(Energy Analytics Institute, 26.Feb.2021) — Apache Corporation provided an update in its annual 10-K report (thru year-end 2020) on its operations in Suriname in South America where it is active offshore on Block 58 with France’s Total S.A.
Highlights
In December 2019, Apache entered into a joint venture agreement with Total to explore and develop Block 58 offshore Suriname. Under the terms of the agreement, Apache and Total each hold a 50% working interest in Block 58, which comprises approximately 1.4 million gross acres in water depths ranging from less than 100 meters to more than 2,100 meters.
In connection with the agreement, Apache received $100mn upon closing in the fourth quarter of 2019 and $79mn upon satisfying certain closing conditions in the first quarter of 2020 for reimbursement of 50% of all costs incurred on Block 58 as of 31 December 2019. All proceeds were applied against the carrying value of the company’s Suriname properties and associated inventory. The company recognized a $19mn gain in the first quarter of 2020 associated with the transaction.
Apache will also receive various other forms of consideration, including $5bn of cash carry on Apache’s first $7.5bn of appraisal and development capital, 25% cash carry on all of Apache’s appraisal and development capital beyond the first $7.5bn, a $75mn cash payment upon achieving first oil production, and future contingent royalty payments from successful joint development projects.
Drilling Activities
Starting in late 2019 and throughout 2020, Apache drilled the first three wells in the block, the Maka Central-1, Sapakara West-1, and Kwaskwasi-1, all of which successfully tested for the presence of hydrocarbons in multiple stacked targets in the upper Cretaceous-aged Campanian and Santonian intervals, encountering both oil and gas condensate.
Details from the Sapakara West-1, Kwaskwasi-1 and Keskesi East-1 wells follow:
Sapakara West-1 (2nd Find On Block 58)
In April 2020, Apache announced a significant oil discovery at the Sapakara West-1 well drilled offshore Suriname on Block 58. Sapakara West-1 was drilled to a depth of approximately 6,300 meters (approximately 20,700 feet) and successfully tested for the presence of hydrocarbons in multiple stacked targets in the upper Cretaceous-aged Campanian and Santonian intervals. This follows the January 2020 announcement of a discovery at the Maka Central-1 well (first find on Block 58). During 2020, the company submitted a plan of appraisal for both of these discoveries.
Kwaskwasi-1 (3rd Find On Block 58)
In July 2020, Apache announced a major oil discovery at the Kwaskwasi-1 well drilled offshore Suriname on Block 58. Kwaskwasi-1 was drilled to a depth of approximately 6,645 meters (approximately 21,800 feet) and successfully tested for the presence of hydrocarbons in multiple stacked targets in the upper Cretaceous-aged Campanian and Santonian intervals. Fluid samples and test results indicate at least 278 meters (approximately 912 feet) of net oil and oil/gas condensate pay in two intervals. This was the third consecutive oil discovery offshore Suriname.
Keskesi East-1 (4th Find On Block 58)
In late 2020, the company commenced drilling a fourth exploration well in the block at the Keskesi prospect. In January 2021, Apache and Total S.A announced a discovery that confirmed oil in the eastern portion of the block. The Keskesi East-1 well is continuing to drill to deeper targets. Apache is transferring operatorship of Block 58 to its partner, Total S.A, which will conduct all exploration and appraisal activities subsequent to completion of drilling operations at Keskesi.
Note: Apache operated the drilling of the first four wells and subsequently transferred operatorship of Block 58 to Total on 1 January 2021.
In January 2021, Apache and Total announced the fourth consecutive discovery in Block 58 at Keskesi East-1, which confirmed oil in the eastern portion of the block. The Keskesi East-1 well is continuing to drill to deeper targets. Apache will continue to operate the Keskesi exploration well until completion of drilling operations.
____________________
By Ian Silverman. © Energy Analytics Institute (EAI). All Rights Reserved.
