjoying a good reputation in the eyes of the public.

The company is converting its first rig to run on liquefied natural gas. Recently, CEO and Chairman G. Steven Farris, commented on the opening of the company's first compressed natural gas (CNG) fueling station in Oklahoma said, "The state of Oklahoma has been and continues to be a leader in encouraging greater use of clean-burning natural gas, which this country has been blessed with in incredible abundance. Oklahoma is considered the nation's leader when it comes to helping encourage vehicle conversion to CNG and supporting the establishment of a CNG fueling station infrastructure. We thank Oklahoma for its continued support." This type of public relations builds trust and support from the community which is greatly needed for oil and gas companies today.

The company had first quarter 2012 revenues of $4.54 billion, 5.56% above the prior year's first quarter results, and revenues for the full year 2011 of $16.89 billion, 39.66% above the prior year's results. This allows management to allocate capital and resources to high-return projects. The Board of Directors of Apache has declared regular cash dividends on the company's common shares and 6% Mandatory Convertible Preferred Stock, Series D. In 2011, the company reported a dividend of $0.60.

With this much momentum going for Apache, it is no wonder this company continues to please investors. The stock is currently trading around $82, and I expect it will rise to the $110 level by early next year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.