Guyana’s value to ExxonMobil will be felt for decades to come, according to an Analyst at Seeking Alpha, a crowd-sourced content service provider that publishes news on financial markets.
In his latest piece on April 12, the analyst examined Exxon’s earnings forecast and why it is a company that investors “want to own.”
To hammer home his point, the analyst said despite the global pursuit of renewable energy, oil and gas will still remain in play for many years to come.
“There is energy addition in form of wind, solar, biofuels, and H2. These sources will share the global energy load along with petroleum sources as long as there is a need for individual transportation and travel,” he outlined. “The good scientists and statisticians at the Energy Information Agency (EIA) have concluded, contrarily to the stated aims of the current executive branch of government, that oil and gas have a bright future as far as the eye can see. In no case do we ever use less oil than we are using now, and in most cases, quite a bit more will be needed.”
This bodes well for new oil producer Guyana, a country which in just eight years has moved from having no proven reserves to over 11 billion barrels of oil equivalent resources. Exxon is operator at the only block where large volumes of commercial crude has so far been found offshore the South American country.
The analyst explained that the US multinational is currently trading at multi-year highs and is ripe for a pullback with its first-quarter earnings release. He added that the company is on track to earn US$10.50 per share in 2023, although that will probably be boosted in the second half thanks to higher oil prices.
“We think this will create a buying opportunity investors should not ignore,” he said.
What works in Exxon’s advantage is its ability to maintain its position as a low-cost producer.
“When Exxon tells you they are going to be the low-cost producer, you can believe it,” he said.
And Guyana’s industry-low breakeven prices and competitive terms make it a prime location for Exxon and its co-venturers. With over 33 discoveries since 2015, Exxon is shooting to produce over a million barrels by 2027 at the prolific Stabroek Block. And it is well on its way to hitting this target.
The company added a third production vessel this week to tap into its massive Payara field. Works are ongoing on the fourth vessel for the Yellowtail project – the largest sanctioned for Guyana. And then in the pipeline, there is the Uaru project, under review. These will add to the already producing Liza Phase 1 and 2 developments.