Introduction
Over this week’s and the column to follow I shall provide a summary overview of ExxonMobil’s two consortium partners in crude oil and gas exploration, appraisal and production in Guyana, largely confined so far to the bountiful Stabroek block. These are the Hess Corporation with a 30 percent working interest and CNOOC Nexxen Guyana Petroleum with 25 percent interest. These are considered below in the order indicated here.
Upfront, the focus of these two columns is on filling the informational deficits readers may face because of the scantiness of coverage, given that I have failed over the past six years to dedicate a single full column to this task.
Overview
Hess Corporation
Hess Corporation (established 1969) and headquartered in New York has, through its Guyana subsidiary, the second largest stake (30 percent) in the consortium led by Exxon Mobil. It has categorized Guyana as a “play” containing “multiple prospects and play types”. Merrill Lynch has reported significant upside- potential for Hess Corporation, which emerged out of the British Amerada Hess Company, founded in 1919. A decade ago, 2013, Hess Corporation became a Fortune 100 corporation ranked number 75 in Fortune 500.
In 2014 the Corporation completed a multi-year transformation focusing on oil and gas exploration and production. During this process it had divested much of its downstream businesses, including energy marketing, gas stations, terminals, and refining operations.
At the end of 2015 its revenues were nearly US$7 billion and total assets stood at US$34.2 billion; Employing 2,770 persons, or less than one-quarter of its earlier levels, prior to concentrating on exploration and production. While not a “super-major” like ExxonMobil, the corporation is a significant energy player in Europe, Africa, Latin America, Asia, Australia and the United States.
From all appearances the Guyana play appears to fit well with the Hess Corporation’s strategy of low-risk high-reward ventures that require strong commitment to up front capital expenditures to produce later profits.
Like the lead Operator, (EEPGL), Hess Guyana seems well disposed not only to pursue further discoveries and to continue wider explorations of the Stabroek Block and the Guyana-Suriname Basin. Indeed, the company website notes: “the results …emphasize the growth prospects of Hess’ resource base and production. The company continues to assess the resource potential of the broader Stabroek block with further exploration planned.”
Corporate Values
Hess Corporation’s website describes itself as “a global independent energy company engaged in the exploration and production of crude oil and natural gas … an industry leader … in the deep-water … offshore Guyana, participating in one of the industry’s largest oil discoveries in the past decade.” Further, unabashedly, the website boasts that Hess is recognized as an industry leader in environmental, social and governance performance and disclosure!
The basis for this assertion seems to lie in the six-core values guidance, which management proclaims guides Hess actions as individuals at work and as a corporation: Integrity, People, Performance, Value Creation, Social Responsibility and Independent Spirit. There is the caveat that, while corporate strategy necessarily changes over time based as it is on business conditions, Hess values do not; they are enduring.
It is from this declared perspective the corporation is committed to meeting the world’s growing need for energy, while making a positive impact on the communities where business takes place [Guyana]. A lot of aspirational declarations are expressed with the promise to avoid widely expressed concerns.
ExxonMobil the Lead Operator’s, reputation, behaviour and performance work against the entire consortium including its zombification status in the USA. This puts Hess on the proverbial back foot
Thus, the need for Hess to proclaim “we strive each day to be a trusted partner that ensures the safety of our workforce and host communities while protecting and preserving the environment.” As the saying goes the proof of the pudding lies in its eating.
Hess Recent Developments
Based on press reports I believe that, on a comparative basis the Hess Corporation has been leading in Consortium efforts to spread the news on Guyana’s emerging petroleum sector. It’s Q4 2023 reporting offers a summary description of the emerging sector and its prospects over the next ten years or so with a bias towards its own forecasted contributions.
With a profit of US$624 million and a share price trending upward in its Exploration & Production budget of US $3.7 billion, more than 80 percent will be allocated to Guyana and the Bakken. Guyana is forecast to average thousands of barrels of oil per day in 2023)
More generally the following schedule emerges
Schedule of Projects
Liza 1 and Liza 2 [projects1 and 2] 360,000 barrels/day, already in place
Payara [project 3] 220,000 barrels/day, on schedule for this year, Yellowtail [project 4] 250,000 barrels/day scheduled for 2025, Uaru [project 5] 250,000 barrels/day scheduled for 2026, Whiptail [project 6] 220,000 to 275,000 scheduled for after 2026.
Active E & D continue linked to the First Oil Projects, Liza Phase 1 and Phase 2 developments on the Stabroek Block with ten more wells in the offing offshore. Guyana is currently operating at a combined gross production capacity of more than 360,000 barrels of oil per day. In addition, $150 million for the Gas to Energy project with First Gas expected by year end 2024. And $250 million primarily for front end engineering and design work, FEED, for future development phases on the Stabroek Block.
Conclusion
As indicated the purpose of this column is to give readers a balanced review of Hess Corporation rather than a critical riposte to the company operations through the Consortium. Next week I appraise CNOOC Nexxen similarly and wrap-up this discussion.
