Apache Corporation (APA - Free Report) and its joint venture partner TOTAL S.A. (TOT - Free Report) have made a second oil discovery at the Sapakara West-1 well in Block 58, offshore Suriname. Apache, the operator of the well, discovered 259 feet (79 meters) net pay of high-quality light oil and gas condensate in multiple stacked and good quality reservoirs.
In January 2020, the joint venture discovered oil reservoirs at a depth of 240 feet (73 metres) and a 164-feet (50 metres) deep hydrocarbon-bearing light oil and gas condensate pay.
The next exploration well will be drilled on the Kwaskwasi prospect with a fourth exploration well to be planned back to back on the Keskesi prospect. TOTAL will become the operator of Block 58 after the drilling of the fourth exploration well.
New Discovery Elevates Stock
Apache’s shares gained 14.71% in intraday trading on Apr 3. The drilling results pleased investors of both companies as the well confirmed ample traces of hydrocarbon within its bounds, mirroring high potential for productive oil wells. This, in turn, boosts Apache and TOTAL’s confidence in discovering significant amount of resources across the sprawling area of 1.4 million acres in the region that they control.
Apart from the obvious addition to its recoverable resources, this new discovery in offshore Suriname happens at a time when global crude oil is struggling with the sudden global economic downturn as a result of the COVID-19 outbreak and therefore comes as an encouraging news for the players in the same space.
Notably, Apache’s stock price appreciation perked up the energy space on Friday when crude rose past $30 per barrel. This upsurge followed the announcement of a meeting between OPEC and 11 non-OPEC countries, which will be held to discuss the ways to bring stability in oil prices by limiting oil productions.
Redesigns Strong Cost Savings
In an earlier release, Apache issued the latest data on cost reduction related to its prior-declared operational restructuring. This Houston, TX-based company is now looking forward to achieve an annualized G&A and LOE cost saving of more than $300 million, up from the actual target of $150 million. Nearly worth $225 million of the recognized savings is expected to be earned in 2020.
With its strategic capex cut, the Zacks Rank #3 (Hold) Apache joins the club of other exploration and production players including QEP Resources (QEP - Free Report) , Devon Energy Corporation and Murphy Oil Corporation (MUR - Free Report) . These industry participants intend to overcome the tough times while maintaining financial flexibility and operational excellence. Notably, solidifying the companies’ cash position at a time when oil prices look to yield zero profits to most producers is indeed a wise move. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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