Exxon buys over second FPSO before end of leasing agreement

Nov 08, 2024 News

FPSO Prosperity

Kaieteur News- ExxonMobil Guyana Limited (EMGL) has finalised the purchase of a second Floating Production Storage and Offloading (FPSO) vessel from Dutch shipbuilder SBM Offshore. The announcement was made by SBM on Thursday.

In August, this publication reported that EMGL was considering the purchase of the Prosperity and Liza Destiny FPSOs, which are operating offshore Guyana in the Stabroek Block. SBM had disclosed that Exxon was contemplating exercising its purchase option to acquire these FPSOs by the second half of 2024, ahead of the end of their maximum lease terms in November 2025 and December 2029, respectively.

Currently, EMGL has three FPSOs operating offshore, all leased from SBM. Last year, Exxon purchased its first FPSO from SBM, the Liza Unity.

In a recent statement, SBM said, “SBM Offshore and ExxonMobil Guyana Ltd, an affiliate of Exxon Mobil Corporation, have completed the transaction related to the purchase of FPSO Prosperity, ahead of the maximum lease term, which would have expired in November 2025.” The purchase involved a total cash consideration of US$1.23 billion.

With the acquisition, ExxonMobil Guyana assumes ownership of the Prosperity unit, although SBM Offshore will continue to operate and maintain the FPSO until 2033. SBM noted, “The net cash proceeds will primarily be used for the full repayment of the US$0.98 billion project financing and as such will decrease SBM Offshore’s net debt position.”

FPSO Prosperity has been operational since November 2023 and will continue to function through an integrated operations and maintenance model that combines SBM Offshore and ExxonMobil’s expertise for high-performance operations. Designed to produce 220,000 barrels of oil per day, Prosperity also has a gas treatment capacity of 400 million cubic feet per day and a water injection capacity of 250,000 barrels per day.

The vessel, which is spread-moored at a depth of about 1,900 meters, can store around 2 million barrels of crude oil. It measures 342 meters in length, 60 meters in width, and 25 meters in height, with a minimum operational lifespan of 20 years. Approximately 4,000 individuals have contributed to the construction of this 110,000-metric-tonne vessel.

SBM stated that the financial impact of this transaction will be reflected in its 2024 guidance update as part of the Third Quarter 2024 Trading Update, scheduled for November 14, 2024.

Last year, EMGL purchased Liza Unity from SBM for US$1.3 billion, a few months before the end of its maximum lease term in February 2024. This transaction also allowed ExxonMobil to take ownership of the unit while SBM Offshore retained responsibility for operations and maintenance through 2033. The sale generated net proceeds that primarily covered the US$1.14 billion project financing repayment, reducing SBM Offshore’s net debt.

According to SBM, the Liza Unity, operational since February 2022, has consistently delivered excellent performance through the integrated operations and maintenance model.

Exxon has not yet exercised its purchase option for the Liza Destiny, the remaining FPSO operating offshore.

The Liza Destiny contract includes a basic 10-year lease term. Built at a cost of US$1 billion, the vessel produced first oil on December 20, 2019, at the Liza field. Originally designed for a production rate of 120,000 barrels per day, Exxon increased the output to 150,000 barrels per day following debottlenecking activities.

SBM’s operation in Guyana includes the FPSOs Liza Destiny, Liza Unity, Prosperity, and the upcoming One Guyana. Exxon has also engaged Japanese shipbuilder MODEC for its fifth FPSO, Errea Wittu and in April, SBM announced it had secured a contract with EMGL to build and install a sixth FPSO, Jaguar, for the Whiptail development.

(Exxon buys over second FPSO before end of leasing agreement )

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ExxonMobil Guyana Limited, FPSO Prosperity, Liza Destiny FPSOs, SBM Offshore

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