Yahoo Finance TOTAL (TOT) & Apache Discover More Oil in Offshore Suriname
TOTAL S.A. TOT and its joint venture partner Apache Corporation APA have made a second oil discovery at the Sapakara West-1 well in Block 58, offshore Suriname. Apache, the operator of the well, discovered 259 feet (79 meters) net pay of high-quality light oil and gas condensate in multiple stacked and good quality reservoirs.
In January 2020, the joint venture discovered 240 feet (73 metres) of oil reservoirs, and 164 feet (50 metres) of hydrocarbon-bearing light oil and gas condensate pay.
The next exploration well will be drilled on the Kwaskwasi prospect, with a fourth exploration well to be planned back-to-back on the Keskesi prospect. TOTAL will become operator of the Block 58 after the drilling of the fourth exploration well.
New Discovery Drives Prices
TOTAL’s shares gained 6% in intraday trading on Apr 2. A similar trend can be noticed for Apache Corporation, which registered an intraday gain of 16.67%. This new discovery in offshore Suriname comes at a time when global crude oil is struggling due to the sudden global economic downturn as a result of the COVID-19 outbreak and is therefore encouraging for these companies.
Pain of Choppy Oil Prices Prevails
Year to date, the price of crude oil has dropped 59.4%, which is adversely impacting the performance and operation of every oil and gas company. The weakness in oil prices is due to supply glut and weak global demand for crude oil owing to lockdown in most of the countries across the globe to fight coronavirus. On top of it, Saudi Arabia — the world’s top oil exporter — has plans to increase crude oil production to 12.3 million barrels per day in April. Additionally, Russia’s increase in oil output is not helping the oil prices.
Expectation of crude oil production cuts from Saudi Arabia and Russia after a tweet suggesting the same by the U.S. President raised hopes among oil and gas companies. However, Saudi Arabia and Russian governments are yet to make any official announcement regarding production cuts. Unless any formal announcement is made to lower production, oil and gas producers will have to sustain in this weak commodity price environment.
TOTAL lowered its 2020 capital expenditure guidance by nearly 20% to less than $15 billion from the prior expectation of $18 billion, after taking into consideration the ongoing decline in commodity prices. The ongoing volatility in the commodity price has forced oil and gas companies like Occidental Petroleum OXY, Devon Energy Corporation DVN and Murphy Oil Corporation to lower their 2020 capital expenditure twice in the recent past to preserve liquidity.
Zacks Rank
TOTAL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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TOTAL S.A. (TOT) : Free Stock Analysis Report
Apache Corporation (APA) : Free Stock Analysis Report
Murphy Oil Corporation (MUR) : Free Stock Analysis Report
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Occidental Petroleum Corporation (OXY) : Free Stock Analysis Report
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