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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