Exxon joins Hess in boasting about increased oil profits from Guyana

Aug 03, 2024 News

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Kaieteur News – ExxonMobil has joined Hess Corporation in boasting about increased oil profits as the second quarter of 2024 came to an end.

The company released their second quarter earnings report on Friday (August 2) which saw total earnings being US $9.2 billion.

According to the report, this translates to “$2.14 per share assuming dilution.”

CEO of the company Darren Woods attributing the profits to their operations in Guyana said that, “We achieved record quarterly production from our low-cost-of-supply Permian and Guyana assets, with the highest oil production since the Exxon and Mobil merger. We also achieved a record in high-value product sales, growing by 10% versus the first half of last year.”

While the cash flow from operating activities was $10.6 billion and cash flow from operations excluding working capital movements was $15.2 billion. Shareholder distributions of $9.5 billion included $4.3 billion of dividends and $5.2 billion of share repurchases, consistent with the company’s announced plans.

“We delivered our second-highest 2Q earnings of the past decade as we continue to improve the fundamental earnings power of the company. We closed on our transformative merger with Pioneer in about half the time of similar deals. And we’re continuing to build businesses such as ProxximaTM, carbon materials and virtually carbonfree hydrogen, with approximately 98% of CO2 removed, that will create value long into the future,” Woods said.

The upstream year to date earnings for 2024 is a whopping $12.7 billion dollars, signifying an increase of $1.7 billion more for the same period last year.

“The prior-year period was negatively impacted by tax-related identified items. Excluding identified items, earnings increased $1.5 billion due to advantaged assets volume growth from record Guyana, heritage Permian and Pioneer production,” the report said.

Year-to-date net production was 4.1 million oil equivalent barrels per day which the company highlighted is an increase of “9%, or 352,000 oil-equivalent barrels per day. Higher crude realizations and structural cost savings offset lower natural gas realizations, higher expenses mainly from depreciation, and lower base volumes due to divestments of nonstrategic assets and government-mandated curtailments.”

Furthermore, “Second-quarter earnings were $7.1 billion, an increase of $1.4 billion from the first quarter driven by the Pioneer acquisition, record Guyana and heritage Permian production, and structural cost savings. Higher crude realizations and divestment gains more than offset lower gas realizations. Net production in the second quarter was 4.4 million oil-equivalent barrels per day, an increase of 15%, or 574,000 oil-equivalent barrels per day compared to the prior quarter due to advantaged volume growth from Pioneer, Guyana and heritage Permian.”

On Wednesday, Reuters reported that “Hess beat estimates for second-quarter profit on Wednesday, helped by sharply higher oil production in Guyana and stronger prices. Hess’s production rose 27.6% to 494,000 barrels of oil and gas per day (boepd), on nearly 75% year-over-year increase in Guyana to 192,000 bpd.”

“The South American country and its lucrative oil assets are at the center of a dispute between Hess, Chevron https://www.reuters.com/markets/companies/CVX.N and Exxon. Last October, Hess agreed to sell itself to Chevron for $53 billion in stock, but the deal has been stalled by a regulatory review and challenged by Exxon, which claims a right to Hess’s Guyana assets,” Reuters added.

Chevron and Exxon are headed to a May 2025 arbitration hearing in the latest chapter of their ongoing dispute over the massive Stabroek Block oilfield off the coast of Guyana.

Chevron said Wednesday in a filing with the Securities and Exchange Commission that it expects a decision within three months of the hearing. The Houston-based company added it had expected and requested to hold the hearing earlier, but the common schedules of the parties made it impossible.

The companies have been locked in a dispute since February, when Exxon threatened to block Chevron’s acquisition of a 30% stake in the Stabroek Block, which is said to contain at least 11 billion barrels of oil. Ongoing arbitration hinges on the applicability of a “right of first refusal” contained in an operating agreement between subsidiaries of Exxon, Hess and China National Offshore Oil Corporation.

An abrogation of the deal could throw into question Chevron’s $53 billion acquisition of competitor Hess, which closed in October. Chevron said in the filing that its views and those of Hess remain unchanged, while claiming that Exxon and CNOOC “continue to ignore the plain language of the operating agreement.”  Exxon operates all production in Guyana, controlling a 45% stake while Hess and CNOOC serve as minority partners. Exxon and CNOOC Ltd filed arbitration claims claiming a pre-emption right to any sale of Hess’ lucrative stake in a Guyana oil-producing joint venture.

The challenge threatens to block Chevron’s biggest deal since its 2001 acquisition of Texaco for $36 billion. Exxon and CNOOC have argued Chevron’s bid for Hess triggered a right of first refusal clause in their Guyana joint operating agreement. Chevron and Hess dispute that claim. The all-stock sale, announced last October, has been stalled by a second request for information by antitrust regulator, the U.S. Federal Trade Commission. Its review should be completed this quarter, a spokesman for Hess said.

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• Exxon, increase, Jagdeo, oil, profits

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