Stabroek Block’s 5.5B barrels reserve an understatement-Hess CEO

Jul 18, 2019 News

By Kiana Wilburg

Hess Corporation which holds a 30 percent stake in the Stabroek Block believes that its shareholders and industry stakeholders are yet to see the full potential of the world-class offshore concession.

Hess Corporation CEO, John Hess

In fact, the firm’s Chief Executive Officer (CEO), John Hess, recently noted that the estimate of 5.5B barrels of oil equivalent reserves is on the low side.
Speaking at the Bernstein 35th Annual Strategic Decisions Conference that was held a few weeks ago in New York, Hess said that the 5.5B estimate really ties to 10 or 11 discoveries and not 12 or 13 which were made.
Hess said that there is going to be a resource upgrade by year end but the drilling programme for the Stabroek will be going forward. The CEO said that most likely, the Stabroek block license holders will keep investing in a two rig exploration programme.
It was noted that the cost to drill the Stabroek block wells are not only relatively cheap by industry standards but only take about 22 days to be completed. Along these lines, the Hess CEO noted that the firm has a long runway of drillable prospects going forward.
He said, “And we have a long way to go as it is still in the early innings and it is the equivalent of 1,150 Gulf of Mexico blocks…It will be phased over time.”

Map showing discoveries on Stabroek Block (Sourced from Hess Corp.)

A PROMISE TO HONOUR
When one considers the exemplary discoveries on the Stabroek Block, Hess was asked to say if he believes the government of Guyana will allow the license holders to continue making high returns over the coming decade plus.
In this regard, Hess said that the license holders have been assured by President David Granger and the People’s Progressive Party (PPP) that they will honour the existing contract. He noted that both sides have told the company this privately and they have said so in public too.
The CEO said, “We also have Exxon as our partner and CNOOC which I think helps us in ensuring the Production Sharing Contract is followed and so, you know, I am not saying the political risk is zero but we feel pretty confident that we can work well with both parties and they want to honour those contracts and that is what we have been told.”
He continued, “There is always media speculation by maybe one or two people who may be opponents down there (and) we have it in our own country. But I think you can’t take too seriously that media speculation. Recently there was talk about a government investigation into how some of the blocks were awarded, but neither Hess nor Exxon was approached in terms of it.”
Hess added, “We feel our blocks are secure. We followed all applicable laws and regulations in getting those government approved blocks. So you will hear noise every once in a while from the media but I think you have to take it with a grain of salt. All I count on is what the President of the country has told us as well as the opposition and they are going to honour those Production Sharing Contracts.”