Liza Phase Two, Payara, Yellowtail could each give Hess $1B annually – John Riley, VP

Jun 02, 2021 News

Map showing the location of the prime Stabroek Block projects.

Kaieteur News – While the COVID-19 pandemic might have unleashed economic hardships on many oil conglomerates like Stabroek Block partner, Hess Corporation, its shareholders and executives are poised to be on cloud nine once the Liza Phase Two, Payara and Yellowtail projects offshore Guyana come on stream.
According to John Riley, Executive Vice President and Chief Financial Officer (CFO) for Hess Corporation, each project has the potential to rake in at least US$1B every year. The Hess official made this disclosure during his participation at the UBS Global Energy Conference that was recently held online. In his contribution, Riley spoke to the financial health of the American exploration and production company. Riley remarked that Hess ended the first quarter with US$1.86B in cash while adding that the recent sale of assets it held in Bakken, USA, raked in US$312M. He said too that Hess’ sale of assets in Denmark will come to a close in the third quarter thereby bolstering its very strong cash position this year.
Once oil prices remain high, Riley said the company could also start the early reduction of its US$1B term loan this year instead of waiting one to two years later. Once this commences and the Liza Phase Two Project comes on stream, the Hess official said the company is expected to have a stronger financial position.
Expounding further, the CFO said, “If you take our 30 percent on that 220,000 barrels of oil per day [that] comes online [for the Liza Phase Two project] it is about 60,000 barrels a day. Multiply that by 365 days and you get 21.9 million barrels when it is up running full and on annualised basis so if you pick your Brent price, if you pick US$60 a barrel, you got a billion dollars of cash flow EBITA (Earnings before interest, taxes, and amortisation) coming.”
The Vice President added, “Once we have that online, we are going to drive down debt to EBITA significantly and that is the position we want to be in so when Payara comes on, that is another billion, then Yellowtail, that is another billion in cash coming in… So we will be very comfortable then with our balance sheet and it is going to keep getting stronger as each FPSO comes on.”
Once this is achieved, Riley said the company’s main objective will be to increase dividends to shareholders.
Kaieteur News had previously reported that the Payara development project includes a floating production, storage and offloading (FPSO) vessel, named Prosperity. It is expected to produce 220,000 barrels per day. Startup is expected in 2024. The Yellowtail Project will be designed to produce 250,000 barrels of oil per day and is expected to come on stream in 2025. It was also reported that ExxonMobil and its partners, Hess, and CNOOC/NEXEN, are scheduled to bring 10 FPSOs on stream this decade.