Guyana continues to be a pivotal part of ExxonMobil’s portfolio as one of its high-return assets and the company yesterday announced net income for the third quarter of US$20 billion, the highest in its history.
“We feel pretty good about the production growth that we’re seeing across the portfolio. We’ve talked about the record production in the Permian and Guyana is obviously performing very, very well with both of those boats (platforms) running at above capacity,” ExxonMobil’s Chairman Darren Woods yesterday reported during the company’s third quarter earnings call.
Woods boasted to investors and analysts, of the company’s most recent discoveries and that current production in the Stabroek Block has surpassed the design capacities of the two FPSOs that are operating.
“We also increased assets from our high return in the Permian and Guyana… we grew our production in Guyana to 360,000bpd [barrels of oil per day] during the third quarter; Liza Phase 1 and 2 both exceeding design capacity. We also had continued exploration success with two discoveries in the quarter earlier this month.”
On Tuesday, the company announced oil discoveries at the Sailfin-1 and Yarrow-1 wells in the Stabroek block offshore Guyana.
In a statement, the company said it has made more than 30 discoveries on the block since 2015, and it has ramped up offshore development and production at a pace that far exceeds the industry average.
Bloomberg reported that Exxon’s stock rose 2.6% yesterday morning, following the announcement.
Questioned on possible oil field inflation and rising costs, particularly in Guyana and the Permian for 2023, Woods said that the company had already forecast all issues when it planned for the 2020 fiscal year and was not worried about the effects.
He said that ExxonMobil has some US$6.4 billion of structural savings currently, as compared to 2019 and it was “well on our way to meeting the objective we set by end 2023 of $9 billion in structural savings.”
“So that’s helping to offset some of those inflationary pressures. And then on top of that, with the centralized organizations and more effectively leveraging the scale, we’re getting what I would call – what we term as kind of short-term efficiencies, purchasing power, however you want to think about that, that we don’t put in the structural bucket, but actually helps us to offset costs. And so we’ve challenged ourselves to deliver on our expense budget for the year and to offset inflation. The organization is doing a pretty good job at that. I think we’ll be within rounding with respect to that. And then next year, the organization is very focused on using the opportunities that have been created through the restructuring of our business to offset those inflationary pressures. And we’re going to stretch ourselves to see how much of that we can do,” he added.
In addition, the company’s first two sanctioned offshore Guyana projects, Liza Phase 1 and Liza Phase 2 are averaging 360,000 barrels of oil per day in the third quarter, while a third project, Payara, is expected to start-up by the end of 2023. A fourth project, Yellowtail, is expected to begin in 2025.
ExxonMobil has said that it is currently pursuing environmental authorization for a fifth project, Uaru. By the end of the decade, ExxonMobil says it expects Guyana’s oil production capacity to be more than one million barrels a day.
And having sold its Romanian upstream affiliate, ExxonMobil Exploration and Production Romania, to Romgaz for more than $1 billion in May of this year, the company yesterday said that deal also contributed significantly to its growth this quarter.
With net income of US$19.7 billion, surpassing the all-time high of US$17.6 billion amassed during the second quarter, ExxonMobil projects that 2022 will be one of its best years.
Overall, the company reported that capital and exploration expenditures were US$5.7 billion in the third quarter, bringing year-to-date 2022 investments to US$15.2 billion, on track with full-year guidance of US$21 billion to US$24 billion.
“Our strong third-quarter results reflect the hard work of our people to invest in and build businesses critical to meeting the demand we see today,” Woods said. He continued, “We all understand how important our role is in producing the energy and products the world needs, and third-quarter results reflect our commitment to that objective.”
Highlights from the third-quarter earnings, according to the company, showed that not only was there a significant increase in income this quarter, but it also saw cash increased by US$11.6 billion with free cash flow of US$22 billion.
Shareholder distributions were US$8.2 billion for the quarter, including US$3.7 billion of dividends and US$4.5 billion of share repurchases, bringing year-to-date repurchases to US$10.5 billion, consistent with the company’s plan to repurchase up to US$30 billion of shares through 2023.
“The Corporation declared a fourth-quarter dividend of $0.91 per share, payable on December 9th. The increase of $0.03 per share reflects confidence in our strategy, businesses performance, and financial strength, and marks 40 consecutive years of annual dividend growth. A reliable and growing dividend shows the company’s commitment to return profits to shareholders, of which approximately 40% are individual investors,” the company stated.
“Net-debt-to-capital ratio improved to about 7%, reflecting a period-end cash balance of $30.5 billion. The debt-to-capital ratio is now 19%, just below the low-end of the company’s target range. Asset sales and divestments resulted in $2.7 billion of cash proceeds during the quarter, bringing year-to-date proceeds to nearly $4 billion,” it added.
The Stabroek Block is expected to produce some 93.6 million barrels of oil equivalent (BOE) for 2022 and of that amount Guyana will get an estimated 12 lifts of one million barrels each, according to the Ministry of Natural Resources.
Guyana’s 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% interest in the block. Hess Guyana Exploration Ltd. holds 30% interest, and CNOOC Petroleum Guyana Limited holds 25% interest.
