Shares of Apache Corporation (APA - Free Report) rallied more than 26% in yesterday’s trading, scoring its biggest intraday gain since 1973 after the energy explorer and partner TOTAL S.A. (TOT - Free Report) announced a major oil discovery at the Maka Central-1 well in Block 58, offshore Suriname.
About the Discovery
Block 58 covers 1.4 million acres in water depths and is located near ExxonMobil (XOM - Free Report) and Hess’ (HES - Free Report) Stabroek block in Guyana, South America’s newest oil giant. The field seems a unique, large-scale oil resource opportunity.
Maka Central-1 well, which was drilled using Noble Sam Croft drillship, encountered a geologic model bearing 73 metres (240 feet) of oil reservoirs and 50 metres (164 feet) of hydrocarbon-bearing light oil and gas condensate pay.
The drilling results proved to be pleasing for both companies as the well confirmed ample traces of hydrocarbon within its bounds, mirroring high potential for productive oil wells. This, in turn, consolidates Apache and TOTAL’s confidence in discovering significant resources beyond the Maka Central finding since the two control 1.4 million acres in the region.
Sam Croft will commence drilling the following well in Block 58 from the Sapakara West prospect onward. Sapakara West-1, located nearly 20 kilometers (12 miles) southeast of the Maka Central discovery, will examine oil-rich upper Cretaceous targets in the Campanian and Santonian intervals.
The TOTAL JV
With a view to explore and develop Block 58 offshore Suriname, last month, Apacheentered into a joint venture (JV) with French company TOTAL. Notably, both companies own 50% of the working interest in Block 58.
For Apache, this joint venture with TOTAL, which is one of the top five publicly traded global integrated oil and gas players, enormously enhanced its portfolio with the addition of the latter’s extensive offshore expertise and global footprint. In other words, the former sees the latter as an ideal partner for a block of such magnitude.
Importance of the Discovery
Apart from the obvious addition to its recoverable resources, the Maka Central-1 discovery adds greater value in light of the company’s struggles with the Alpine High find in West Texas.
Alpine High, touted as a game-changer for the company following its discovery in 2016, has seen natural gas production from the play lag expectations with extremely low prices of the commodity prevalent at the Waha hub in West Texas. In fact, Zacks Rank #3 (Hold) Apache was recently forced to reduce volumes from the play. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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