Hess sells 61% interest in Denmark asset to cover its 30 % Stabroek Block costs

Mar 19, 2021 News

Hess Corporation CEO, John Hess.

Kaieteur News – In light of ExxonMobil’s plans to bring 10 Floating Production Storage and Offloading (FPSO) vessels on stream to develop the nine billion barrels of oil equivalent resources in the Stabroek Block, Hess Corporation has sold a key asset in Denmark to cover its share of the costs.

In the Stabroek Block, Hess holds a 30 percent working interest, while CNOOC/NEXEN holds 25 percent. ExxonMobil carries the remaining interest, thereby making it the Operator.

Yesterday, the American company told the market that it has entered into an agreement with Ineos Exploration and Production Company to sell its subsidiary, Hess Denmark ApS, which holds a 61.5% interest in the South Arne Field. The asset has been sold for a total consideration of US$150 million, effective January 1, 2021. The sale is expected to close in the third quarter of 2021, subject to government approvals and customary closing conditions.

Following the announcement, John Hess, Chief Executive Officer, of Hess Corporation said, “The sale of our Denmark asset enables us to further focus our portfolio and strengthen our cash and liquidity position. Proceeds will be used to fund our world class investment opportunity in Guyana.”

It should be noted that Hess has been active in the Danish North Sea since becoming the operator of the South Arne field in 1994. South Arne, located about 150 miles west of Esbjerg, has produced oil and gas since 1999, and uses horizontal production and water-injection wells to optimize production from chalk reservoirs. According to Hess’ website, the South Arne Field had produced an average of 5,800 barrels of oil equivalent per day net to Hess in the fourth quarter of 2020.

As it relates to the Stabroek Block, Hess Corporation, CNOOC/NEXEN and the Operator of the concession, ExxonMobil, have announced that plans are moving apace to bring a fourth project plan to the government by year-end, while a fifth development is already under consideration. Further to this, the joint venture partners had said that by 2027, it could have a sixth oil development project in the Stabroek Block.

Rystad Energy, an energy research and business intelligence company, was one of the first industry stakeholders to project that ExxonMobil would be able to place one FPSO offshore Guyana every year for the next 10 years. If these projections pan out, the 10th vessel will start producing in 2031.

By the end of the first year, after the 10th FPSO is placed, ExxonMobil would have wiped out 4.14 billion barrels of oil, leaving a little over three billion barrels left. In the following years, it will produce about 730 million barrels of oil in each year. By 2036, there would be nothing left.

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