Hess Corporation does not expect oil production in the South American country of Guyana where it has a 30% stake in the Stabroek Block, to turn a profit for the company before 2022 when the larger Liza Phase 2 development comes on stream.
When Liza Phase 1 production comes online, expected by 2020, Guyana will still be at breakeven or perhaps a slight deficit says CEO John Hess. Speaking to investors on a Q1 2018 conference call on April 25, the CEO said, “When that production comes on, we’re beginning to pick up significant cash flow, but Guyana itself is going to be still maybe more in a breakeven to maybe a slight deficit as we go forward with Phase 2 and Phase 3 capital. Then what happens when Phase 2 comes on – and remember that’s a bigger FPSO; 220,000 barrels per day – when that comes on and let’s just say it’s two years for now; somewhere mid-ish 2022, just for an assumption standpoint. Guyana begins to throw off significant free cash flow at that point in time.”
Hess said key to the company’s strategy is its position in Guyana “which represents one of the most attractive oil investment opportunities in the world today. The 6.6 million acres Stabroek block in Guyana where Hess has a 30% interest and ExxonMobil is the operator is uniquely advantaged by its scale, reservoir quality, cost, rapid cash paybacks, and superior financial returns.”
The giant Payara field is planned as the third development with start-up expected in late 2023 or early 2024, bringing expected gross production from the first three phases of development to more than 500,000 barrels of oil per day.