Six-to-one is not 50-50 Part 2

Jul 01, 2026 News

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Road to First Oil – Every Man, Woman and Child Must Become Oil Minded; Column 191 July 1, 2026

By Christopher Ram

(Kaieteur News) – Today continues where Column 190 left off, examining the egregious failures of omission and commission by ExxonMobil, Hess, CNOOC and their auditor, the cumulative effect of which is to present a distorted picture of the economics of their Stabroek Block operations. At the media briefing on EMGL’s 2025 financial statements, John A. Colling sought to explain the gap between the Government’s share of petroleum revenues and that of the oil companies by referring to “petroleum agreement accounting” and a “cost bank”. Yet neither term appears in the 2016 Petroleum Agreement, any annex thereto, or the financial statements of any of the three Stabroek Block partners. Readers sent to the accounts for an explanation will search in vain.

And far from showing seventy-five per cent of revenue going to costs, EMGL’s 2025 accounts show the opposite. Costs, including non-cash charges, amount to less than thirty per cent of revenue, while profit exceeds seventy per cent. Sent to the accounts to find cost recovery, the reader finds disproportionate profits instead.

Three companies, one Petroleum Agreement, one Block, one operator and one audit firm. The accounts should be comparable and consistent. They are not. On matters central to understanding the venture, they disclose different things, omit different things, and sometimes present the same reality in different ways. Where those differences are material, one or more must be wrong. It falls to the auditor who signed all three to explain what will not reconcile.

1 – The basis that will not name itself

EMGL’s basis note states only that its figures represent the company’s “unassigned interest in various Petroleum Agreements”, without identifying either the interest or the agreements. Accounts that do not disclose the very interest being reported fail to tell the reader what they are accounts of. Hess, audited by the same firm in the same year, disclosed its 30 per cent interest in the Stabroek Block in a single sentence. CNOOC, did the same, and a bit more. The information was plainly available; only EMGL withheld it.

The omission affects every figure in EMGL’s financial statements. Every asset, liability, revenue and expense relates to an interest the reader is never told. On that basis alone, the unqualified audit opinion is difficult to sustain.

2 – One tax, one law, three faces

EMGL reports income tax expense of about G$231.6B, an effective rate near 19 per cent, yet offers virtually no explanation. Hess provides a full reconciliation and records an effective rate of about 25 per cent. CNOOC records approximately 8 per cent and, alone among the three, discloses that the Government pays its taxes under the Agreement.

One law, one venture, three effective tax rates. No reconciliation between them and, in EMGL’s case, no meaningful explanation at all. The problem is deeper than disclosure. The accounts create the impression that the companies bear a tax burden which, under the Agreement, is borne on their behalf. That is not merely incomplete reporting. It obscures the economic substance of the arrangement.

3 – The depreciation that will not reconcile

EMGL’s income statement records depreciation and amortisation of G$300.8B. Note 10 reports depreciation alone of G$431.0B. The difference may be legitimate. Depreciation can be capitalised into assets rather than expensed immediately. But the accounts do not bridge the two figures. No reconciliation is provided, no capitalised amount identified, and no explanation offered for the G$130.2 billion difference.

On one of the largest non-cash charges in the accounts, the reader is left to assume what should have been clear and unambiguous.

4 – The decommissioning puzzle

Accounting standards require companies to provide, up front, for the estimated cost of dismantling wells and facilities at the end of their lives. Yet CNOOC, with a 25 per cent interest, reports the largest liability at about G$197.6B. EMGL, with a 45 per cent interest, reports about G$102.8B and Hess about G$90.1B.

The figures may be correct. The accounts do not explain them. Hess and CNOOC disclose the discount rates used in their calculations. EMGL does not, although the valuation depends critically on that assumption. Three companies sharing the same field report markedly different liabilities, using different disclosures and apparently different assumptions, while the largest participant provides the least information.

5 – Hiding the 6:1 mystery

When challenged about the disparity between the companies’ revenues and Guyana’s share, Exxon points to the “cost bank”. Yet that balance appears nowhere in the Agreement and nowhere in the financial statements of any of the three companies.

That omission hides perhaps the most important issue to the financial statements. The balance of unrecovered costs determines how much oil is taken as cost oil before profit oil is shared. It determines who gets what from the Block. Yet none of the companies discloses the balance, its movement during the year, or the amount remaining to be recovered.

The result is that billions of dollars of costs are recorded, but the recovery that explains the disparity is not. The most consequential number in the revenue-sharing arrangement is absent from all three sets of accounts.

The Question the Auditor Must Answer

Directors are responsible for the preparation and the contents of the financial statements; an audit does not relieve them of that burden. Auditors, for their part, are responsible for the contents of the opinion they express on those statements. One omission may be an oversight. Two may be error. Beyond that, the pattern becomes harder to explain. One block, one agreement, one operator and one auditor should produce the most consistent financial statements in the country. Instead, they produce some of the least.

EMGL will not identify the interest on which its accounts are based. It leaves unexplained a G$130B difference in one of its largest charges. It discloses no discount rate for a major decommissioning provision. And it omits the recoverable-cost balance that determines how petroleum revenues are shared. These are not defects at the margins. They go to the basis, measurement and understanding of the accounts themselves.

Hess and CNOOC disclosed information that EMGL withheld. Yet all three remain silent on the recoverable-cost balance. And all three present taxation in a way that obscures the economic reality that the State pays their tax.

The big question is not whether every number in the accounts is wrong. It is how accounts containing omissions of such significance came to receive an unqualified opinion. That is a question for the auditor.

This coming Friday, we will look at the growing list of failures by successive governments. Be warned, they make depressing reading.

These columns are offered by Christopher Ram and posted on his blog chrisram.net and are reproduced with the consent of the writer.

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• Christopher Ram, CNOOC, ExxonMobil, Hess

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