Hess reports 180% profit jump, driven by Payara start-up in Guyana

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Hess Corporation reported a net income of US$972 million or US$3.16 per share for the first quarter of 2024, in its April 25 earnings report. This represents a 180% increase over the net income of US$346 million or US$1.13 per share in the first quarter of 2023. 

The company said the increase in after-tax earnings compared with the prior-year quarter primarily reflects higher production volumes in the first quarter of 2024. 

Exploration and Production (E&P) net income was US$997 million, compared with US$405 million in the first quarter of 2023. The Corporation benefited from a higher average realized crude oil selling price of US$80.06 per barrel, compared to US$74.23 in the prior year quarter, including the effect of hedging. 

Guyana oil production could reach almost 1.5 million bpd by 2027 | OilNOW

Hess said net production was 476,000 barrels of oil equivalent per day (boe/d), compared with 374,000 boe/d in the first quarter of 2023, primarily due to higher production in Guyana and the Bakken. Net production in Guyana totaled 190,000 b/d, up from 112,000 b/d in the prior year quarter. Guyana therefore accounted for 76% of the total production jump reported by Hess for the first quarter. This was due to the start-up of the ExxonMobil-operated Payara project in November 2023, in which Hess is a 30% stakeholder.

Payara reached its target oil production of 220,000 b/d in January and continued to stabilize its output throughout the quarter. The project demonstrated the capacity to produce up to 238,000 b/d, higher than its initial target of 220,000 b/d. 

The Bakken also contributed to Hess’ overall higher production, increasing from 163,000 boe/d in the prior year quarter to 190,000 boe/d. Hess said this primarily reflected increased drilling and completion activity, as well as higher natural gas liquids (NGL) and natural gas volumes.

Chevron has signed a definitive agreement to acquire Hess, driven strongly by Hess’ 30% stake in the Stabroek Block offshore Guyana. The other Stabroek Block partners, Exxon and CNOOC, have filed for arbitration at the International Chamber of Commerce in London, arguing that a right of first refusal (ROFR) clause in their joint operating agreement requires Hess to offer them its 30% stake before Hess could be sold to Chevron. Discoveries continue to be made and new projects are being pursued, raising the stakes. The dispute could delay the planned acquisition to 2025.

Guyana is also seeing a surge in revenues from royalties and oil sales from the production at the Stabroek Block. With the start-up of the Payara project, Guyana expects approximately US$2.4 billion in oil revenues this year, up from US$1.6 billion in 2023.

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