PARTNERS IN PETRO
French oil major Total launches joint venture in Apache’s offshore project in Suriname.
French oil major Total is entering a joint venture with the Houston exploration and production company Apache Corp. to develop an offshore oil field off the coast of the South American nation Suriname.
Each company will control 50 percent of the venture. Under the deal, Apache will serve as the initial operator. After the first three wells are complete, Total will take over as operator. Total agreed to pay its share of the past costs of the project as well as a $100 million bonus to Apache.
The Total-Apache joint venture aims to develop a 1.4 million-acre offshore lease known as Block 58 with water depths ranging from 300 to nearly 6,900 feet. Already approved by Suriname regulators, the deal is expected to close before the end of the year.
The deal provided a muchneeded boost to Apache after the company reported vague results from its Suriname test well and said it would keep drilling. That development disappointed investors who hoped for more positive results from the highly anticipated offshore prospect in the tiny nation on the northeast coast of South America.
Apache’s stock fell by more than 14 percent after the Dec. 2 announcement, ultimately closing down about 12 percent.
That disappointing report followed the abrupt departure of Apache’s exploration chief in October, financial losses and declining activity in its heavilytouted Alpine High discovery in West Texas. Apache said it lost $170 million in the third quarter, following a $360 million loss in the second.
White knight
The joint venture with Total sent Apache’s stock soaring. Apache shares gained more than 17 percent in trading last Monday, when the deal was announced.
Total, headquartered in Paris, has come into deals to provide a boost to Houston oil and gas companies. Total’s agreement to pay nearly $9 billion to buy the Africa assets to what was then Anadarko Petroleum helped Occidental Petroleum to outmaneuver the California oil major Chevron and acquire The Woodlands company.
The deal between Total and Apache came just three days after Exxon Mobil announced it had started commercial production in the Liza offshore field in the neighboring nation of Guyana. Hoping to replicate Exxon Mobil’s success, Apache is quick to point out that it is drilling just seven miles from the maritime border between Suriname and Guyana.
Apache’s Block 58 project has already spent four years in development. The Houston company signed a production sharing contract with Suriname’s national oil company Staatsolie for the offshore lease in June 2015. The joint venture with Total brings in the French oil major into the project without a penalty for Apache.
“Total’s extensive offshore operational experience and global footprint make it an ideal partner for a block of this size and potential,” Apache CEO John Christmann said in a statement. “Upon meeting certain drilling commitments, the partnership has the rights to explore the entire block through mid-2026 without acreage relinquishments. This provides for a thorough evaluation of the multiple play types we have identified in this emerging oil-prone basin.”