Latest update December 16th, 2024 9:00 AM
Exxon has two accounting books for Guyana reflecting different profits for 2022
…One says $578B in profits and the other $106B; Exxon says Guyana should focus on the $106B
Kaieteur News – The 2022 financial statements for ExxonMobil’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL) show that it made a jaw-dropping profit totalling $577B. However, officials at the company are saying that this figure is not reflective of the true picture of expenses, investments, and profits made.
EEPGL’s Vice President and Business Service Manager, Phillip Rietema
In order to get a holistic picture, one has to apply the accounting rules governing the Stabroek Block Production Sharing Agreement (PSA) which would show EEPGL’s profits for 2022 being roughly US$500M or approximately GY$106B (depending on the currency conversion rate used).
Explaining the foregoing, and in great detail, was EEPGL’s Vice President and Business Service Manager, Phillip Rietema. He stressed that there are two separate accounting standards, one governing the preparation of financial statements and the other for the Stabroek Block PSA. The two are so distinct that he called them “apples to oranges.”
During a briefing with media operatives yesterday, the official said, “There are really two different accounting standards. For our accounting books, we follow the International Financial Reporting Standards (IFRS). It specifies how we are to show our operations.” With IFRS rules, he said the financial statements reflect 100 percent of the revenues achieved in 2022 and 100 percent of expenses incurred hence one might see royalty payments, a non-recoverable expense, reflected in those statements.
Under the Stabroek Block Petroleum Agreement, he said the accounting standards are different. The Vice President explained that 75 percent of the revenues made go towards cost oil, a term that refers to the pool of expenses/investments made by the oil companies which they are entitled to recover over time. The remaining 25 percent of the revenues is considered profit oil which is split between the State and the oil companies 50/50. Out of its share of profit oil, the companies pay Guyanese authorities a two percent royalty. The Vice President said the government therefore gets a 14.5 percent take while the co-venture partners, which include Exxon, Hess and CNOOC, get 10.5 percent. When this formula is applied, the Vice President said EEPGL’s profit is roughly US$500M.
It was agreed during the press briefing that the US$500M figure, as well as the application of the accounting standards of the Stabroek Block contract, are what provide a more accurate picture of how much EEPGL is getting versus that of the country’s earnings. Another equally important point he noted was that while the company made a profit last year, it is still cash negative. In this regard, the Vice President said the company and its partners have made from 1999 to now, over $4 Trillion in investments. Of that sum, only $2.5 Trillion was recovered with $1.5 Trillion still outstanding. He said: “our (EEPGL) profits to date cumulative are around $600B. So we (EEPGL) have invested over $2 trillion with earnings over $600B. The investments are more than three times our cumulative earnings.”
Meanwhile, Guyana has made about $440B in net cash flow since 2020 with no investment. The EEPG official explained that the partners are making accelerated investments into the block which has resulted in an asset base of over $2.3 Trillion.
- affiliate, currency, different, Esso Exploration and Production Guyana Limited (EEPGL), Stabroek Block
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