Wednesday, June 7, 2023

Hess Corporation’s most impressive asset is in Guyana

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Hess Corporation’s most impressive asset remains the 30% stake it has in the Stabroek Block offshore Guyana where over 9 billion barrels of oil equivalent resources have been found since 2015.

The first 4 developments – Liza Phase 1, 2, Payara and Yellowtail – will be producing over 800,000 barrels of oil per day by 2025. Going forward another development every year or two will allow the company’s production to continue growing.

Hess says Guyana production could hit 1.5 million bpd before 2030

“The company’s 30% stake will turn into 240 thousand barrels/day in production by 2025 at a $37/barrel margin for shareholders,” The Value Portfolio estimates. “That means in 2025, the company will be earning $3.2 billion in annual FCF [free cash flow] from its asset stake, with significant potential to double by 2030 and keep growing by then. That’s massive for an almost $25 billion company and will enable strong shareholder returns.”

At present Hess has almost $1.9 billion in cash and $5.5 billion in total liquidity. The company has 150 thousand barrels/day hedged at $60/barrel Brent, although prices have been stronger than that recently. According to The Value Portfolio, the company also has a $1.9 billion CAPEX budget mostly allocated to its long-term high growth businesses.

Hess says high quality oil found at Uaru with potential for massive reservoir

“Hess Corporation is a valuable company with an impressive portfolio of assets,” The Value Portfolio said. “The company has Gulf of Mexico and JDA/Malay Basin assets that provide reasonable value and occasional asset sale opportunities. At the same time, the company’s Bakken Shale and Guyana assets represent major long-term growth opportunities.”

Hess plugs over three-quarter billion dollars more into Guyana offshore operations

The company reported last month a net income of US$252 million for the first quarter of 2021.  “Our company continues to successfully execute our strategy to grow our resource base, have a low cost of supply and sustain cash flow growth,” CEO John Hess said at the time.

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