ExxonMobil yesterday announced an increase in third quarter earnings in the amount of US$7.4 billion, its highest for the period since 2017, and signaled plans for more investments in Guyana’s offshore Stabroek Block.
While the company’s capital spending has been strategically constrained this year, coming in at the lower end of the $16 billion to $19 billion range, it has estimated that next year the sum would be increased with investments in its Guyana projects, seen as one of its soundest investments.
“We are expecting higher capex in the fourth quarter and a significant increase as we head into 2022. What underpins that is further investments in Guyana, focused on Payara, Yellowtail apprai-sals,” Kathryn Mikells, Senior Vice President and Chief Financial Officer said during the company’s third quarter earnings call.
The company’s net earnings for the quarter was US6.75 billion.
In response to Bank of America analyst Doug Leggate on the company’s foresight on appropriate capital structure, dividend policy and dividend metrics like, coverage for the company, Mikells said that the company has to invest in the “advantaged” projects that it has, “that [are] on very strong returns and that’s from Guyana to things like biofuels and the Strathcona project.”
Not many details were given on the direct Guyana operations but the company emphasized that pro-gress continues on the high-return deep water project.
In a release, the company said oil-equivalent production in the third quarter was 3.7 million barrels per day, while excluding entitlement effects, divestments, and government mandates, oil-equivalent production increased 4% versus the prior-year quarter, including growth in the Permian and Guyana.
With more than 20 total significant discoveries date within the Stabroek Block, the company this month increased its estimate of the discovered recoverable resource to approximately 10 billion oil-equivalent barrels.
The increased estimate followed a new discovery at the Cataback-1 well. “This discovery adds to the resource in the Turbot/ Tripletail area, enhancing the development project potential,” Mike Cousins, senior vice president of exploration and new ventures at ExxonMobil had said after the discovery was announced. “Our proprietary technologies, global exploration experience and drilling capabilities continue to yield positive results in the Stabroek Block, which will generate additional value for Guyana”, a statement from the company quoted him as saying.
ExxonMobil’s recent discoveries and ongoing projects continue to contribute to the advancement of the Guyanese economy, with more than 2,850 Guyanese now directly supporting the company’s project activities, the statement said. ExxonMobil and its key contractors have spent over US$480 million with more than 800 Guyanese vendors since 2015, according to the statement.
On the same day of the announcement, Minister of Natural Resources, Vickram Bharrat, in a statement said that Guyana currently has the third highest oil reserves in the Latin America and Caribbean Region.
He said that in transforming the hydrocarbons sector, the Ministry of Natural Resources and the Government of Guyana (GoG) remain committed to enhancing the exploration and development of Guyana’s oil and gas resources.
This week the Liza Unity- a second floating production, storage and offloading (FPSO) vessel – arrived in the Stabroek Block offshore area and is expected to commence start up works in the first quarter of next year on the Liza Phase 2 development.
The Liza Phase 2 development will produce up to 220,000 barrels of oil per day from the Liza Unity FPSO, which will be supported by a total of six drill centres and approximately 30 wells. The company has said that this includes 15 production wells, nine water injection wells and six gas injection wells. Phase 2 will develop approximately 600 million barrels of oil, with a capex price tag of US$6 billion, including a lease capitalization cost of approximately US$1.6 billion, for the Liza Unity.
The Stabroek Block is 6.6 million acres (26,800 square kilometers). ExxonMobil affiliate Esso Exploration and Production Guyana Limited is the operator and holds 45 percent interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds 30 percent interest and CNOOC Petroleum Guyana Limited holds 25 percent interest.
