Independent oil and gas producer Apache Corp. (NYSE: APA) announced the discovery of a new shale play, called the Alpine High, in the Delaware Basin portion of the Permian Basin. The company estimates the discovery includes 75 trillion cubic feet of “rich” gas and 3 billion barrels of oil equivalent.

These are company estimates and not yet proved, but nonetheless pretty impressive.

CEO John J. Christmann IV got to crow a little:

While other companies have focused on acquisitions during the downturn, we took a contrarian approach and focused on organic growth opportunities. These efforts have resulted in the identification of an immense resource that we believe will deliver significant value for our shareholders for many years. We are incredibly excited about the Alpine High play and its large inventory of repeatable, high-value drilling opportunities.

And the excitement may be justified. The Permian is the hot spot for crude exploration and production right now, and these numbers from Apache tell the story:

• Apache has secured 307,000 contiguous net acres (352,000 gross acres) at an attractive average cost of approximately $1,300 per acre.
• 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.
• 2,000 to more than 3,000 future drilling locations have been identified 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. Initial estimates for the Woodford and Barnett zones indicate a pretax, net present value (NPV) range of $4 million to $20 million per well, at benchmark oil and natural gas prices of $50 per barrel and $3 per million cubic feet (Mcf), respectively. Expected well costs in development mode for a 4,100 foot lateral are estimated to be approximately $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. This includes six wells in the Woodford, one well in the Barnett and one well each in the shallower Wolfcamp and Bone Springs oil formations.

Focus on the acreage for a moment: a total of 307,000 net acres at about $1,300 per acre. PDC Energy Inc. (NASDAQ: PDCE) recently paid about $23,000 an acre for 57,000 net acres in the Delaware Basin and EOG Resources Inc. (NYSE: EOG) paid around $7,000 to $8,000 per acre for 186,000 net acres in basin as part of its acquisition of Yates Petroleum. It is true that PDC and EOG paid for flowing oil and Apache’s acreage is mostly undeveloped, but even at the low NPV of $4 million, at 40-acre spacing each acre’s hydrocarbons are valued at $100,000. And the value could rise by a factor of five.

It’s no wonder the company has boosted its 2016 capex budget by $200 million to a 2016 total of approximately $2 billion and that it plans to spend a quarter of its total annual budget on the Alpine High play.

Apache’s stock jumped to an intraday high of $58.99, up more than 14%, before settling back down to trade at $55.40. The stock’s 52-week range is $32.20 to $59.59, and the consensus 12-month price target is $57.06.

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