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ExxonM banking on Guyana for increased production
…eyes higher earnings, greater returns for shareholders
Kaieteur News – US oil major ExxonMobil Corporation has set its target on raking in higher earnings this year driven by increased production and it is also guaranteeing shareholders greater returns on their investments.
Darren Woods, Chairman and Chief Executive Officer (CEO) of the Fortune 500 company recently shared Exxon’s Corporate Plan update, boasting of the strategies crafted to ensure returns to shareholders. He said, “The strategy we’ve developed, competitive advantages we possess, organization we’ve built, the performance we’re delivering, and the shareholder returns we’re generating, adds up to what we believe is the most compelling investment case in the industry.”
ExxonMobil Chairman and CEO, Darren Woods
According to the updated Corporate Plan through 2027, “Upstream earnings potential is on track to more than double by 2027 versus 2019, resulting from investments in high-return, low-cost-of-supply projects.” ExxonMobil highlighted that the company anticipates oil and gas production in 2024 to be about 3.8 million oil-equivalent barrels per day. It said this will further increase to about 4.2 million oil-equivalent barrels per day by 2027, driven by growth in the Permian and Guyana.
Presently, the company is producing about 500,000 barrels per day (bpd) in Guyana’s Stabroek Block. Production is slated to reach 620,000 bpd in the first quarter of this year after the third project- Payara- reaches full potential of 220,000 bpd.
Guyana is aiming to produce 1.2 million barrels of oil per day by 2027. ExxonMobil in its Corporate Plan update also highlighted that the company’s capital allocation approach prioritizes competitively advantaged, high-return, low-cost-of-supply, value-accretive investments that enable ExxonMobil to lead the industry now and through the energy transition.
ExxonMobil boasts of higher earnings in a short video. In the background of this screenshot is Guyana’s Floating Production Storage and Offloading (FPSO) vessel.
It stated, “The company now anticipates total annual capital expenditures and exploration expense of $23 billion to $25 billion in 2024 and $22 billion to $27 billion annually from 2025 through 2027, generating an average return of approximately 30%. Greater than 90% of the capex (capital expenditure) has payback periods less than 10 years.” Exxon was keen to note that it envisions increased cash flow and earnings to enable further surplus cash generation and increased shareholder distributions. “The company remains on track to complete $17.5 billion in share repurchases in 2023 as part of the $35 billion repurchase program previously announced for 2023 and 2024,” it added.
ExxonMobil is the operator of Guyana’s lucrative Stabroek Block. The company holds a 45% interest, while Hess Guyana Exploration Ltd. holds 30 percent interest and CNOOC Petroleum Guyana Limited holds 25 percent interest. To date, the GoG has sanctioned five projects with three already in operation. A sixth development is presently pending approval. Already more than 11 billion barrels of oil has been discovered in the Stabroek Block by the consortium.
Guyanese have been demanding changes to the lopsided Petroleum Agreement signed in 2016 by the former Coalition administration since the deal mostly favors the contractors. The key fiscal terms Guyana has agreed to include a two percent royalty and 50 percent of profits, after 75 percent of the revenues are deducted by the oil companies as cost. This means Guyana earns 14.5 percent of the revenues from the projects in the Stabroek Block. Notably, the contract does not feature a ring-fencing provision to prevent revenues from one project being spent to develop another. In the absence of this mechanism, Exxon has been funding its exploration and development costs from the revenues being earned currently. In the interim, Guyana receives a meager share of the revenues.
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