ExxonMobil boasts a bellwether status in the energy space and an optimal integrated capital structure that has historically produced industry-leading returns, says investment research firm Zacks in an analysis published on Nasdaq this week.
“Management’s track record of capex discipline across the commodity price cycle makes it a relatively lower-risk energy sector player,” Zacks said, pointing to the multiple discoveries the oil major has made offshore Guyana and how this will result in bigger production volumes.
“The company made multiple world-class oil discoveries at the Stabroek Block, located off the coast of Guyana. It hit another oil prospect at the Longtail-3 well, offshore Guyana,” Zacks said, referring to the latest discovery announced on June 9.
Longtail-3 encountered 230 feet (70 meters) of net pay, including newly identified, high quality hydrocarbon bearing reservoirs below the original Longtail-1 discovery intervals.
The company deployed two additional drillships offshore Guyana in the first quarter of 2021; the Stena DrillMAX and the Noble Sam Croft to enable further exploration and evaluation, while continuing development drilling activities in the basin. It is also moving forward with a 15-well campaign at that is expected to result in further discoveries, adding to the more than 9 billion barrels of oil equivalent found so far since 2015.
“These new finds will lead to soaring production volumes. Daily production is expected to reach 1 million barrels by 2027,” Zacks said.
Annually, through 2025, the company is willing to invest in the $20-$25 billion range. The investments will likely get allocated to profitable growth projects that will generate significant cash flow. According to Zacks, the company expects to generate more than 30% returns from such investments.
“Its strong growth profile along with low debt compared to other integrated majors makes it all the more attractive. These factors should enable Exxon to grow its cash flow, allowing it to continue increasing its dividend,” the investment firm pointed out.
Consultancy group Rystad Energy has said ExxonMobil’s 15 billion boe of reserves declared in 2020 means its volumes would run out in just over 11 years, compared to the previous expectation that these would last for more than 16 years.
But according to Rystad Energy, ExxonMobil has fared better than its peers over the past 5 years, adding more than 70% of the produced reserves thanks to 9 billion boe of discovered volumes offshore Guyana.
The South American country in turn has raked in over US$344 million dollars from its share of Liza crude so far, since production began in 2019, and is expected to cross the half-billion U.S. dollars mark by the end of the year.