PARAMARIBO - APA Corporation (NASDAQ: APA) and TotalEnergies (EPA:TTEF) EP Suriname B.V. have reached a final investment decision for the development of a major offshore oil project in Suriname's Block 58, with an estimated investment of $10.5 billion and a production start slated for 2028. The joint venture, which includes APA's subsidiary and TotalEnergies as the block operator, each holding a 50% interest, plans to tap into the Krabdagu and Sapakara fields, with Staatsolie, the national oil company of Suriname, having an option to acquire up to a 20% interest.
The project, named GranMorgu, is expected to produce over 750 million barrels of oil, with the production facilitated by a Floating Production, Storage and Offloading (FPSO) unit capable of handling 220,000 barrels per day. The FPSO will be situated approximately 93 miles off the Suriname coast and is designed to integrate new technologies aimed at minimizing greenhouse gas emissions. Notably, the FPSO will feature an all-electric configuration with zero routine flaring, full reinjection of associated gas, optimized power usage with a waste heat recovery unit, deep-sea water cooling, and an advanced methane detection and monitoring system.
APA's CEO, John J. Christmann IV, emphasized the significance of the project for stakeholders, including Suriname's citizens, the joint venture, and APA shareholders. He recognized the contributions of TotalEnergies and Staatsolie in reaching the investment decision. The development of Block 58 marks APA's continued commitment to the region since entering the basin in 2012 and expanding its position with the acquisition of Block 58 in 2015.
In addition to the Phase-1 Central Area Field Development, the partnership retains the option for further exploration within Block 58, allowing for a comprehensive assessment of the block's remaining potential.
This news is based on a press release statement from APA Corporation. The company, with subsidiaries involved in oil and gas exploration and production in various regions, including the United States, Egypt, the United Kingdom, and offshore Suriname, regularly updates stakeholders through its website. The forward-looking statements included in the press release involve risks and uncertainties that could affect actual results and are subject to change. Investors are advised to consider the disclosures made by APA in its regulatory filings.
In other recent news, TotalEnergies and APA Corp have committed to a $10 billion investment in Suriname's oil and gas project, Block 58, marking the start of offshore production for the nation. APA Corp has also extended its multi-year deal with Palantir Technologies (NYSE:PLTR) for the integration of artificial intelligence capabilities into its operations.
Simultaneously, Thermon Group Holdings (NYSE:THR) announced key leadership changes with Jan L. Schott (ETR:1SXP) and Greg Lucas stepping into the roles of Senior Vice President and Chief Financial Officer, and Vice President and Chief Accounting Officer, respectively. Diamondback (NASDAQ:FANG) Energy and Kinetik Holdings have also increased their equity interest in EPIC Crude Holdings to 27.5% each, expected to enhance the company's growth and financial stability.
APA Corporation recently announced a dividend of 25 cents per share and sold non-core assets in the Permian Basin for $950 million, a move that analysts from TD Cowen, Truist Securities, and Scotiabank have reacted positively to. These are among the latest developments in the energy sector, reflecting a dynamic and evolving industry landscape.
InvestingPro Insights
As APA Corporation moves forward with its significant $10.5 billion offshore oil project in Suriname, investors may find additional context from recent financial data and analyst insights valuable.
According to InvestingPro data, APA's market capitalization stands at $9.05 billion, suggesting that the Suriname project represents a substantial investment relative to the company's current market value. The company's P/E ratio of 2.7 indicates that the market is pricing APA's shares at a relatively low multiple of its earnings, which could be attractive to value-oriented investors.
An InvestingPro Tip notes that APA has maintained dividend payments for 54 consecutive years, showcasing a long-term commitment to shareholder returns. This track record of consistent dividends aligns with the company's focus on creating value for shareholders, as mentioned by CEO John J. Christmann IV in the context of the Suriname project.
Another relevant InvestingPro Tip highlights that analysts predict the company will be profitable this year. This projection, combined with the company's profitability over the last twelve months, suggests that APA is in a strong financial position to undertake the substantial investment in the GranMorgu project.
The company's revenue for the last twelve months as of Q2 2024 was $8.908 billion, with a robust gross profit margin of 71.39%. These figures indicate APA's ability to generate significant cash flows, which could be crucial for funding the long-term Suriname development.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and metrics beyond those mentioned here. The platform currently lists more than 10 additional tips for APA, providing a deeper dive into the company's financial health and market position.
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