Saturday, September 18, 2021

Hess significantly reduces losses in Q2, Guyana activities advancing

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Hess Corporation which holds a 30 percent working interest in the Stabroek Block offshore Guyana, disclosed today that it sustained a net loss of US$73 million, or US$0.24 per common share, in the second quarter of 2021. This represents a significant improvement when compared with a net loss of YUS$320 million, or $1.05 per common share, in the second quarter of 2020.

On an adjusted basis, the company said net income in the second quarter of 2021 was US$74 million, or $0.24 per common share. It attributed this improvement in adjusted after-tax results compared with the prior-year period to higher selling prices in the second quarter of 2021.

As for exploration and production loss, it said this stood at US$25 million in the second quarter of 2021, compared with a net loss of US$249 million in the second quarter of 2020.

Expounding on the company’s improved fiscal performance, Chief Executive Officer (CEO), John Hess said, “In July, we paid down half of our US$1 billion term loan maturing in March 2023 and, depending on market conditions, we plan to repay the balance in 2022. This debt reduction, combined with increasing cash flows from our Guyana developments, will allow us to significantly increase cash returns to shareholders in the coming years through dividend increases and opportunistic share repurchases.”

With this in mind, he believes the company is uniquely positioned to deliver industry leading cash flow growth over the next decade.

Guyana Operations

Regarding its performance in Guyana, Hess noted the announcement by ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited this morning, that there was a significant new oil discovery at Whiptail. The Whiptail-1 well encountered 246 feet (75 meters) of net pay in high-quality oil-bearing sandstone reservoirs. Hess said drilling is also ongoing at the Whiptail-2 well, which is located 3 miles northeast of Whiptail-1 and has encountered 167 feet (51 meters) of net pay in high quality oil-bearing sandstone reservoirs.

Further to this, Hess said drilling continues at both wells to test deeper targets, while adding that the results will be evaluated for future development. It added that the Whiptail discovery is located approximately 4 miles southeast of the Uaru-1 discovery that was announced in January 2020 and approximately 3 miles west of the Yellowtail Field.

With respect to the Corporation’s net production from the Liza Field, this was 26,000 bopd in the second quarter of 2021 compared with 22,000 bopd in the prior-year quarter.

Hess noted that startup of Phase 2 of the Liza Field development, which will utilize the Liza Unity floating production, storage and offloading vessel (FPSO) with an expected capacity of 220,000 gross bopd, remains on track for early 2022.

As for the third development, Payara, it reminded that this will utilize the Prosperity FPSO with an expected capacity of 220,000 gross bopd; first oil is expected in 2024.

A fourth development, Yellowtail, has been identified on the Stabroek Block with anticipated startup in 2025, pending government approvals and project sanctioning.

Furthermore, Hess noted that the Mako-2 appraisal well was completed in the second quarter confirmed the quality, thickness and areal extent of the reservoir. When integrated with the previously announced results at Uaru-2, the combined discovered resource at Mako and Uaru is expected to support a fifth FPSO on the Stabroek Block.

Hess said it expects to have at least six FPSOs on the Stabroek Block by 2027 with the potential for up to 10 ships to develop the current discovered recoverable resource base.

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