Investors who had risked much on Apache Corporation (NYSE: APA), holding out hope for a major payday in Suriname were disappointed on Monday as the company’s stock tumbled 13% to hit $19.36 per share.
Just one month ago, Apache’s share price was above $24.
Investors were banking on the risky yet plausible notion that Apache might score bigtime with its drilling prospects offshore Suriname; after all, its larger rival, Exxon, struck oil several times over right across the border in Guyana with its luscious Stabroek discoveries.
Apache announced on Monday, however, that it had indeed reached its targeted well depth—and that it is planning on drilling a bit further, which most are interpreting as a bad sign, in conjunction with what Apache didn’t say: that it had struck significant hydrocarbons.
The Maka Central – 1 well that Apache had planned to drill offshore Suriname was supposed to reach 6,200 meters. It did. But now, Apache will continue testing in two distinct Upper Cretaceous play types, and then after completion of these tests, Apache will set casing, modify the rig, and then commence drilling sometime later this month to evaluate a third play type in the Cretaceous, Apache said in today’s release.
Apache is planning to hit 6,900 meters as a new depth.
Today’s news follows several disappointing developments from Apache, the most recent of which were its forecasts to slash upstream capital spending in 2020 to a level 10-20 percent below its 2019 budget of $2.4 billion. Its Alpine High discovery also failed to dazzle thanks to ultra low gas prices. And its Q3 losses came in at $108 million.
Still, Apache’s financial position should be better in 2020 as it cuts costs and focuses more on oil rather than gas as it wisely shifts away from Alpine High.
By Julianne Geiger for Oilprice.com
