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Chevron sees 2025 cash flow boost after synergies, fourth FPSO comes on stream in Guyana
Guyana’s Stabroek Block
Kaieteur News – American oil major Chevron Corporation expects to see a rise in its cash flow per share starting in 2025, driven by post-acquisition synergies and the anticipated start-up of a fourth floating production storage and offloading (FPSO) vessel offshore Guyana.
Chevron is now a 30 per cent shareholder in Guyana’s Stabroek Block after completing the US$53 billion acquisition of Hess Corporation, following a favorable arbitration outcome regarding Hess’ Guyana asset.
In late 2023, the acquisition of Hess was announced. The deal gave Chevron access to Hess’ most valuable asset, a 30 per cent stake in the Stabroek Block, which is estimated to hold 11.6 billion barrels of oil equivalent. However, the move prompted the other partners in the Stabroek Block, ExxonMobil Corporation and China National Offshore Oil Corporation (CNOOC) to approach the Paris-based International Chamber of Commerce (ICC) to examine their preemption rights over Hess’ share.
On Friday, it was announced that Chevron had completed the acquisition. Notably, had the arbitrator ruled in favour of Exxon and CNOOC, Chevron was prepared to walk away from the deal entirely. Chevron said the transaction is expected to be accretive to cash flow per share in 2025. A key contributor to this forecast is the integration of Hess’ 30% stake in the prolific Stabroek Block, operated by ExxonMobil. The company said, “Expected to be accretive to cash flow per share in 2025 after achieving synergies and start-up of the fourth floating production storage and offloading vessel in Guyana.”
Notably, Chevron outlined that the addition of Hess’ assets will not only bolster its near-term financials but will also extend its growth trajectory well into the 2030s. The company noted that the deal increases its estimated five-year production and free cash flow growth rates and is poised to support sustained growth over the next decade.
The Stabroek Block located about 120 miles offshore Guyana, spans 6.6 million acres. Oil production began in December 2019 and has grown to 650,000 barrels per day (bpd) from three sanctioned projects: Liza Phase 1, Liza Phase 2, and Payara. This output is expected to increase with the upcoming start-up of Yellowtail, the fourth development, later this year.
ExxonMobil Guyana holds a 45% interest, Hess Guyana holds 30%, and CNOOC Petroleum Guyana Limited holds the remaining 25%. Exxon has two other sanctioned projects under its belt: Uaru and Whiptail. It has also submitted an Environmental Impact Assessment (EIA) for its seventh project, Hammerhead, with production targeted for 2029. Additionally, the company has filed an application for an eighth development, Longtail.
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