Dec 03, 2019 News
Analysts believe that Guyana is currently the King of ExxonMobil’s portfolio and that the sulphur finds recently reported by Tullow which caused its shares to plummet were overblown and that the more recent hammerhead find by ExxonMobil is in fact profitable.
In fact, the company is looking to extract at least US$10B from its planned production at the Liza I, II and Payara developments.
According to market reports, analysts yesterday reported that despite the geopolitical risks involved in developing Guyana’s offshore potential considering nearby’s Venezuela’s claim to the Essequibo region, the region will be a long-term cash cow.
It was reported that in light of the various expansion projects planned in Guyana “which are likely an understatement given how much the project has grown in recent years,” it could increase the company’s production by double digits and its profits by even more.
Qualifying this position is found in analyzing ExxonMobil’s investments in Guyana with its falling share prices and profits in recent years.
The Company in the near future is looking to extract up to 100,000 barrels per day.
It is expected that this production should provide close to US$1B in annual profits to ExxonMobil, and is expected to come online this month.
The company has also reached a final investment decision on Liza Phase II and this is expected to bring double production by 2022 and should grow ExxonMobil’s share to 200,000 barrels per day, or $2 billion in annual profits.
The company is also pursuing the Payara field development and has already commenced early engineering.
That project should add another 100,000 barrels per day to Exxon Mobil’s share, and will add another $1B in annual profits for Exxon Mobil.
This would mean that by the end of 2025 the company would have gotten some US$10B in profits from Guyana. This in addition to its value added processes such as its refineries that will no doubt increase the profit margin for ExxonMobil.
Analysts noted that future projects are being defined still and that “ExxonMobil went from 10 drilled and 15 undrilled projects in 2017 to 15 drilled and 40 undrilled in 2019…That means that the company has more undrilled prospects than the total number it had in 2017.”
The company is also said to be looking at developing two other fields including the Hammerhead find by 2025 start that could add 100 thousand barrels to the company’s production.
Addressing the sulphur content in the oil discovered by Tullow Oil offshore Guyana, it was noted that while the discovery had a massive negative impact on the company’s stock, and a substantial negative impact on Hess Corporation’s stock, “interestingly enough, the impact on Exxon Mobil’s stock was much smaller.
“It’s also important to keep in mind that what might be unprofitable for Tullow Oil could be very profitable for Exxon Mobil, solely because of the difference in scale of the company’s operations.”
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