What happened
Shares of Apache (APA -1.03%) had surged more than 19% by 10:00 a.m. EST on Tuesday. Fueling the energy stock was news that it had made a "significant" oil discovery offshore Suriname.
So what
Last month, Apache issued a disappointing operational update on the Maka Central-1 well offshore Suriname. While the company didn't state that it had drilled a dry hole, it planned to continue drilling deeper and conduct more tests, which led investors to believe that it hadn't found commercial hydrocarbons.
Image source: Getty Images.
However, Apache and its partner, French oil giant Total (TTE -0.21%), announced today that they could confirm a significant oil discovery at the Maka Central-1 well. After conducting additional tests, the partners encountered a 240-foot-thick oil reservoir as well as a 164-foot column of light oil and gas condensate.
Apache CEO John Christmann commented on the find by saying the company is "very pleased with the result from Maka Central-1." He noted that the "well proves a working hydrocarbon system," which "indicates the potential for prolific oil wells." Because of that, Apache and Total believe they have significant resource potential beyond the Maka Central discovery since they control 1.4 million acres in the region.
Now what
Apache has disappointed investors in recent years, as its Alpine High play in the Permian Basin hasn't panned out as well as it expected. Investors initially feared the same with offshore Suriname. Instead, it now appears as if the company has a major oil discovery on its hands. That could be a big-time growth driver in the coming years as Apache works with Total to develop Maka Central and other future potential finds in the area.
