Update on Offshore Exploration Drilling

23 August 2022

Staatsolie is committed to contribute to fundamental strengthening of the Surinamese economy. The development of the first offshore project in Suriname is estimated to contribute USD 10 billion in government income during the term of the project. This estimate is based on publicly available information and calculations by Staatsolie.

The operators of Block-58 (TotalEnergies) and Block-53 (APA Corporation, hereinafter APA) completed two exploration wells in the past week. See also the press release from APA on this: APA Corporation Announces First Discovery in Block 53 Offshore Suriname; Provides Update on Block 58 Operations | APA Corporation. Staatsolie provides the following update on this.

Results of the Dikkop-1 well
APA announced today that the exploration of the Dikkop-1 well in Block-58 has been completed. This well, unfortunately, encountered aquifers in the intended interval and has been closed. In this case, it is a dry well.

Staatsolie is convinced that the decision to develop the first offshore project will not be significantly influenced by this result as alternative developments have been initiated. Dikkop-1 was intended to increase the production level for development, expressed in barrels per day.

Unlike the first development in Guyana, due to the differences in geology, we will have to combine multiple reservoirs to arrive at the required commercial volumes for the first offshore project. Nevertheless, analyses by Staatsolie and its offshore partners show that there is certainly room for the development of several projects in this deep-sea area.

As mentioned earlier, the Sapakara discovery is a high-quality oil accumulation with world-class reservoir characteristics. Further assessment of Sapakara and the recently announced discovery of Krabdagu-1 are ongoing. Staatsolie is optimistic that a final decision for the development will be made by the Block-58 partners TotalEnergies and APA as soon as these assessment results are available. According to Staatsolie, the first development will probably come from the combination of Sapakara and Krabdagu.

While the exploration results in Block-58 have been particularly good so far, the result from Dikkop-1 highlights the risks and uncertainties of exploration drilling and also the complexity of the Suriname Basin. To date, 7 exploration wells have been drilled in Block-58, 5 of which have discovered significant hydrocarbon reservoirs requiring further assessment, starting with Maka-1 in 2020. This represents an exploration success rate of over 70%. From a global exploration perspective, this can be qualified as a world-class result.

Results of the Baja-1 put
Baja-1 was drilled to a depth of 5,290 meters and encountered a 34-meter net oil interval. Preliminary liquid and log analyses indicate light oil with a gas-to-oil ratio of 1,600 to 2,200 standard cubic feet per barrel, in a good quality reservoir. Evaluations of the well are ongoing.

Staatsolie is enthusiastic about the success of Baja-1, the first oil discovery in Block-53. A preliminary technical analysis indicates that the Baja discovery may be an extension of the same reservoir found in the Krabdagu well in Block-58. If confirmed through further research, it could be a huge addition to the Krabdagu reservoir. The discovery of Baja-1 also helps reduce the risks of similar exploration opportunities in the rest of Block-53, highlighting the potential of offshore Suriname, including outside of Block-58. In this regard, the exploration period of Block-53 has been extended to better explore the area.

There are currently 3 drilling platforms operational in the offshore area of Suriname. Two drilling platforms will be active in Block-58, which will conduct both exploration and assessment drilling. Also, in Block-42, Shell has recently started drilling an exploration well.

To conclude, Staatsolie’ s current contribution to government income is also shared. We contributed USD 132 million in 2020, USD 186 million in 2021 (an increase of 41%), and USD 259 million is forecasted for 2022 (an increase of 39%). This equates to an average of USD 22 million (SRD 450 million) per month in 2022. Our employees are highly motivated to achieve the production targets and thereby continue to contribute to the shareholder and the country. At the same time, Staatsolie is steadily working on the further development of the offshore oil and gas industry on the medium to longer term.