Hess anxious to reap multibillion dollar profits off more Guyana projects

Apr 28, 2022 News

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…says 925M barrels will be developed from Yellowtail alone

Kaieteur News – Hess Corporation was excited to share with investors on Wednesday morning, updates on its sanctioned Guyana projects that are poised to return multibillion-dollar profits based on the generous provisions of the Stabroek Block Production Sharing Agreement (PSA) and prevailing oil prices for sweet, light crude.
With respect to the developments in the Stabroek Block where it holds a 30 percent working interest, Hess said net production totaled 30,000 barrels of oil per day (bopd) in the first quarter of 2022 compared with 31,000 bopd in the prior-year quarter. In February, the company said production commenced from the Liza Unity floating production, storage and offloading vessel (FPSO) and contributed 7,000 net bopd in the first quarter of 2022.

With respect to the Liza Destiny FPSO, Hess told shareholders that the vessel recently completed production optimization work initiated in March that expanded its production capacity to more than 140,000 gross bopd from 120,000 gross bopd previously. It is currently producing 130,000 gross bopd and is expected to reach its full capacity in the second quarter.
As for the Liza Unity FPSO, Hess said it is expected to reach its production capacity of approximately 220,000 gross bopd by the third quarter. Additionally, Hess stated that in the first quarter, it sold approximately 2.3 million barrels of oil from Guyana and expects to have seven one-million barrel liftings in the second quarter and eight one-million barrel liftings in both the third and fourth quarters.
As for the third Stabroek Block development, Payara, Hess reminded that it will utilize the Prosperity FPSO with an expected capacity of 220,000 gross bopd, with first production now expected in late 2023. In April 2022, the Corporation recalled that the operator of the Stabroek Block, being ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), had announced it had made the final investment decision to proceed with the Yellowtail development on the Stabroek Block after the field development plan received approval from the government of Guyana in a record breaking 52 days.
Yellowtail, the largest development thus far on the Block, is expected to utilise the ONE GUYANA FPSO, which will develop an estimated gross resource base of approximately 925 million barrels of oil. The ONE GUYANA FPSO is expected to have a capacity of up to 250,000 gross bopd, with first production expected in 2025. Six drill centers are planned with up to 26 production wells and 25 injection wells.
Excluding pre-sanction costs and FPSO purchase cost, Hess Corporation’s net share of development costs is forecast to be approximately US$2.3 billion, of which approximately US$210 million is expected in 2022, US$430 million in 2023, US$585 million in 2024, US$390 million in 2025 and US$295 million in 2026. Additionally, Hess reminded that three new discoveries on the Stabroek Block were announced on Tuesday at Barreleye, Lukanani and Patwa.
The Barreleye-1 well encountered approximately 230 feet of hydrocarbon bearing sandstone reservoirs of which approximately 52 feet is high quality oil bearing. The well was drilled in 3,840 feet of water and is located approximately 20 miles southeast of the Liza Field. The Lukanani-1 well encountered 115 feet of hydrocarbon bearing sandstone reservoirs of which approximately 76 feet is high quality oil bearing. The well was drilled in water depth of 4,068 feet and is located in the southeastern part of the block, approximately 2 miles west of the Pluma discovery.
The Patwa-1 well encountered 108 feet of hydrocarbon bearing sandstone reservoirs. The well was drilled in 6,315 feet of water and is located approximately 3 miles northwest of the Cataback-1 discovery. Hess Corporation also reported net income of US$417 million, or US$1.34 per share, in the first quarter of 2022, compared with net income of US$252 million, or US$0.82 per share, in the first quarter of 2021. On an adjusted basis, the Corporation reported net income of US$404 million, or US$1.30 per share, in the first quarter of 2022. The improvement in adjusted after-tax earnings compared with the prior-year period was primarily due to higher realized selling prices in the first quarter of 2022, partially offset by lower sales volumes, the company said. Chief Executive Officer (CEO) John Hess was keen to note that as his company’s portfolio becomes increasingly free cash flow positive, it will commit to prioritizing the return of capital to shareholders through further dividend increases and share repurchases.

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