Guyana’s oil reserves and investment potential were yesterday boosted by the Hess Corporation announcement that appraisal of the Yellowtail well and 13th discovery in the offshore Stabroek Block it shares with ExxonMobil and China National Offshore Oil Corporation (CNOOC) has yielded two additional reservoirs.
“The Stena Carron rig recently completed appraisal drilling at Yellowtail-2, located 1 mile southeast of Yellowtail-1. The well identified two additional high quality reservoirs, one adjacent to, and the other below the Yellowtail Field, further demonstrating the world class quality of this basin,” the company yesterday announced at its Second Quarter Earnings Call .
“This additional resource is currently being evaluated and will help form the basis for a potential future development,” it added. The Stabroek Block discoveries so far have been rated at nine billion barrels of oil equivalent.
The company informed that the Noble Don Taylor commenced drilling of the Redtail exploration well, which is 1.25 miles northwest of Yellowtail-1, this month. The other two drillships, the Noble Bob Douglas and the Noble Tom Madden, are currently drilling and completing Liza Phase 1 and Phase 2 development wells.
Chief Executive Officer of the company, John Hess, said that with multiple phases of low-cost oil developments in Guyana, the company is “well positioned to deliver industry-leading cash flow growth and increasing financial returns in the years ahead.”
Hess reiterated Guyana’s Environmental Protection Agency Director Vincent Adams’ announcement last week, that production at the Liza-1 well will be ramped up to its maximum 120,000 barrels per day next month.
“The operator, Esso Exploration and Production Guyana Limited, is currently commissioning water injection equipment and bringing natural gas injection fully online that should enable the Liza Destiny floating production, offloading, and storage vessel [FPSO] to reach its capacity of 120,000 gross bopd [barrels of oil per day] in August,” he said.
And as a result of COVID-19 related travel restrictions here, according to Hess, ExxonMobil had taken the decision to “temporarily idle two drillships”, but both had resumed drilling operations by the end of the second quarter.
COVID-19 also impacted the company’s financials, but revenue received from crude sales were cushioned because of the company’s hedging strategy. Hess had told the Fireside Chat at the JP Morgan 2020 Energy, Power, and Renewables Conference that that it had hedged more than 80 per cent of its oil for 2020.
“The Corporation’s average realized crude oil selling price, excluding the effect of hedging, was $20.63 per barrel in the second quarter of 2020, compared with $61.37 per barrel in the prior-year quarter, reflecting a decrease in benchmark oil prices and widening of crude differentials realized as a result of reduced demand caused by the global coronavirus (COVID-19) pandemic. In addition, a higher proportion of Bakken and Guyana production was sold in April and May which had lower prices than the month of June,” Hess said.
“Realized gains from crude oil hedging activities improved after-tax results by $228 million in the second quarter of 2020 and reduced after-tax results by $14 million in the second quarter of 2019. Including hedging, the Corporation’s average realized crude oil selling price was $39.03 per barrel in the second quarter of 2020, compared with $60.45 per barrel in the year-ago quarter.”
Guyana had received about US$35 per barrel of its crude when it sold its second of the five lifts of one million barrels of oil that it is entitled to this year.
Department of Energy Director Dr Mark Bynoe had told this newspaper that Guyana decided that it would not hedge its 2020 five lifts of oil, but sell at current day Brent prices until it gets a substantive crude oil marketer to advise on future lifts.
“… the depression in oil prices will impact Guyana’s revenue since Guyana did not hedge but used a dated Brent approach. However, no one knows what this impact will be, but we continue to monitor the situation,” Bynoe had said in April.
Next week this country is expecting its third one-million-barrels-of-oil lift.
