Hess Corporation on Monday announced its 2021 Exploration & Production capital and exploratory budget of $1.9 billion with more than 41% allocated to offshore developments in Guyana where the company has a 30% stake in the prolific Stabroek block.
CEO John Hess reminded that the three oil developments sanctioned so far in Guyana – Liza Phase 1, 2 and Payara, have a Brent breakeven oil price of between $25 and $35 per barrel which remains integral to company’s growth plans.
“By investing only in high return, low-cost opportunities, we have built a differentiated portfolio of assets that we believe will provide industry leading cash flow growth over the course of the decade,” Hess disclosed during the presentation of the company’s 2021 budget.
The relatively low cost of producing crude in Guyana continues to make the South American country a favourable investment destination even with the impact of demand destruction brought on by the coronavirus.
Hess’s Chief Operating Officer, Greg Hill emphasized Guyana’s importance to the company this year. “Offshore Guyana, our focus in 2021 will be on advancing our next two sanctioned developments to first oil – Liza Phase 2 in early 2022 and Payara in 2024 – and on front end engineering and design work for future development phases on the Stabroek Block.
Development of the nation’s offshore oil fields will also feature prominently in Hess‘s long-term project development plans. “We also will continue to invest in an active exploration and appraisal program, with 12-15 wells planned on the Stabroek block,” Hill disclosed.
The $1.9 billion budget Hess has allocated for 2021 comprises $670 million (35%) for production, $780 million (41%) for offshore Guyana developments and $450 million (24%) for exploration and appraisal activities.
Specifically, $25 million of the Hess budget is associated with the Liza Phase 1 development on the Stabroek Block in Guyana (Hess 30%), where production reached nameplate capacity of 120,000 gross barrels of oil per day in December 2020.
Additionally, $450 million is for the Liza Phase 2 development with production startup expected in early 2022 with a capacity of up to 220,000 gross barrels of oil per day, while $235 million is for the Payara development with startup planned for 2024 at a capacity of up to 220,000 gross barrels of oil per day.
And, as Hess prepares for the long term, the company has allocated $70 million primarily for front end engineering and design work for future development phases on the prolific Stabroek block offshore Guyana.