ExxonMobil Corp now earning five times more since 2019-Exxon VP

Dec 23, 2024 News

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…as Guyana marks five years of production

Kaieteur News- Senior Vice President of ExxonMobil Corporation, Neil Chapman, recently told shareholders of the Fortune 500 company that earnings have now quintupled since 2019.

In the same year, ExxonMobil Guyana Limited (EMGL), previously Esso Exploration and Production Guyana Limited (EEPGL), a subsidiary of Exxon, commenced oil production in Guyana’s Stabroek Block. The Liza project today is celebrated as one of the company’s fastest ever to move from discovery to production.

During Exxon’s Corporate Plan Update and Upstream Spotlight, Chapman pointed out that 70% of all the company’s capital expenditure between now and the end of the decade will be in Guyana, Permian and in its LNG business.

He said the average returns on investment of all the capital expenditure in upstream between now and 2030 is over 40%. Further, Chapman informed shareholders, “that 90% of all the spending that we’re deploying between now and 2030 will generate a double digit return at less than $35 a barrel if the price is less than $35 a barrel for the life of the project. And obviously we know that is not going to happen. But it illustrates the resilience of these investments.”

Although Chapman was not direct in remarks about the contribution of Guyana to the company’s growth, he explained, “Between 2019 and 2025, ExxonMobil added 600,000 barrels a day of production and we divested 600,000 barrels a day of production. The earnings per barrel of what we added was five times of what we divested.”

Since production activities commenced in 2019, ExxonMobil Guyana has increased the daily rate of production to over 600,000 barrels. To date, Exxon has obtained approval from the Government of Guyana for six development projects in the Stabroek Block – Liza Phase One, Liza Phase Two, Payara, Yellowtail, Uaru and Whiptail. The first three projects are already producing oil at a daily estimated rate of 640,000 barrels per day (bpd).

Yellowtail is expected to come on stream by 2025, followed by Uaru in 2026 and Whiptail in 2027. On December 19, EMGL marked five years of production in Guyana. In a statement, the company said, “ExxonMobil Guyana’s deepwater developments are the most successful in the world. In five years, the company has started up three complex offshore mega-projects on schedule and on budget, while simultaneously advancing plans for five additional projects by the end of the decade. Production capacity in Guyana is expected to surpass 1.7 million barrels per day, with gross production growing to 1.3 million barrels per day, by 2030.”

While the oil companies have been boasting higher profits and returns to its shareholders, Guyana continues to receive a meagre share of profits due to the lopsided oil contract with Exxon and government’s refusal to seek a renegotiation of the deal.

In the meantime, Exxon deducts 75% of Guyana’s oil produced each month to recover cost. The remaining 25% is shared equally with Guyana as profits. The country also receives one of the lowest royalty rates known to the sector, a paltry 2%, which is paid quarterly.

A key provision not included in the contract allows Exxon to shorten Guyana’s share of profits by investing the earnings to develop projects yet to start up, and even finance the company’s exploration activities. To date, Guyana would have been receiving a greater profit share with a ring-fencing provision, since the cost of the three projects in operation have been paid off. Despite being urged to implement a ring-fencing provision to ensure the country benefits from the current high oil prices, the government is reluctant to apply this mechanism.

Fair contract?

Earlier this month, it was reported that President of ExxonMobil Upstream Company and Vice President of Exxon Mobil Corporation, Liam Mallon described Guyana’s Production Sharing Agreement (PSA) with the company as “very fair”.

According to the Government of Guyana’s Mid-Year Report, the total earnings from the export of crude oil amounted to US$9.4B in the first six months of 2024, a US$4B increase compared with the same period last year.

It should be noted that 75% of that amount was deducted by the Stabroek Block partners to recover their investments. To this end, the report states that US$7.5B in Foreign Direct Investment (FDI) outflows was recorded, reflecting cost recovery from the oil and gas sector. In addition to revenue deducted for cost, Exxon also received 50% of the profits from the Stabroek Block, in accordance with the 2016 PSA. As such, Exxon and partners bagged at least US$8.5B from Guyana’s oil and gas operations in only six months.

Meanwhile, Guyana’s Natural Resource Fund (NRF) received a US$1.2B top-up during the first half of 2024.

(ExxonMobil Corp now earning five times more since 2019-Exxon VP)

(ExxonMobil Corp now earning)

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• Chapman, earnings, ExxonMobil, five times, Guyana

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