Sweet Stabroek Block PSA allows investors to recoup exploration, development costs before production begins – Hess CEO tells investors

Dec 04, 2022 News

Kaieteur News – Hess Corporation’s Chief Executive Officer (CEO), John Hess, recently assured investors that while project developments and exploration programmes at the Stabroek Block are moving at industry leading speeds, they have nothing to fear. Profits, he said, will remain sky-high.

During a recent Bank of America’s Energy Conference, Hess explained that the Production Sharing Agreement (PSA) is so perfectly designed for the investors’ pockets that it allows the recouping of exploration and development costs way before the time kicks in for production.

Hess said, “Each one of these investments in Guyana is between US$6B to US$10B and that includes the costs for a Floating, Production, Storage and Offloading (FPSO) vessel, drilling, and subsea infrastructure. Exxon has done an exceptional job bringing several projects in Guyana forward ahead of schedule and under (the original) budget. At the end of the day, 75 percent of revenue made goes against the costs incurred each year. So that is a very tax efficient and cash efficient way for you to recoup your investment.”

CEO of Hess Corporation, John Hess

He told investors that with each ship that comes on board, Hess makes an easy US$1B in profit. Hess said Guyana is a prime piece of oil real estate and while 11 billion barrels of oil equivalent resources have been unlocked, the partners expect it to double as they go deeper for sweet oil.

In terms of the state of play for its current projects, Hess said the Liza Phase 1 and Phase 2 developments are currently operating at their combined gross production capacity of more than 360,000 barrels of oil per day at the Stabroek Block.

The third development at Payara is on track to come online at the end of 2023 utilizing the Prosperity Floating, Production, Storage and Offloading (FPSO) vessel with a production capacity of approximately 220,000 gross barrels of oil per day. The fourth development, Yellowtail, is expected to come online in 2025, utilizing the ONE GUYANA FPSO with a production capacity of approximately 250,000 gross barrels of oil per day.

A plan of development is expected to be submitted to the Government of Guyana before year end for a fifth development, Uaru, which is expected to come online at the end of 2026 with a gross production capacity of approximately 250,000 barrels of oil per day.

Guyana’s Stabroek Block is 6.6 million acres (26,800 square kilometers). ExxonMobil affiliate Esso Exploration and Production Guyana Limited is the operator and holds 45% interest in the Block. Hess Guyana Exploration Ltd. holds 30% interest, and CNOOC Petroleum Guyana Limited holds 25% interest.