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Yellowtail Project to drive massive free cash flow growth for Hess Corporation – CFO
Kaieteur News- Hess Corporation’s Senior Vice President and Chief Financial Officer, John Riley, has confirmed that Guyana’s offshore oil developments are now self-funding, with the upcoming Yellowtail project set to deliver a substantial boost in free cash flow for Hess.
Riley provided these insights during an interview, highlighting the transformative financial impact of the company’s operations in the Stabroek Block, where Hess holds a 30% stake.
“Yes, Guyana is self-funding and look, it was self-funding now and then. Obviously, when the Yellowtail coming on, you get a whole big jump, and we really do get a big step change in cash flow every time when these FPSOs come on,” Riley said.
Hess Corporation’s Senior Vice President and Chief Financial Officer, John Riley
The Yellowtail project, Guyana’s fourth offshore development and its largest to date, is slated to commence production in 2025. With a US$10 billion investment, the project will introduce a Floating Production, Storage, and Offloading (FPSO) vessel capable of producing 250,000 barrels of oil per day (bpd), surpassing earlier developments like Liza Phase 1, Liza Phase 2, and Payara.
Discussing Yellowtail’s impact, Riley explained, “Now you’re bringing a 250 boat on, you know, these other ones obviously have been kind of optimized up to 250, but you’re bringing a bigger boat on. You’ve got the three boats already paid for, you know, behind you on that. So, yes, Yellowtail gives a nice, really nice, big inflection to our free cash flow.”
The FPSO for Yellowtail is expected to depart its construction yard in the first quarter of 2025, with production ramping up mid-year, according to Hess CEO John Hess. This development is part of ExxonMobil-led plans to increase Stabroek Block production capacity to over 1.3 million bpd by 2027.
When asked how the company plans to use the cash flow generated from Yellowtail, Riley noted, “So let’s just say, if we were staying independent, we’d go back to that where we were, you know, we would grow the dividend. That would be the first thing that we’re going to do. Well, first, we make sure we’re funding our return projects. We grow the dividend, just as we have been doing and now, just recently did. And then we would take some up to 75% of that cash flow, and we’d return it to shareholders.”
Riley explained that would be the move in the event of the US$53 billion merger with Chevron not going through. He clarified that this strategy would not move forward as Hess navigates its pending merger. Instead, the company will retain cash during the transition period.
The Yellowtail project will target the Tilapia and Redtail reservoirs, adding to Guyana’s current production of over 650,000 bpd. Along with Uaru and Whiptail, it is expected to contribute significantly to the consortium’s goal of boosting production.
Alistair Routledge, the President of ExxonMobil Guyana Limited (EMGL) the operator of the block had announced that the Yellowtail project – the largest deepwater project to date in Guyana – is on track for the 2025 startup. EMGL holds 45% interest and the third partner CNOOC Petroleum Guyana Limited, holds 25% interest. The ExxonMobil-led consortium has plans in place to grow production capacity to more than 1.3 million bpd by the end of 2027, when they anticipate having all six projects up and running offshore. This will include the addition of the Yellowtail, Uaru and Whiptail projects. Recently, Exxon announced that it has achieved the milestone of producing 500 million barrels of oil from the block since production began in December 2019.
(Yellowtail Project to drive massive free cash flow growth for Hess Corporation – CFO)
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