Guyana to repay its single largest debt in history ($10B) in two years

Nov 19, 2019 News

…as Hess brags on financial returns from Stabroek Block post-2022

The operators of the Stabroek block offshore Guyana are looking to collect in excess of $10B from Guyana in the course of two years, in order to pay off for the Liza 1 and 2 field Developments, including the cost of two Floating, Production, Storage and Offloading (FPSO) vessels.

CEO of Hess Corporation, John Hess (Photo credit: bloomberg.com)

This, in order to see a healthy return on its cash flows, as confirmed by 30 per cent stakeholder in the Stabroek Block, Hess Corporation.
Chief Executive Officer (CEO) John Hess confirmed this during the recently concluded 2019 Global Energy Conference that was held in Miami, Florida.
Hess was at the time speaking to any changes in the company’s proposed investments in the coming years.
He told the confab any upward revision to the projected Capital Expenditure for Hess Corporation would be had from 2022, at which point in time the company is looking to begin seeing positive returns on investment in Guyana.
According to Hess, once the second ship comes on in 2022 and in Guyana, Hess will be producing over 100,000 barrels a day which will recoup “all our cost from first ship and second ship”
He told investors that the company is looking at 2022 and beyond as the time when the company will be generating significant free cash flow.
Lauding the decision by Hess’ Board of Directors, he pointed out that the investment in Guyana was made at a time when industry leaders were not investing in the offshore sector.
According to Hess, the company managed to purchase a 30 per cent stake in ExxonMobil’s Stabroek Block for US$30M and has since seen the discovery of more than six billion barrels of oil.
He told investors that investments in the Permian did not give the desired returns that the company was looking for and that blocks were being returned in the Gulf of Mexico.
Hess said “we looked at the Permian and were all about returns and we looked at where the return would be best.”
He explained that companies had been paying as much as US$40,000 for an acre which could only give a 10 per cent return on the investment, calculated at a price of US$60 a barrel.
According to Hess, offshore opportunities were being deserted.
He said the company was looking to secure substantial growth not only in production but in cash flow, something it achieved in Guyana.
Speaking to upward changes in the Capital Expenditure plans for the company, he said that this will be determined by the post-2022 returns.
Hess divulged that the company, with its Guyana investment is looking to see a 10 per cent growth in production while receiving a 20 per cent growth in cash flow returns.
This, he said, is a unique value position that has a rate of change that is competitive anywhere, “The best rocks for best returns…at end of the day we are on track for that.”
According to Hess, the company is looking at a $3B a year investment primarily in its operations in the Bakken and Guyana, an outlook that will change come 2022 when the company expects a surge in cash flow as a result of the recouping of investments in the first two field developments.

Discover more from Kaieteur News

Subscribe to get the latest posts sent to your email.

Latest News