Oil explorer Apache reports mixed results off South America

Nov 17 Reuters -- APA Corp, the parent company of oil and gas producer Apache, reported mixed results from drilling off the coast of Suriname, with one new well showing as much as 375 million barrels of oil while a second was set to be abandoned.

Exploration off Suriname is closely watched as it is close to the border from massive oil discoveries by Exxon Mobil consortium, that includes Hess Corp and China National Offshore Oil Corp, and is estimated to hold more than 10 billion barrels of oil equivalent.

After a failed bet in the Alpine High region of the Permian basin, Apache had been pinning its hopes on the discovery of Suriname.

A single reservoir in Sapakara South-1 is expected to yield 325 million to 375 million barrels of oil, APA said, adding that it would plug and abandon the Bonboni 1 well in the northern part of Block 58, as it did not make sense to commercially develop the area.

APA holds a 50% interest in the block, while French energy major TotalEnergies holds the remaining.

The flow test, very positive Annand Jagesar, a managing director at the Suriname state oil company Staatsolie, told a local radio station that the results set the basis for offshore development.

It means that we can have a production platform with Sapakara as base. It means that we can get back to that old timeline where we have the first production in 2025. The results come at a time when global crude prices have gained 60% since 2020 end, rising to multi-year highs, as nations ease COVID 19 restrictions and economies rebound from the pandemic.

The flow test results are expected to give investors more confidence in what a broad-scale development could look like, according to the analysts of Truist Securities.

APA shares were down 3.54% at $28.59.