Hess sets aside US$70M for unannounced Stabroek Block developments

Jan 27, 2021 News

Hess CEO, John Hess.

Kaieteur News – Part Stabroek Block owner, Hess Corporation, has set aside US$70 million from its 2021 exploration and production capital and exploratory budget of US$1.9 billion to finance unannounced, future development phases.
In a Monday statement, Hess said that the money was set aside “primarily for front end engineering and design work for future development phases on the Stabroek Block.”
Last September, even before the co-venturers – ExxonMobil, Hess and CNOOC – got approval for the Payara development, they were so sure of swift approvals for their endeavours under the Production Sharing Agreement (PSA), that Chief Executive Officer (CEO) of Hess, John Hess, said that the partners are already relatively optimistic that the Yellowtail-1 discovery would support the fourth development.
ExxonMobil announced the Yellowtail-1 find in April of 2019. The Noble Tom Madden drillship had encountered approximately 292 feet (89 meters) of high-quality oil bearing sandstone reservoir and was drilled to a depth of 18,445 feet (5,622 meters) in 6,046 feet (1,843 meters) of water. The well, Exxon had said, is located approximately 6 miles (10 kilometers) northwest of the Tilapia discovery.
Subsequent appraisal drilling led to a Westwood Global Energy assessment of more than 300 million barrels of oil equivalent resources in the well.
Hess had said that the partners are looking at developing Yellow-tail as it is a large resource which consists of lighter crude. “…We are doing the pre-development work now to make that the fourth ship…”
The ship will likely have a production capacity of 220,000 barrels per day. This would take production capacity in the Stabroek block to 780,000 barrels of oil per day, once Yellowtail-1 follows first oil at Liza Phase Two and Payara.

OTHER BUDGETARY ALLOCATIONS TO GUYANA
The jewel in Exxon’s crown, Guyana investments account for the majority of Hess’s 2021 budget.
“Our capital program reflects our disciplined approach in the current oil price environment to preserve cash, core capabilities and the long term value of our assets,” CEO John Hess said on Monday. “The majority of our 2021 budget is allocated to Guyana, where our three sanctioned oil developments have a Brent breakeven oil price of between $25 and $35 per barrel… By investing only in high return, low cost opportunities, we have built a differentiated portfolio of assets that we believe will provide industry leading cash flow growth over the course of the decade.”
Chief Operating Officer, Greg Hill, said: “Offshore Guyana, our focus in 2021 will be on advancing our next two sanctioned developments to first oil – Liza Phase 2 in early 2022 and Payara in 2024 – and on front end engineering and design work for future development phases on the Stabroek Block. We also will continue to invest in an active exploration and appraisal program, with 12-15 wells planned on the Stabroek Block.”
Of its 2021 development funding, the company has plugged US$25 million into its Liza Phase One development which has been producing since December, as well as US$450 million and US$235 million for the upcoming Liza Phase Two and Payara developments.
Of its exploration and appraisal budget, the bulk of $450 million has been allocated to drill 12-15 exploration and appraisal wells on the Stabroek Block in Guyana, and some seismic acquisition and processing.
Hess has a 30 percent stake in the Stabroek block, along with ExxonMobil (Operator – 45 percent) and CNOOC (25 percent).

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