ExxonMobil bills Guyana $55B for dry holes drilled in 2023

Jun 07, 2024 News

One of the drillships used by ExxonMobil for its exploration activities in the Stabroek Block

Kaieteur News – In 2023, ExxonMobil Guyana Limited (EMGL) billed the country a jaw-dropping $55 billion for dry holes it drilled during exploration activities across the Stabroek Block.

This is according to the company’s financial statement for the year ended December 31, 2023. According to the report shared with the media on Thursday at the company’s Duke, Street, Kingston, Georgetown office, exploration expenses was six times higher in 2023 when compared to 2022. The company reported that some $55,496,143,794 was spent on five dry wells in 2023 while $8,744,062,803 was expended on one dry hole in 2022. Each well is distinct from the other, meaning the cost varies on a number of factors such as depth, location, technology used and equipment costs.

Notably, the exploration costs reflected on the financial statement does not include the successful wells drilled by Exxon, but only those that were “dry”. Successful exploration wells are accounted for separately. A total of two commercial discoveries were announced in 2023. This year, Exxon will be pursuing a number of exploration and appraisal wells ahead of its scheduled relinquishment of a portion of the Block in October. The Country Manager, Alistair Routledge said recently that two wells, Redmouth and Trumpet fish, will be drilled in hopes of landing a find big enough to support a standalone project.

ExxonMobil to date has made over 40 discoveries in the Stabroek Block since oil was first discovered in 2015. The company later commenced oil production at its first offshore deepwater project in 2019. Presently, ExxonMobil Guyana is producing oil from three Floating, Production Storage and Offloading (FPSO) vessels in the oil rich Stabroek Block. The company is currently pumping over 645,000 barrels of oil per day (bpd) cumulatively from the three projects- Liza One, Liza Two and Payara.

The terms of the Production Sharing Agreement (PSA) allow the company to bill Guyana for its exploration activities, even if those efforts do not produce oil. This means that Guyana pays ExxonMobil for its drilling campaign regardless of whether oil is found. In fact, the company uses Guyana’s oil to recover these and other expenses related to Stabroek Block.

Each month, ExxonMobil can deduct up to 75% of the revenues earned from oil production to cover its expenses. The remaining 25% is then shared equally with Guyana as profits. 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.

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drilled, dry, Exploration, ExxonMobil, holes

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