Partner in the Stabroek Block, Hess Corporation (Hess), yesterday announced another discovery at the Fangtooth well in the lucrative “high return” offshore area, while stating that this country along with North Dakota’s Bakken (USA) area will see some 80% of its US$3.7 billion capital projects spending committed to them.
The new discovery in the Stabroek Block comes even as operator ExxonMobil forges ahead with the exploration of some additional 10 wells this year.
“We are pleased to announce today a significant new oil discovery at the Fangtooth Southeast-1 well, located approximately 8 miles southeast of the original Fangtooth-1 discovery. The Fangtooth Southeast-1 well encountered approximately 200 feet of oil-bearing sandstone reservoirs and was drilled to 5,397 feet of water,” President of Hess, John Hess, announced during the Earnings Call for the fourth quarter of 2022.
“Fangtooth was our first stand-alone deep exploration prospect on the Stabroek Block and this area has the potential to underpin a future oil development,” he added.
Minister of Natural Resources, Vickram Bharrat, yesterday pointed Stabroek News to a statement his ministry issued on Hess’ announcement, saying that government would first have to check with ExxonMobil. “The Ministry has noted the information and we are currently working with Exxon who is completing the analysis so as to make the information available,” the Ministry of Natural Resources statement read.
Hess’s Chief Operating Officer, Greg Hill, pointed out that the company, which has a 30% interest in the Stabroek Block, believes that the partnership “delivered exceptional facilities for liability, project delivery and exploration success in 2022.”
Hess reported a net income of US$624 million, up from US$265 million for the same period in 2021.
Guyana’s prospects were played up by all of the company’s spokespersons yesterday with the president of the company informing that its “financial priorities are to continue to allocate capital to our high-return low cost investment opportunities, to keep a strong cash position and balance sheet, and to grow our dividend and as market conditions and our return of capital framework provide to increase share repurchases.”
Hess said that in Guyana, the Liza Phase 1 and Liza Phase 2 developments are currently operating at their combined gross production capacity of more than 360,000 barrels of oil per day.
The third development, Payara, remains on schedule for startup by the end of this year, with a gross production capacity of approximately 220,000 barrels of oil per day.
The fourth development, Yellowtail, is expected to come online in 2025, with a gross production capacity of approximately 250,000 barrels of oil per day.
A plan for a fifth development in Uaru with a gross production capacity of approximately 250,000 barrels of oil per day was submitted to government in November and final approval is expected by the end of the first quarter of this year.
“We also will continue an active exploration and appraisal programme in Guyana with approximately 10 wells planned for the Stabroek Block in 2023.
Net production
For its share in the Production Sharing Agreement which allocates up to 75% of production to cost oil, Hess said that net production from Guyana averaged 116,000 barrels of oil per day in the fourth quarter of 2022 and 78,000 barrels of oil per day for the full year 2022, “both above our guidance.”
“For the first quarter and the full year 2023, we forecast net production in Guyana to average approximately 100,000 barrels of oil per day,” Hill said.
Turning to developments. He informed that Liza Phase 1 was successfully debottlenecked in 2022 and has been operating at or above its revised nameplate capacity of 140,000 barrels of oil per day.
“Liza Phase 2, utilizing Liza Unity FPSO, achieved first oil in February of last year and production ramp-up from start-up to nameplate capacity was achieved in about 5 months, which is world-class performance in the deep-water. The Liza Unity is currently operating at or above its nameplate capacity of 220,000 barrels of oil per day. Production optimization opportunities are currently being considered for late 2023.
The third development, Payara, is approximately 93% complete. The Prosperity FPSO is expected to depart from Singapore in late first quarter and commence hookup and commissioning activities following arrival in Guyana. The project remains ahead of schedule and is anticipated to achieve first oil by the end of 2023,” Hill said.
For Yellowtail, the fourth development, he noted that it is approximately 40% complete and remains on track for first oil in 2025. The One Guyana FPSO’s hull has been completed and is expected to enter dry dock in Singapore in April. Topside fabrication activities have commenced at module fabrication sites in Singapore and China, and development drilling is underway.
On its fifth development – Uaru – Hill said that the final development plan was submitted in November, and they are “currently awaiting approval by the Government of Guyana, which we anticipate by the end of the first quarter.”
In November of last year, the company had announced that it had selected MODEC for building its 5th FPSO which will be used for the Uaru project. No name has yet been publicly identified for the vessel.
And pending government approvals, a sixth development, Whiptail, is expected to be sanctioned early next year.”
Guyana’s Environmental Protection Agency (EPA) had last week announced that ExxonMobil had applied for authorization for the Whiptail project. The Agency said an Environmental Impact Assessment would have to be submitted, given that the project could significantly affect the environment. Against this background, the EPA has issued a 28-day notice to the public to submit questions and matters which they would like to be answered or considered in the EIA.
With regard to upcoming wells, Hill said that operations are continuing at the Tarpon Fish-1 well in the northwest corner of the Stabroek Block, approximately 43 miles northwest of the Liza-1 well. “The well is in the first test of cretaceous age clastic reservoirs in Northwest Stabroek. The well will also test a deeper Jurassic aged carbonate prospect.”
He continued on exploration plans, pointing out that the “Lancetfish-1 is a deep play exploration well, located approximately 2.5 miles northeast of the Fangtooth Southeast-1 well that underlies a portion underneath the field. Drilling operations are underway on the Noble Don Taylor drillship. Beyond that, there is a well called Basha, which will target a deep prospect in the Fangtooth area.” Another well is also nearby, which will penetrate an “up dip upper campaigning prospect,” east of the Barreleye Well.
Overall, Hess praised its Guyana’s investments for its high performance which yielded higher than Wall Street projects and signalled to shareholders that they would see those returns reflected in their dividends.
“In summary, our execution in 2022 was again strong, and 2023 will be an exciting year with the Bakken returning to a steady growth trajectory, with an active drilling program in the Gulf of Mexico and with the advancement of our major projects and further delineation of the significant upside in Guyana, all of which position us to deliver industry-leading performance and significant shareholder value for many years to come,” the company’s CEO said.
“We had net income of (US)$624 million in the fourth quarter of 2022 compared with (US)$515 million in the third quarter of 2022. On an adjusted basis, which excludes items affecting comparability of earnings, we had net income of (US)$548 million in the fourth quarter of 2022 compared with (US)$583 million in the previous quarter,” he added.
