Hess Corporation, Exxon’s partner in the Stabroek Block, yesterday assigned a huge portion of its 2021 exploration and production budget to Guyana citing the attractive breakeven oil price here of between US$25 and US$35 per barrel.
According to a Business Wire release, of its 2021 Exploration & Production capital and exploratory budget of US$1.9 billion, more than 80% will be allocated to Guyana and the Bakken (Bakken is one of the newest, and most productive oil fields in Midwest United States). Of the dedicated 80%, 65% or US$1.230 billion has been earmarked for Hess Guyana’s development, exploration and appraisal exclusively. According to the release, Hess’s 2021 budget for Guyana will see allocation towards development of US$780 million or 41%, and US$450 million or 24% for exploration and appraisal of projects in Stabroek Block and other expenditures.
Hess’s distribution of the 41% includes US$25 million to the Liza Phase 1 development on the Stabroek Block in Guyana (Hess is a 30% shareholder), where production reached nameplate capacity of 120,000 gross barrels of oil per day in December 2020; US$450 million will be dedicated to the Liza Phase 2 development which is expected to have a capacity of up to 220,000 gross barrels of oil per day, with first production expected in early 2022. US$235 million has been projected for the Payara development which is rated to have a capacity of up to 220,000 gross barrels of oil per day, with first production expected in 2024 and US$70 million budgeted primarily for front end engineering and design work for future development phases on the Stabroek Block. Hess anticipates further exploration in the Stabroek Block, and has dedicated US$450 million to drill 12-15 exploration and appraisal wells on the Stabroek Block. Funds are also included for seismic acquisition and processing in Guyana.
Hess Corporation is one of the three major players in the Stabroek Block with 30% interest (Esso Exploration and Production Guyana Limited with 45% working interest and CNOOC with 25% interest being the other).
“Our capital program reflects our disciplined approach in the current oil price environment to preserve cash, core capabilities and the long term value of our assets,” CEO John Hess said. “The majority of our 2021 budget is allocated to Guyana, where our three sanctioned oil developments have a Brent breakeven oil price of between $25 and $35 per barrel. By investing only in high return, low cost opportunities, we have built a differentiated portfolio of assets that we believe will provide industry leading cash flow growth over the course of the decade”, Hess added.
Chief Operating Officer Greg Hill said: “Offshore Guyana, our focus in 2021 will be on advancing our next two sanctioned developments to first oil – Liza Phase 2 in early 2022 and Payara in 2024 – and on front end engineering and design work for future development phases on the Stabroek Block. We also will continue to invest in an active exploration and appraisal program, with 12-15 wells planned on the Stabroek Block.”
