Houstons Apache Corp. is seemingly at a crossroads with the abrupt departure of its exploration chief, mounting financial losses, declining activity in its prized Alpine High discovery in West Texas, and future hopes pegged to striking it big offshore of the small South American nation of Suriname.

Just last week, Steve Keenan, Apaches head of worldwide exploration, left the company, triggering a nearly 10 percent drop in the companys stock price. On Wednesday, Apache reported a larger-than-expected $170 million loss for the third quarter. Since the beginning of September 2018, Apaches stock has plunged by 55 percent.

Apache, meanwhile, is hoping to replicate Exxon Mobils success in finding oil off the coast of Guyana with its offshore holdings in neighboring Suriname. Apache is quick to point out that it is drilling just seven miles from the Guyana maritime border. Apache should have the results of its first test well by the end of November.

Apache needs a key asset for growth that they can lean on for the long term, and Suriname has the most potential, said Scott Hanold, an energy analyst with RBC Capital Capital Markets. The company had put a lot of weight on the Alpine High to create value, and it doesnt seem to have materialized.

Wall Streets reaction to Keenans sudden departure was driven by the fear that his exit portended ominous news for the Suriname results. Apache declined to say why Keenan left, but insisted it wasnt related to Suriname. The first test well is still being drilled and the results wont be known for a few more weeks at the earliest, Apache said Wednesday.

Apaches quarterly loss compares to an $81 million profit in the same quarter last year. Apache has now reported losses in four consecutive quarters, totaling nearly $1 billion.

Job cuts

Apache said it is cutting an undisclosed number of jobs and further centralizing its organization to save an extra $150 million per year. In addition, Apache plans to cut its 2020 capital spending by up to 20 percent a cutback of as little as $250 million to as much as $500 million. Apache could provide more details in its earnings call Thursday morning.

Despite slashing spending, Apache noted that its production is rising. Out of an average of 391,000 barrels of oil equivalent produced each day, 254,000 barrels come just from the Permian Basin in West Texas and New Mexico. Thats 65 percent of its total production. Alpine High accounts for 30 percent of the Permian output.

Apache, however, said it will cut back on its drilling activity in the Alpine High play to two rigs from five. Considered arguably the energy sectors biggest discovery of 2016, Alpine High essentially has proven more natural gas-heavy with less oil than previously believed. While crude oil prices are modest at best, natural gas prices are much lower. In the Permian, crude oil is prized above all.

The outlook for natural gas is just not going to support the expenditures in Alpine High, said Michael Scialla, an energy analyst with the Stifel investment banking firm But I do still think it has some long-term potential.

As for Keenan, he was poached in 2014 by Apaches previous CEO from Houston rival EOG Resources before oil prices went bust beginning in late 2014. He had played a key role in EOGs pioneering success in South Texas Eagle Ford shale.

Switching gears

Keenan was charged with finding Apaches next big discovery and he seemingly did just that with Alpine High.

The companys attention is now focused on Suriname, where two more test wells are planned. Keenan could prove less necessary to the success of the project as Apache aims to switch gears from exploration mode to development, Hanold said.

Apache is sort of pivoting from the science to the operations, he said.

jordan.blum@chron.com

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Apache at crossroads as it pins hopes on Suriname offshore field - Houston Chronicle