With 11 billion barrels of oil equivalent resources unlocked along with a license to drill an additional 35 wells by 2028, Guyana’s Stabroek Block certainly holds the key to Hess Corporation delivering more than 10 percent production growth annually. This much was outlined by the company’s Chief Executive Officer (CEO), John Hess during the company’s 2023 second-quarter earnings call on July 26.
Specifically, Hess articulated that there are multiple phases of multi-billion-dollar developments in the pipeline for Guyana. Currently, there are two projects producing approximately 400,000 barrels of oil per day (bpd) from the Stabroek Block where Hess holds a 30% working interest. A third project, Payara, is set to come on stream in the fourth quarter and add another 220,000 barrels of oil per day.
Two other sanctioned projects, Yellowtail and Uaru, will follow closely behind Payara and produce a combined 500,000 bpd by 2026.
Hess said therefore that Guyana remains the key to its strategy for robust performance. He also noted that ExxonMobil Corporation, through its affiliate and operator, Esso Exploration and Production Guyana Limited (EEPGL), has made more than 30 discoveries on the Stabroek Block.
Hess said the partners, which also include CNOOC Petroleum Limited Guyana, currently have a line of sight to six floating production, storage and offloading vessels, or FPSOs, in 2027, with a gross production capacity of more than 1.2 million barrels of oil per day and the potential for up to 10 FPSOs to develop the discovered resources on the Stabroek Block.
In terms of low cost of supply Hess said, “As our resource base continues to expand, particularly in Guyana, where our first five developments have breakevens in the range of US$25 to US$35 per barrel Brent, we will steadily move down the cost curve. By 2027, we forecast that our cash unit costs will decline by 25% to approximately US$10 per BOE.”
Given these developments, coupled with its robust inventory of high-return drilling locations in the Bakken, Hess said it is well positioned to deliver highly profitable production growth of more than 10% annually through 2027 for its shareholders.
Based upon a flat Brent oil price of US$75 per barrel, the company’s cash flow is forecast to increase by approximately 25% annually between 2022 and 2027, more than twice as fast as its top-line growth.
