American energy company, Hess Corp, continues to tout the world-class potential of the oil reserves in Guyana and has acknowledged that the low cost of development could earn the company big profits.
Hess, in its March 2022 Investor Relations presentation, said with Guyana’s oil reserves in the Stabroek Block found in shallow producing horizons, drilling time and costs are nearly half of those in typical deepwater exploration.
It detailed that Guyana developments have a breakeven price of about US $25 to $35 per barrel. As the Guyana developments progress, Hess noted that it is “favourably positioned” with this low breakeven.
Simply put, a breakeven point is when a company’s costs equal its income and as such, the company is neither recording a profit nor loss. And a low breakeven point means that the business will start making a profit sooner.
Referencing data from Wood Mackenzie, a global consultancy group, Hess emphasised that Guyana is positioned to record one of the highest growth rates globally but with a low carbon intensity.
And Hess said, “Multi phases of low-cost Guyana oil developments (are expected) to drive industry-leading cash flow growth and financial returns.”
Hess has a 30 per cent interest in Guyana’s prolific Stabroek Block; ExxonMobil is the operator at this block and has been producing oil here since 2019. And the company boasted that production here could increase significantly in the coming years.
Earlier this year, Hess announced plans for big spending on oil exploration and production in Guyana and the US Bakken shale basin.
Hess expects to spend US $2.6 billion on exploration and production in 2022, of which about 80% will be allocated to Guyana and the Bakken, compared with US $1.9 billion last year.
Meanwhile, looking ahead, Hess outlined that production at the Liza Phase 2 production should intensify while works at the Payara development should be executed soon. Production at Liza Phase 2 commenced earlier this year; startup production at Payara is pinned in 2024.
The company is hoping to sanction Yellowtail as a fourth development; once approved by local authorities, Yellowtail is set to be the fourth development field offshore Guyana, with production commencing in 2025.
Much like Hess, Chief Executive Officer (CEO) and Chairman of ExxonMobil Darren Woods touted the potential of Guyana during a recent visit.
Putting Guyana’s discoveries into context, Woods highlighted: “…since 2015, more than 11 per cent of the conventional oil discovered in the world has been found right here in Guyana.”
And this, the Chairman said, is only the beginning for Guyana.
With current estimates, the Stabroek block contains the equivalent of more than 10 billion oil-equivalent barrels – a substantial amount with further exploration still ongoing.
