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TICKERS: APA, TOT

Apache and Total Form $5 Billion Joint Venture to Drill off Suriname Coast

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Shares of Apache Corp. traded 16% higher today after the company reported that it has formed a joint venture with Total SA of France to explore and develop Block 58 offshore Suriname.

Late yesterday evening, oil and gas exploration and production company Apache Corp. (APA:NYSE) and producer and marketer of fuels, natural gas and low-carbon electricity Total S.A. (TOT:NYSE), announced that they have established a 50-50 joint venture (JV) agreement to explore and develop Block 58 offshore Suriname.

The firms outlined the terms of the agreement indicating that Apache and Total will each own a 50% working interest in Block 58. The report advised that this area is composed of approximately 1,400,000 acres in water depths that range from below 100 meters to over 2,100 meters. "Apache will operate the first three exploration wells in the block, including the Maka Central-1 well, and subsequently transfer operatorship to Total."

The JV agreement provides that "Apache will receive various forms of consideration, including: $5 billion of cash carry on Apache's first $7.5 billion of appraisal and development capital; 25% cash carry on all of Apache's appraisal and development capital beyond the first $7.5 billion; various cash payments in conjunction with closing of the joint venture agreement and future production from joint development projects; and reimbursement of 50% of all costs incurred to date in Block 58."

Both firms advised that the transaction is expected to close within three days and they have already received all of the necessary approvals from the governmental authorities in Suriname to proceed.

Apache's CEO and President John J. Christmann commented, "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...Upon meeting certain drilling commitments, the partnership has the rights to explore the entire block through mid-2026 without acreage relinquishments. This provides for a thorough evaluation of the multiple play types we have identified in this emerging oil-prone basin."

Patrick Pouyanné, chairman and CEO of Total, added, "We are very pleased to team up with Apache and Staatsolie, and to become operator of this promising license where we will bring our deepwater expertise. It is indeed a unique exploration opportunity in a prolific basin."

Regarding the status of the initial exploration findings Apache CEO Christmann added, "Apache and Total are encouraged by the preliminary information and test results from the two upper Cretaceous play types encountered thus far...Deepening and testing operations continue at Maka Central-1. Following the completion of these activities, the rig will be moving to the next location. When the companies are prepared to fully characterize results of Maka Central-1, additional information will be provided."

Total SA is an oil and gas company headquartered in Paris, France. The firm has a market cap of over $140 billion, employs over 100,000 people and has active operations in more than 130 countries. Total is a major energy player that produces and markets fuels, natural gas and low-carbon electricity.

Apache Corp. is an oil and gas exploration and production company based in Houston, Texas. The company explores for, develops and produces natural gas, crude oil and natural gas liquids. The company currently operates in the U.S., Egypt and the U.K. The company states that its mission is "to grow in an innovative, safe, environmentally responsible and profitable manner for the long-term benefit of our stakeholders."

Apache has a market capitalization of about $8.5 billion with approximately 376 million shares outstanding and a short interest of around 5.9%. APA shares today at $24.08 (+$1.46, +6.45%) compared to Friday's closing price of $22.62. The stock has traded today between $23.95 and $26.73/share and currently is trading at $26.59 (+$3.97, +17.55%).

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