Apache, Total Find Oil in South America -- 2nd Update
08 January 2020 - 5:29AM
Dow Jones News
By Christopher M. Matthews and Micah Maidenberg
Apache Corp. and Total SA said that they have found
"significant" deposits of oil off the coast of Suriname, fueling
investor excitement that it could be the second big discovery in
the region recently after a major strike in offshore Guyana by
Exxon Mobil Corp.
News of the successful find sent shares of Houston-based Apache
up more than 25% in Tuesday trading, putting it on pace for its
largest stock gain since 1973. Total shares were down slightly.
The surge more than reversed a decline in Apache's share price
in December, when the company released a sparse progress report
that didn't detail whether it had found oil near the small South
American country, raising more questions than answers.
Apache's announcement Tuesday was also short on details but
indicated Apache had found oil in two of the areas it had been
testing, erasing investor fears the project could be a bust.
"Data indicates the potential for prolific oil wells," Apache
Chief Executive John Christmann said in a statement Tuesday.
Analysts said the announcement could lead to a more than $1
billion increase to the valuation of the project. The value of the
project could increase significantly as Apache performs further
tests, the analysts said.
Many investors have been closely monitoring Apache's activity in
Suriname, which is near a massive offshore oil field in Guyana that
Exxon is developing. Oil began flowing in December at the Exxon
project, one of the largest offshore discoveries in years.
Investors have hoped the project in Suriname could resemble the
find in neighboring Guyana. Exxon estimates it could recover more
than six billion barrels of oil and gas from the Stabroek field
there, which it is developing with partners Hess Corp. and China's
Cnooc Ltd.
Analysts say Guyana, a tiny country with a population of less
than one million people, could pump 750,000 barrels a day by 2025,
making it one of the largest oil producers in Latin America. The
find is likely to transform the impoverished nation, and a similar
discovery in Suriname would carry significant implications for that
country.
Apache struck a deal with Total last month to explore and
develop the field in Suriname, in which the French energy giant
will bear most of the project's significant costs. Under that deal,
which analysts said was necessary to develop the field quickly,
Total will recover its upfront costs from the project's early
revenues before it reverts to a 50-50 profit share between the two
companies.
"We are optimistic about the large remaining potential of the
area still to be discovered and will test several other prospects
on the same block, " said Kevin McLachlan, senior vice president of
exploration at Total.
Write to Christopher M. Matthews at christopher.matthews@wsj.com
and Micah Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
January 07, 2020 13:14 ET (18:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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