Shares of American energy production company Apache Corp. (APA) - Get Report jumped more than 15% Monday after the company announced a 50-50 joint venture with France’s Total S.A (TOT) - Get Report to explore and develop an offshore drilling site in Suriname, a northeastern South American.
The two companies will explore Block 58, which consists of approximately 1.4 million acres in water depths ranging from less than 100 meters to more than 2,100 meters.
In addition to the 50% working interest, Apache will also receive $5 billion of cash carry on the company’s first $7.5 billion of appraisal and development capital and a 25% cash carry on all Apache appraisals that top the $7.5 billion threshold.
“Suriname Block 58 presents a unique, large-scale oil resource opportunity, and we are very pleased to welcome Total to our existing partnership with Staatsolie, the national oil company of Suriname. Total’s extensive offshore operational experience and global footprint make it an ideal partner for a block of this size and potential,” said Apache CEO and President John J. Christmann in a statement.
The partnership has the rights to explore the entire 1.4 million acres through mid-2026 withought acreage relinquishments, according to the terms of the deal, as the two company’s say that they are “encouraged by the preliminary information and test results from the two upper Cretaceous play types encountered thus far.”
“We are very pleased to team up with Apache and Staatsolie, and to become operator of this promising license where we will bring our deep water expertise. It is indeed a unique exploration opportunity in a prolific basin,” said Total CEO Patrick Pouyanné.
Total S.A. shares were climbing 0.84%, while Apache shares jumped 15% $26.10.