The effects of the Coronavirus as well as the oil price war between Russia and Saudi Arabia, continue to leave the petroleum industry in turmoil.
But even with the low break-evens that operators are facing as a result of this state of affairs, Guyana remains a major investment growth area for the large incumbent players.
This was recently noted by Westmount Energy Limited, an investment holding company with several shares in firms that hold key positions in prime offshore blocks.
In its latest report to shareholders, Westmount said that the major incumbent players in the Guyanese offshore sector have been guiding reduced capital investment for 2020, in response to the sudden oil price collapse.
Taking this into account, it said that the picture so far suggests that near term discretionary exploration drilling offshore Guyana may be less affected by these immediate budgetary adjustments than drilling in other regions.
It also said that the main impact of COVID-19 is likely to be its potential to delay some operational activities as travel restrictions upset the international flow of offshore workers.
At this stage, Westmount Energy said it is not experiencing any major disruption to its business model from the Coronavirus.
The British firm said that it is very well capitalized with £2.6M cash at December 31, 2019, and with a low fixed cost base. In this context, Westmount said its Board remains focused on investment opportunities and deployment of capital that gives additional exposure to drilling in this prolific emerging basin.
Kaieteur News understands that Westmount’s current investment portfolio offers shareholders exposure to potentially a minimum of three ExxonMobil-operated Upper Cretaceous wells, across the Canje and Kaieteur Blocks, over the next 12 months.
Current guidance from the various deepwater operators indicates that Westmount is likely to be the only London quoted junior player offering exposure to drilling offshore Guyana in 2020.
It said that success in some of these wells could result in transformational value changes for the medium term and positive times ahead for shareholders.
NEAR TERM OUTLOOK
In light of the arrival of a series of unprecedented events on the back of the COVID-19 pandemic, Westmount told its shareholders that the near term outlook is likely to be dominated by extreme volatility, in the first instance, as public health authorities grapple globally with containment and mitigation measures with respect to the virus.
The company said: “The duration of the pandemic is unclear at this stage, though there is some evidence from China in recent days which suggests that the measures taken there have been successful and that the peak of the epidemic there has now passed (after 3 months). In addition, synchronized economic stimuli are being put in place by governments across the main global economies to cushion the immediate impacts and promote economic rebound.”
In spite of this immediate outlook, Westmount contended that proven plays, large discovered volumes and prodigious exploration success rates, continue to highlight the Guyana-Suriname Basin as a global exploration hotspot.
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