‘Bet on hefty profits from Guyana’s oil’— Financial Analyst urges Hess Investors

Dec 05, 2022 News

…says Guyana will soon surpass company’s Bakken North Dakota production

Kaieteur News – Guyana’s oil production is expected to surpass that of Hess Corporation’s profitable Bakken North Dakota US asset, and like Company Executives, International Analysts are also encouraging Investors to bet on the hefty profits that have been projected for the future.

Hess had announced earlier this year that it would be focusing more attention on its Bakken and Guyana assets, as it expected its net production to increase between 12 percent and 15 percent from these two projects. ‘Seeking Alpha’, a Financial Institution with over 100 employees who provide data and analysis on the global financial market, was keen to note that Guyana holds “massive potential” for returns on oil production. It said that Hess Corporation reported an adjusted third-quarter 2022 earnings of $1.89 per share, “beating again analysts’ expectations this quarter.”

“Guyana Production will soon surpass the company Bakken production,” the report added as it recommended buying company shares at or below $140. It was noted that Hess’ quarterly revenues rose to $3,157 million from $1,811 million last year. “Production from Guyana reached 98K Bop/d (98,000 Barrels of oil equivalent per day) this quarter. Net cash provided by operating activities was $1,339 million in the third quarter of 2022, up from $615 million in the third quarter of 2021.”

‘Seeking Alpha’ said that Hess Corporation announced its 8th and 9th discoveries this year in the Stabroek block called Yarrow-1 and Sailfin-1 and these two discoveries add to the previous gross discovered recoverable resource estimate for the Block of approximately 11 billion BOE. “This is a total of 30 discoveries, with two phases producing 360K Bop/d gross. The company expects achieving first oil with its third phase, called Payara, in late 2023.” The Financial Analyst said the four sanctioned Guyana developments (Liza 1, Liza, Payara and Yellowtail) have breakeven prices of $25- $35/BBL Brent. “I recommend buying HES at or below $140 with possible lower support at $131.3,” the Advisor said.

John Hess, Hess Chief Executive Officer had also related the high return value of its operations in Guyana. At a recently held Bank of America Securities Global Energy Conference, he told Investors a ‘major upgrade’ to the 11 billion barrels of oil equivalent that has been discovered in the offshore Stabroek Block. Fangtooth-1, Lau Lau-1, Barreleye-1, Patwa-1, Lukanani-1, Seabob-1, Kiru-Kiru-1, Sailfin-1 and Yarrow-1 wells have not yet to be appraised for the number of barrels they hold. He insisted that to grow future cash flow there has to be growth in the resource.
At the same event, Hess also told Investors that the Production Sharing Agreement (PSA) the Stabroek Block consortium has with Guyana is so designed, that it allows for the recouping of exploration and development costs way before the time kicks in for production.

“Each one of these investments in Guyana is between US$6B to US$10B and that includes the costs for a Floating, Production, Storage and Offloading (FPSO) vessel, drilling, and subsea infrastructure. Exxon has done an exceptional job bringing several projects in Guyana forward ahead of schedule and under (the original) budget,” the CEO related. He noted however that at the end of the day, 75 percent of revenue made goes against the costs incurred each year.

“So that is a very tax efficient and cash efficient way for you to recoup your investment,” he suggested. Hess told Investors also that with each ship that comes on board, Hess makes as much as US$1B in profit. In the 6.6-million-acre Stabroek Block Hess has a 30 percent interest, ExxonMobil has 45 with the remainder being held by our Chinese partner, CNOOC. Hess said that 29 significant discoveries were made with nine alone this year. The nine discoveries, he said, “…are not in that resource base estimate so there will be a major upgrade to that number.” The Stabroek Block current estimate is at 11billion barrels of crude.

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