Ram accuses Exxon of false reporting

Jun 30, 2025 News

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…says company inflating current profits, while hiding true impacts of future recoveries on Guyana’s oil revenues

Kaieteur News – Amid growing concerns over the recently released financial statements of ExxonMobil and partners, Chartered Accountant, Christopher Ram has accused the oil giants of double standard in its reporting, which he said allows them to inflate current profits by treating cost recoveries as immediate revenue while hiding the true ongoing impact of future recoveries on Guyana’s oil revenues.

Exxon Mobil Corporation and its partners, Hess Corporation and China’s CNOOC, recently reported a combined profit of US$10.4 billion from their oil operations in Guyana in 2024, marking a 64% year-on-year jump, according to ExxonMobil’s financial statement. The surge was driven by expanded production capacity and favorable fiscal terms that continue to make Guyana one of the most lucrative oil plays globally, Yahoo Finance had reported. ExxonMobil alone booked US$4.7 billion in adjusted earnings from its Guyana operations last year, contributing substantially to its global earnings of US$33.46 billion. Meanwhile, Hess posted US$3.1 billion in profits from the region, up from US$1.9 billion in 2023, while CNOOC earned US$2.5 billion, rising from US$1.5 billion.

The Ministry of Natural Resources later issued a statement claiming that most of the US$10.4B represented cost recovery. Kaieteur News had queried based on Exxon’s financial statement how it was possible for the oil major and its partners in the Stabroek Block to walk away with US$10.4 billion, while Guyana received a mere US$2.6 billion, despite a 50/50 profit sharing and Guyana’s 2 per cent royalty agreement.

Vice President Bharrat Jagdeo in response said that the figures were consistent with the formula, “which says that 14.5 per cent of the 25 per cent which is set out for as profit sharing would result in those that configuration, and they would have 10.5 per cent. So that’s consistent from what I saw. It can’t be any different in these years.” Jagdeo further shared, “They have to get less profits than we would have received because of that formula. They, they’ve spoken about paying back the capital which is a different matter about paying back the capital invested which comes out of the 75 per cent allocated of revenue allocated for that purpose. So, we can’t conflate the two, (they are) very different and it’s consistent with the formula, and just to tell you that to give you an indication if they say $1.3 trillion, we got since the beginning of oil that’s less than this year’s budget one year budget, that’s what we got from the beginning so that confirms what we have been saying because we passed five budgets so far. So entirely clear.”

Warped accounting practice

However, writing in his column, which was published by the Stabroek News last Friday Ram questioned the accounting practice of the oil companies. He said such warped practice allows them to inflate current profits by treating cost recoveries as immediate revenue while hiding the true ongoing impact of future recoveries on Guyana’s oil revenues. “When companies selectively apply accounting standards based on what makes their numbers look better, that is not compliance – it is flagrant and deliberate manipulation. Both the Coalition and the PPP/C have failed to recognise the avarice of Exxon and its partners, signalled when, at the very beginning, they overstated pre-production costs. Or when the local books failed to account for the proceeds of sale of interest in the Stabroek Block,” Ram wrote.

It should be noted that while ExxonMobil and the government of Guyana have taken umbrage with this newspaper reporting that the oil major’s profits for last year stood at US$10.4B, no such objections were made to reports by Reuters, Yahoo Finance and other international agencies that quoted the same figure. “What the oil companies are expecting is that all Guyanese – and indeed Yahoo Finance, Reuters, Bloomberg and shareholders will believe that all these billions of barrels of oil come at no cost – or, in the case of Exxon, by mainly Depreciation and amortisation which accounted for 63% of its total operational expenditure in 2024, up from 51.2% in 2023. There’s the well-known saying that there is no such thing as a free lunch. Our oil companies have profits free from of any cost of sales,” Ram wrote in his column.

Oil lifts

Ram also explained in his column that for 2024 there were 225 oil lifts, four of which went to Guyana in the form of in-kind royalties and 56 went to profit sharing (Government 28 and Oil Companies 28). That leaves 165 lifts, all of which went to the oil companies for cost recovery. “The oil companies did not tell us this breakdown, nor did the Government – which probably did not try to find out. This information comes from scouring the Bank of Guyana’s Natural Resource Fund reports and the Minister’s Budget Speech.”

Ram said that at approximately $80 million per lift, “those 165 cost recovery lifts represent roughly $13.2 billion in value flowing to the companies. “From analysing their financial statements, we can determine that only 22 lifts ($1.8 billion) went to actual current year expenses, while a staggering 143 lifts ($11.4 billion) represented recovery of prior years’ costs.” Ram said it is worth noting too that expenses included a significant element of non-cash expenses as well, such as decommissioning, amortisation and lease provisions. The numbers become even more puzzling when we consider that despite receiving only 28 lifts ($1.9 billion) as their legitimate profit share, the companies reported over $10.4 billion in profits in their financial statements – more than five times their actual profit oil entitlement. This suggests a troubling pattern where massive historical cost recoveries are treated as current profits, a fundamental distortion that demands immediate investigation, attention, transparency and disclosure,” the chartered accountant said.

Touching on International Financial Reporting Standards (IFRS) rules, Ram said Guyana is an IFRS subscribing country and companies operating here should provide information to enable a reader to understand and appreciate the numbers. “Yet the 2024 financial statements of the oil companies create more confusion than clarity. Under IFRS, the principle of transparency demands that financial statements provide a true and fair view of a company’s financial position and performance. Readers should be able to understand the source of revenues, the nature of expenses, and how profits are generated. Yet when we examine these oil company statements, we find a labyrinth where massive cost recoveries somehow contribute to profit calculations without clear explanation of how historical reimbursements become current earnings.”

The chartered accountant said the fundamental question becomes: “Are these companies meeting their IFRS obligations to provide clear, understandable financial information? When a company receives $11.4 billion in cost oil recovery but reports this in a way that inflates profits to $10.4 billion – while their actual profit entitlement is only $1.9 billion – something is seriously wrong with either their accounting practices or their disclosure standards.”

He said IFRS requires that companies explain material transactions and their impact on financial performance. “Yet nowhere in these statements do we see adequate explanation of how the petroleum sharing agreement works, how cost recovery differs from profit generation, or why reported profits bear no relationship to actual profit oil received. This is not a matter of disclosure – as important as that is. It is an attempt to distort and deceive. it’s a fundamental failure to meet international accounting standards that Guyana, as an IFRS jurisdiction, should be enforcing.”

He said it defies any logical, decent accounting rule that Exxon and partners would recognise hundreds of billions of Guyana dollars in deferred tax liability which they will never pay but refuse to recognise on their books expenditure the recovery of which is guaranteed by the Agreement. “That is not an oversight. That is false accounting. Just think about the boldness of their position. They carry massive deferred tax liabilities on their balance sheets which they know they will never pay since these taxes are paid out of Guyana’s generous cost recovery and tax certificate mechanisms. Yet they forget basic accounting principles when it comes to their guaranteed unrecovered costs,” Ram noted.

He said the general rule of accounting is that expenditure incurred in one period to be recovered in a future period, even in the absence of any contractual arrangement, is recognised as assets. “Even that part of the motor car insurance premium that covers months into the next accounting period is treated as a prepayment in business accounting. The 2016 PSA makes cost recovery a contractual right, not a discretionary hope. Yet these companies treat guaranteed cost recovery as uncertain while booking tax obligations they will never pay as concrete liabilities. Had they applied that principle, they would have treated the recovery as the exchange of an asset (cash or oil) for another asset (recoverable costs).”

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• Alistair Routledge, Christopher Ram, ExxonMobil Guyana, False reporting, Guyana's oil revenues

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