Oil producer Apache Corp and its joint venture partner Total SA said on Thursday that they made their second significant oil discovery of the year in a closely watched area off the coast of South America's Suriname.
Shares of Apache were trading more than 12% higher after surging nearly 21% at market open, on a day when oil stocks were generally stronger due to a recovery in global crude prices.
The discovery comes at a time when shale oil producers in North America are grappling with the worst oil price shock in decades, which has led several companies, including Apache, to cut spending for the year and slash dividends.
The conventional plays offshore Suriname are especially significant for Apache as it follows the US oil and gas producer's failed bet in the Alpine High region of the Permian basin, which has suffered from diving natural gas prices.
Apache's second major find was made at the Sapakara West-1 well drilled offshore Suriname on Block 58, which comprises 1.4 million acres, the companies said on Thursday, adding that the third and fourth exploration well locations in the block have been identified.
The well was drilled by a water depth of about 1,000 meters and encountered 79 meters net pay of high-quality volatile oil and condensate.
"We believe that, while still in the very early stages of exploration, the results from the Sapakara well further demonstrate what we believe to be the enormous potential of Apache's offshore Suriname position," SunTrust Robinson Humphrey analyst Neal Dingmann said in a note.
Apache's initial discovery in Suriname was dubbed "among the most anticipated in the world" by one brokerage and was just over the border from Exxon Mobil-led discoveries off Guyana that are estimated to hold more than 8 billion barrels of oil.
Houston, Texas-based Apache last month unveiled deep cuts to its exploration budget, pledging to stop all drilling in the Permian basin and to scale back some international operations, in a bid to remain profitable despite the low oil prices.
Dingmann added that the sector and particularly US shale continue to face unprecedented headwinds but Apache's exploration upside and diversified price exposure puts the company in a relatively favorable position, compared with pure US onshore peers.