* Deal will give cash boost for Apache
* Total to pay initial bonus of $100 mln (Adds stock market reaction, analyst comments)
By Jessica Resnick-Ault and Maria Ponnezhath
Dec 23 (Reuters) - Apache Corporation and French rival Total have formed a joint venture to develop a project off Suriname, the companies said, in a deal that gives the U.S. oil and gas producer a cash injection.
Apache's Suriname offshore prospect, near the border with South America's newest oil giant, Guyana, is a long-shot for the U.S. company, with the Total agreement providing financing to continue exploration.
Apache reported this month it had reached its target depth at its first Suriname well but said only that it would drill deeper, knocking 17% of its shares in two days as investors took the news as a sign the well had no commercially viable oil.
Apache shares rose about 10% to $24.88 in early trading on Monday on news of the agreement. The stock is off about 5% year to date, below the 28% gain in the S&P 500 index of major U.S. stocks.
Exploration off Suriname is being watched closely as it is just over the border from Exxon Mobil's and Hess Corp.'s giant fields off the coast of Guyana. Total has non-operating interests in two Guyana projects.
Total said it would give Apache a bonus of $100 million when the deal closes, reimburse half of Apache's costs to date for its first three exploration wells, and could pay more depending on further developments.
Apache said it would receive $5 billion of cash carry on its first $7.5 billion of appraisal and development capital along with other considerations. Total eventually would become the operator of the wells.
The deal reduces Apache's risk if the wells prove uneconomic, according to researchers at Cowen & Co, but "significantly reduces upside value potential."
The U.S. oil producer has largely pulled back internationally to focus on its much-hyped Alpine High field in a remote corner of the Permian Shale basin, the top U.S. shale formation.
However, Alpine High has been a disappointment, requiring enormous investment in pipeline infrastructure and delivering mostly natural gas at a time when prices are their lowest in more than two decades.
Apache posted a $577 million loss in the first nine months of this year as it pulled back at Alpine High.
Under the Suriname deal, Apache and Total will each hold a 50% working interest in Block 58.
Apache will operate the first three exploration wells in the block, including the Maka Central-1 well, and subsequently transfer operations to Total. (Reporting by Maria Ponnezhath and Jessica Resnick-Ault; Additional reporting by Gary McWilliams in Houston and Sudip Kar-Gupta in Paris; Editing by David Clarke and Steve Orlofsky)