APA stock rose higher in pre-market trading on July 30, 2020, after the company received an analyst upgrade.
Stifel analyst Michael Scialla upgraded Apache to Buy from Hold with a price target of $18, up from $13. Apache’s third discovery in Suriname had the greatest net pay and highest quality reservoir of the three, noted Scialla, who contends “Suriname is emerging as world-class resource with company-making potential.” He believes momentum there could provide management with options to improve the balance sheet, the analyst added.
On July 29, 2020, Altus Midstream Company (Nasdaq: ALTM) announced its second-quarter 2020 results. Apache reported Q2 adjusted EPS of (74c) versus the consensus estimate of ($1.01). The company reported Q2 revenue of $752M versus the consensus estimate of $706.25M.
CEO John Christmann IV said, “Our continued success in Suriname, along with the steps we’ve taken to streamline our organization and further strengthen our financial position, prepare us well for the long term. Apache has achieved more than $300M of combined, annualized LOE and overhead savings – doubling our original target – and delivered on our activity and capital reduction goal. These actions have lowered our free cash flow breakeven oil price to around $30 per barrel for the second half of 2020.”
On July 29, 2020, Apache Corporation (Nasdaq: APA) and Total S.A. (NYSE: TOT) announced a major oil discovery at the Kwaskwasi-1 well drilled offshore Suriname in Block 58. The well was drilled using the Noble Sam Croft with Apache as operator holding a 50% working interest and Total holding a 50% working interest.
Kwaskwasi-1 was drilled to a depth of approximately 6,645 meters (21,800 feet) and successfully tested for the presence of hydrocarbons in multiple stacked targets in the upper Cretaceous-aged Campanian and Santonian intervals.
Preliminary fluid samples and test results indicate at least 278 meters (912 feet) of net oil and volatile oil / gas condensate pay in two intervals. The shallower Campanian interval contains 63 meters (207 feet) of net oil pay and 86 meters (282 feet) of net volatile oil / gas condensate pay. Based on samples taken, the API oil gravities are between 34 and 43 degrees. The deeper Santonian interval contains 129 meters (423 feet) of net hydrocarbon reservoir. The team is still collecting data on API oil gravities in the Santonian.
“We are thrilled with the results from the Kwaskwasi-1 exploration well. This is the best well we’ve drilled in the basin to date, with the highest net pay in the best quality reservoirs,” said John J. Christmann, Apache CEO and President. “While we have a lot more work to do, a discovery of this quality and magnitude merits a pace of evaluation that enables the option of accelerated first production.”
Block 58 comprises 1.4 million acres and offers significant potential beyond the discoveries at Kwaskwasi, Sapakara West and Maka Central. Apache has identified at least seven distinct play types and more than 50 prospects within the thermally mature play fairway.
Upon completion of operations at Kwaskwasi-1, the Sam Croft will move to the fourth prospect in Block 58, Keskesi, which is located approximately 14 kilometers (9 miles) southeast of Sapakara West-1. The Keskesi exploration well will test oil-prone upper Cretaceous targets in the Campanian and Santonian.
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