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Many energy analysts and investors are focused on Apache Corp's (APA 1.12%) American shale operations, which are very promising, but that doesn't paint the whole picture of its asset base. Apache operates in Egypt with its partner China Petroleum & Chemical (SNP), which owns a third of Apache's Egyptian oil and gas interests. A few months ago Apache and China Petroleum & Chemical, otherwise known as Sinopec, had a few discovery wells come online that point toward strong exploration upside in Egypt.

Exploration
In early May, Apache announced two discoveries that were drilled by an Apache-operated joint venture with the Egyptian government, which Sinopec has a stake in. One of those discoveries, the Herunefer-1X in the Matruh Basin, found hydrocarbons in the Alamein, Alam El Buieb-6, Masajid, Upper Safa and Lower Safa formations. The well, which tapped into the Lower and Upper Safa intervals, produced 49 million cubic feet of gas a day, or MMcf/d, and 7,700 barrels a day of condensate. That is a lot of output considering the well only cost $6 million to complete.  

Apache and Sinopec own 6.8 million gross acres in Egypt, and Apache plans on further exploring the Matruh Basin after this discovery. According to Tom Maher, Apache's Egypt region vice president:

Herunefer-1X is the first of a series of exploration wells planned for the Matruh Basin area this year. ...The basin remains an attractive focus area for exploration and development and has been relatively under-explored.  We have identified a number of untested structural features, and trends have been mapped and identified, with the potential for stacked targets and high-condensate-yield gas objectives.

If additional discoveries can be found in the Matruh Basin, then Apache and Sinopec will be able to keep this major free cash flow generating asset growing. To expand its growth prospects, Apache also tested out the northern Shushan Basin. 

The BAT-1X discovery produced 31 million cubic feet of gas a day and 390 barrels of condensate a day. While the well only cost $5.25 million to drill, the results were less promising than in the Matruh Basin. Nevertheless, natural gas production can be very economical outside of North America.

To prop up growth even further, Apache started up a horizontal drilling program in Egypt, transferring over expertise from its American operations.

Expanding the horizon
In the first quarter of 2014, Apache drilled four horizontal wells as part of the 28 net wells it completed in Egypt. By attempting to bring the shale revolution to Egypt, Apache is spearheading what could be an energy boom in a country located right next to numerous members of OPEC. 

In February, Apache brought the MRZK 102H well online, which had an initial production rate of 1,030 barrels of oil per day. In May, Apache planned on bringing the Neama-14H well online. When Apache updates shareholders in its next earnings release, investors should pay close attention to the production rates of its horizontal wells. Whether or not Apache can bring horizontal drilling to Egypt will be determined if it can post strong production results on most of its horizontal wells. Investors in Sinopec should also watch Apache's results, as both companies could be on the forefront of a new shale boom.

Foolish conclusion
Most are focused on Apache's huge shale potential in the Permian Basin and in the Oklahoma panhandle, but that shouldn't cloud over its Egyptian venture with Sinopec. Their Egyptian operations are free cash flow positive, meaning that future conventional discoveries and the horizontal drilling program will be fully covered. These two discoveries point toward a high likelihood of conventional exploration upside, which goes well with the possibility of a new shale revolution.