Guyana’s oil to help double Exxon’s global profits in 5 years

Dec 03, 2021 News

…as company manages to pay off US$11B debt this year—CEO Woods

Kaieteur News – Come 2027 when Guyana is expected to be producing some one million barrels of oil per day (bpd), US based ExxonMobil Corp., is projecting that its total earnings on the world market would by then be doubled.

Chief Executive Officer, Darren Woods

The announcements were made on Wednesday last, when the company disclosed some of its corporate plans up to 2027, including a slashing of its overall capital expenditure from a pre-pandemic target of US$35B annually to between US$20B and $25B through to 2027.
The plans, ExxonMobil said, support the corporate strategy of continued structural cost savings, investment in low-cost-of-supply and lower-emission products, and further portfolio high-grading, positioning the company to double earnings and cash flow by 2027 versus 2019.

According to the company, much of the US oil major’s future spending will be focused on projects in Guyana, where the company has discovered vast reserves of crude—in excess of 10 billion barrels of proven reserves thus far with intensive drilling campaigns in train.
Production from Guyana, in addition to its assets in the Texas/New Mexico Permian basin—the largest US oilfield—would double earnings by 2027 compared with 2019’s US$14.3B.
Production in Guyana currently stands at some 124,000 barrels of crude oil per day from the Liza Destiny in the Liza I production field in the Stabroek Block.
That Floating Production Storage and Offloading Vessel (FPSO), has been joined by a second, the Liza Unity, currently being hooked up for commission at the Liza II development field in the Stabroek Block.
Minister of Natural Resources, Vickram Bharrat, in a recent Argus Media was quoted as saying “By 2027, we are hoping that there will be at least seven FPSO vessels in the country and that we will be producing either close or even over 1mn bpd.”
ExxonMobil intends to have five FPSOs operating in Guyana by 2026, and sees potential for up to 10 soon after.
The Liza Unity is scheduled for its ‘first oil’ in a few weeks’ time – January next year – and is designed to produce some 220,000 bpd.
Additionally, the US$9B Payara project, the third development field in the Stabroek Block is progressing with the FPSO currently under construction at the Keppel Shipyard in Singapore while production wells and other ancillary related works are underway.
That project is scheduled for commissioning in 2024 and will deliver another 220,000 bpd to the Stabroek Block output.
Esso Exploration and Production Guyana Limited (EEPGL) Exxon Mobil’s Guyana subsidiary and operator of the Stabroek Block is currently in the process of acquiring authorization, environmental and otherwise in order to pursue its fourth development—Yellowtail.
Contracts to this effect have already been given out by the operator despite any project sanctions by the Guyanese authorities.
Maintaining capital investments in the range of between US$20B and US$25B per year through 2027 “with flexibility to adjust to adverse market conditions or changes in policy and technology for low-emissions projects” is being made possible as a result of the improved cash position of the company in the past year with the recovery of oil and natural gas prices.
According to the company’s Chairman and Chief Executive Officer (CEO), Darren Woods, “the restored strength of our balance sheet and improved financial outlook support accelerating investment in our industry-advantaged, high-return projects, and a growing list of financially accretive lower-emission business opportunities,”
According to Woods, “our strategy is designed to create shareholder value by leveraging our competitive advantages while maintaining flexibility to respond to future policy changes and technology advances associated with the energy transition.”
To this end, he iterated that projected growth of cash flow and earnings in the upstream business, results from aggressive cost reductions and progressing advantaged investments in low-cost-of-supply projects in Guyana, Brazil, and the Permian Basin in the United States.” To This end, he said more than 90% of the company’s planned upstream capital investments through 2027 are expected to generate returns of greater than 10 percent at prices less than or equal to $35 per barrel of oil equivalent.”
According to Woods, “increased cash flow and earnings enable both further debt reduction and returns to shareholders.”
It was noted that, to date, the company has repaid US$11B in debt and expects to be comfortably within the range of its targeted debt–to-capital ratio of 20 to 25 percent by year-end.