John Hess speaks, Guyanese should listen

Jan 09, 2025 Features / Columnists, The GHK Lall Column

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Hard Truths… 

By GHK Lall 

Kaieteur News- Exxon’s partner, John Hess, is feeling his oats.  The venue was the Goldman Sachs Research: Energy, CleanTech, and Utilities Conference held last Tuesday.  Mr. Hess used that open forum to broadcast his disagreement with Exxon over the proven reserves of oil in the Stabroek Basin.  Mr. Hess has gained a reputation among Guyanese as being a man who speaks fluently.  Some may say he is too fluent.

In this matter of the inventory of oil-up-to-date, accurate, reliable-I want to hear him speak as freely as he can, so that Guyanese have the clearest idea of how much oil overall has been found.  It should be a normal aspect of any company-country partnership routine, with citizens benefiting from the info flow.  It hasn’t been so here.

Say whatever must be said about him, but John Hess, Chief Executive Officer of Hess Corporation has been in business since he was knee-high to a calf.  Though more of New York roots, he has cut his teeth on oil, with his father, Leon Hess, as good a teacher as can be had.  It helped that he spent some time at the Harvard Business School.  For emphasis, he may be talkative, but he is a keen business executive.  So, he is concerned about the oil reserves matter.  His company has one estimate for the total in Guyana’s Stabroek Block, while Exxon has a smaller number.  It seems that something is nagging at Mr. Hess causing him to vent publicly.  A Goldman Sachs gathering is a good place to get his message across.  Exxon’s estimates are too tight.  I agree.

There were eight new discoveries as of April 2022, but Exxon was busy counting sheep and not barrels of new oil.  Since April 2022, Exxon has become like the Communist Party of North Korea.  It has been a Corporate Iron Curtain of silence, not one word about one new barrel of oil.  It also appears that new discoveries have gone on an extended sabbatical.  First, there was the gush of discoveries.  Since Guyanese started clamoring for renegotiation of the company’s Machiavellian masterpiece, the 2016 Production Sharing Agreement, better known as the oil contract, new discoveries fell out of favor.  Well, at least in the public sphere.

Exxon is riding high in the saddle, like one of those legendary old-time Texas badmen.  So, it can afford the luxury of saying little about new discoveries and how much new oil is under its wing.  What is good for Exxon is not as good for Hess Corp.  It doesn’t have that cushion of goodwill and high regard from the eagle-eyed watchers who tune in to confabs like the recent Goldman Sachs one.  As an outsider and never one of the Seven Sisters of oil, Hess Corp has to be a scrapper.  So, there was John Hess leaning impatiently against the proven oil reserve numbers for Guyana used by Exxon.

Exxon’s top Guyana trail boss, Mr. Alistair Routledge, was ready and waiting.  Listen, these numbers have to be reported to the US Securities and Exchange Commission (SEC), so be done with the questioning, second guessing, and disagreeing.  Get over it, Johnny.  For sure, Exxon has a duty of timely reporting to the SEC for full and fair investor disclosure purposes.  But what Mr. Routledge did was get the first half, the compelling half, of his oil reserve story on the public record.  What he didn’t tell his audience, especially the Guyanese people, is how much leeway the rules amended in 2010, and as last tweaked in 2013, allow a champion oil acrobat like Exxon to deal with reserves to suit itself.

The SEC’s new reporting rules allow oil and gas companies to employ a range of probabilities, along with reliable technology, to make estimates about reserves with reasonable certainty.  Further, the SEC is also now allowing reporting of “probable reserves” and “possible reserves” alongside “proved reserves”, and with “analogous reservoirs” thrown in as an added bonus.    In sum, there is a tremendous amount of company expertise and discretion allowed by the SEC.  A company as reporting savvy as Exxon is sure to recognize the opportunities to work reserve estimates to suit its visions, and all within the rules.  It is not the oldest American oil company for nothing.  Its history goes all the way back to Titusville, Pennsylvania, John D. Rockefeller, and Standard Oil.  Exxon will report, but only after exhausting all the spaces it can create to buy time.

Hess himself is no poke at this game.  He can rock the boat a bit, but Exxon is the engine.  Of course, his courtship with Michael Wirth and Chevron has left a sour taste.  For a while, Exxon firmly believed that it was first in line in any sale of shares in the Stabroek Block by any partner.  Their domestics about shares and sales are of less importance to me when the real number of new oil (the total) has become such a lock-and-key issue for Exxon.  Mr. Routledge’s all-too-careful navigation of the oil reserves issue has been fully absorbed here.  Why, sir?  And now there is an insider and partner, John B. Hess, adding more to the reserve story.  It is a little too rich for me, frankly.

(The views expressed in this article are those of the author and do not necessarily reflect the opinion of this newspaper.)

(John Hess speaks, Guyanese should listen)

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• Exxon, hard truths, John D. Rockefeller, Pennsylvania, Texas badmen, Titusville

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