‘Crown-jewel Guyana’ reason for US company sticking with Hess

‘Crown-jewel Guyana’ reason for US company sticking with Hess – Manager

Nov 21, 2022 News

Kaieteur News – The Manager of a company that is a shareholder of Hess Guyana Exploration Limited – a company that holds a 30 percent interest in Guyana’s prolific Stabroek Block – has stated that it will be patient and stick beside Hess, owing to the crown-jewel Guyana.

CEO of Hess Corporation, John Hess

This was reported by Barron’s in August 2022. Barron’s is a leading source of financial news, providing in-depth analysis and commentary on stocks, investments and how markets are moving across the world.

American oil giant, ExxonMobil subsidiary, Esso Exploration and Production Guyana Ltd (EEPGL) is the operator of the Stabroek Block with a 45 percent interest and the other partner, CNOOC Petroleum Guyana Limited with 25 percent interest. Kaieteur News had reported that for the third-quarter of 2022, Exxon announced that its overall earnings was a record-shattering US$19.7 billion – whereas Hess reported that it earned a net income of US$515 million and CNOOC recording US$5.1 billion.

In Barron’s article titled, “Why a Patient Growth Fund Is Sticking with Microsoft and Hess Stock,” it quoted Gentry Lee, a Co-Manager of BNY Mellon Worldwide Growth as stating that Hess has the opportunity for significant growth over the next decade.

Lee said, “[Hess has] the opportunity for very significant growth over the next decade due to their ownership of some very productive [oil] fields offshore of Guyana, alongside Exxon Mobil [XOM].”

To this end, Lee noted, “The project is really a crown jewel for both companies, but it represents a bigger percentage of the value of Hess.”
According to the company’s website, they are a success across the financial world for individuals and institutions.

Barron’s reported that while tech stocks like Microsoft, Apple (AAPL), and Alphabet (GOOG) make up 25 percent of the portfolio, the team also invests in less familiar growth companies.
For instance, energy stocks make up 7.5 percent of the company’s fund. Last year, the company purchased shares in Hess. It was further stated that given the team’s patience, they can afford to wait until Hess has squeezed every last drop of profit from those oil wells.

Guyana’s Stabroek Block is 6.6 million acres (26,800 square kilometers) and has approximately 11 billion proven barrels of oil. In addition to this, the Production Sharing Agreement (PSA) Guyana signed with the oil major firm have been labeled as lopsided – and this is the main reason why civil society have been calling for a renegotiation of the contract but the PPP Administration is adamant that they will abide by ‘sanctity of contract’ and not renegotiate the deal.

Notably, under the PSA, neither Exxon nor its affiliates pay taxes. In fact, Guyana has agreed to, under the taxation provisions, to pay ExxonMobil’s share of Corporation and Income Tax. As such, it would mean that Guyana foregoes each year, billions of US dollars. On top of this, documentation to this effect is then provided to the US based company allowing it to not have to pay any taxes in its home country for its earnings overseas.