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Exxon partner sells interest in Libyan assets
– to focus on mega-profits from Stabroek Block
Kaieteur News – International media reports have revealed that Hess Corporation intends to shed more global assets to focus on the “mega-profits” to be had from its 30 percent stake in the oil-rich Stabroek Block. Specifically, Argus Media noted that TotalEnergies and ConocoPhillips will purchase Hess’ 8.16% stake in Libya’s Waha Oil Concessions in the Sirte Basin and invest to improve production. This was confirmed with TotalEnergies’ Chief Executive Officer (CEO), Patrick Pouyanne.
Hess Corporation’s CEO, John Hess
The Waha acquisition by TotalEnergies and ConocoPhillips, which already hold stakes of 16.33% each, was approved by Libya’s interim government. It was further noted that TotalEnergies plans to spend US$2B on the Waha project to raise production currently at 300,000 barrels of oil per day by 100, 000 barrels of oil per day.
In March, Kaieteur News reported that Hess had sold a key asset in Denmark to focus on its lucrative Guyana projects, specifically the Liza Phase One, Liza Phase Two, Payara and Yellowtail developments in the Stabroek Block. The American company had told the market that it entered into an agreement with Ineos Exploration and Production Company to sell its subsidiary, Hess Denmark ApS, which held a 61.5% interest in the South Arne Field. The asset was sold for a total consideration of US$150 million.
The following month, the company sold its Little Knife and Murphy Creek acreage interests in The Bakken, North Dakota to Enerplus Corporation, a Canadian energy giant, for US$312 million.
While it may have stakes in other blocks in the Guyana-Suriname basin, Hess Corporation has categorically stated that its top priority will remain the oil rich Stabroek Block since it is “the mother-load” of its portfolio. Specifically making this comment was Hess’ Chief Operating Officer (COO), Greg Hill. He was, at the time, participating in Bank of America’s Global Energy Conference.
Participating in the virtual conference as well was Chief Executive Officer (CEO), John Hess, who boasted about the revenue making potential of the Stabroek Block projects. He said, “The Bakken, Deepwater Gulf of Mexico and Malaysia serve as our cash engine, while Guyana serves as our growth engine. With the start-up of Liza Phase Two early next year, Guyana also becomes a cash engine and at that time, all of our major assets will be free cash flow positive.”
With a lineup of up to 10 Floating, Production, Storage and Offloading (FPSOs) in Guyana to develop approximately 10 billion barrels of oil equivalent resources, as well as its robust inventory of high return drilling locations in the Bakken, USA, the CEO said the company’s ability to deliver high return resource growth is, therefore, “unparalleled.”
Expounding further he said, “When Liza Two comes on, we will steadily move down the cost curve. Our Guyana developments have a Brent breakeven price between US$25 and US$35 per barrel. And as our Bakken production in the USA goes up to 200,000 barrels of oil equivalent per day in the next several years, we will be able to go down the cost curve.”
The Hess boss added, “By 2026, we predict that our cash unit cost will go down by 25 percent versus this year to approximately US$9 per barrel of oil equivalent resources…”
Further to this, Hess said his company is clearly positioned to deliver industry leading cash flow growth. In this regard, he said between 2021 and 2026, the company’s cash flow is forecast to increase by 25 percent annually. He said this is more than two times as fast as its production growth. At a price of US$65 per barrel Brent, Hess said this should result in annual free cash flow growth increasing to approximately US$3B per year by 2026. “And if you add a US$10 higher price it is actually US$4B per year,” the Hess boss stated.
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