U.S. oil and gas producer Apache Corp said on Sunday it entered into a joint venture agreement with France’s Total S.A. to explore and develop an offshore block off Suriname.
Reuters reported that the deal gives Apache a cash injection for continued work in Suriname
Apache’s Suriname prospect, near the border with South America’s newest oil giant, Guyana, is a long-shot for the struggling U.S. oil and gas producer.
Earlier this month, Apache reported it had reached the target depth at its first and closely watched Suriname well. But the company said only that it would drill deeper, causing its shares to drop 17% over two days as investors took the news as a sign results would show the well had no commercial oil quantities.
Suriname draws attention because it just over the border from Exxon Mobil’s and Hess Corp.’s giant fields off the coast of Guyana.
Apache has largely pulled back internationally to focus on its much-hyped Alpine High field in a remote corner of the Permian Shale basin, the top U.S. shale formation.
However, Alpine High has been a disappointment, requiring enormous investment in pipeline infrastructure and delivering mostly natural gas at a time when prices are at a more than two-decade low.
Apache posted a $577 million loss in the first nine months this year compared with a $421 million profit in the same period a year earlier, as it pulled back at Alpine High due to low gas prices.
Under the deal, Apache and Total will each hold a 50% working interest in Block 58 in Suriname.
Apache said it will receive $5 billion of cash carry on its first $7.5 billion of appraisal and development capital along with other considerations, including reimbursement for 50% of its spending on block 58 so far.
Apache will operate the first three exploration wells in the block, including the Maka Central-1 well, and subsequently transfer operatorship to Total.