Apache stock soars on Suriname discovery
Stock of Apache Corp. surged more than 25 percent Tuesday after the Houston energy firm confirmed it struck oil offshore of the small South American nation of Suriname.
Just two weeks after Apache formed a joint venture with the French energy major Total, the two companies said they’ve made a significant oil discovery that could turn Suriname into a legitimate oil producer just as Exxon Mobil is doing with neighboring Guyana.
The announcement comes after Apache first offered vague drilling results in early December that disappointed investors and battered Apache’s stock. The company Apache then formed a 50-50 partnership with Total to eventually hand over the Suriname operations to the French firm. In just over a month, Wall Street sentiments have made an about face on Apache’s Suriname plans with the joint venture and, now, the first promising well results.
Apache’s stock spiked to $32.51 per share on Tuesday, up $6.87. Apache’s shares are up more than 75 percent since the first Suriname test well results were announced in early December. Apache is trading at its highest stock price since April, which is when the U.S. benchmark for oil traded above $65 per barrel.
Oil settled Tuesday at $62.70 a barrel in New York, down 57 cents, but oil prices were spiking after hours late Tuesday following the news of Iranian rocket attacks on U.S. military installations in Iraq.
Apache has pinned high hopes on Suriname after Exxon Mobil started developing huge oil projects offshore of Guyana. Apache is quick to point out that it is drilling just seven miles from the Guyana maritime border.
Although Brazil and Venezuela both have many decades of oil experience, energy companies have begun focusing on their smaller neighbors to explore their offshore waters. There’s also more exploration occurring by Colombia.
Apache said it discovered substantial oil volumes at two different depths at the first Suriname test well, called Maka Central-1. High pressures underground prevented drilling much deeper than 20,000 feet to test a third interval at about 22,000 feet. But the initial results show additional promise at the greater geologic depth, called the Turonian, as well, Apache said.
“Preliminary formation evaluation data indicates the potential for prolific oil wells,” said Apache Chief Executive John Christmann.
On HoustonChronicle.com:Apache at crossroads as it pins hopes on Suriname offshore field
The exploration area, known as Block 58, contains about 1.4 million acres.
“We have identified at least seven distinct play types and more than 50 prospects,” Christmann said. In partnership with Total, we look forward to advancing both exploration and development of discoveries on the block.”