Suriname could be on the path toward oil production growth with news Jan. 7 from Apache Corp. and partner Total SA of a significant oil discovery off the country’s coast.

Analysts say the duo has cracked the code offshore the South American country next to Guyana, where the Exxon Mobil Corp.-led consortium has made 15 discoveries with estimated recoverable resources exceeding 6 billion barrels of oil equivalent. The Apache-operated Maka Central-1 well offshore Suriname tested for the presence of hydrocarbons in multiple stacked targets in the upper Cretaceous-aged Campanian and Santonian intervals and hit both oil and gas condensate, according to a news release.

Results of the closely-watched wildcat lifted shares of Apache, which like its peers has been negatively impacted by low oil and gas prices, by more than 26% in midday trading to $32.49.

“The discovery news results in a ~$2.50/share increase in our valuation based on our estimate 500 MMboe gross resource potential,” analysts with CapitalOne Securities Inc. said in a note. “We were previously assigning ~$3/share of risked value for the Maka Central-1 prospect based on estimated 50% probability of success and 500 MMboe gross resource potential.”

The well is located offshore Suriname on the 1.4 million-acre Block 58, acreage near Exxon Mobil’s Haimara gas and condensate discovery well that was drilled to a depth of 5,575 m (18,289 ft). Using the Noble Sam Croft drillship, Apache said in December it had drilled to a depth of about 6,200 m and decided to conduct tests in two Upper Cretaceous play types before drilling to a targeted 6,900 m.

Putting market speculation to rest, the company revealed on Jan. 7 it encountered 50 m (164 ft) of net hydrocarbon-bearing reservoir in the shallower Campanian interval and 73 m (240 ft) in the deeper Santonian interval.

John J. Christmann, Apache’s CEO and president, said the results prove “significant potential” beyond the discovery at Maka Central for the block’s entire acreage.

“The [Maka Central] well proves a working hydrocarbon system in the first two play types within Block 58 and confirms our geologic model with oil and condensate in shallower zones and oil in deeper zones,” Christmann said in a statement. “Preliminary formation evaluation data indicates the potential for prolific oil wells. Additionally, the size of the stratigraphic feature, as defined by 3-D seismic imaging, suggests a substantial resource.”

Apache said it also targeted the Turonian, a geologic analog to oil discoveries offshore West Africa. However, overpressured, oil-bearing reservoirs in the lower Santonian prompted the company to stop short of the interval at 6,300 m (20,670 ft).

“The pressures encountered in the lower Santonian are a positive sign for the Turonian and future drilling will test this interval,” Apache said.

The company and partner Total have identified at least seven distinct play types and more than 50 prospects within the thermally mature play fairway, Christmann added in his statement.

Analysts with Tudor, Pickering, Holt & Co. said: “this discovery and the potential success of additional prospects could secure oil resource growth for years to come.”

Apache and Total entered into the joint venture agreement to explore and develop Block 58 offshore Suriname in late December.

Under the terms of the agreement, Apache and Total each hold a 50% working interest in Block 58. Apache will operate the first three exploration wells in the block, including the Maka Central-1 well, and subsequently transfer operatorship to Total.

Source: Total
Source: Total

“In partnership with Total, we look forward to advancing both exploration and development of discoveries on the block,” Christmann said.

Plans are to drill the Sapakara West prospect next. Apache said Sapakara, which is about 20 km (12 miles) southeast of Maka Central-1, will test oil-prone upper Cretaceous targets in the Campanian and Santonian intervals.

 

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