Stabroek COVs could exceed 2024 well projection with Chevron’s takeover of Hess – Deakin

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Chevron’s recent takeover of Hess has major implications for Guyana’s oil industry and its blossoming economy, according to Americas Market Intelligence (AMI) Director of Energy Practice, Arthur Deakin.

For instance, Deakin foresees an uptick in the wells planned for next year. 

“ExxonMobil’s US$62 billion dollars in free cash flow in 2022 makes it one of the most well-capitalized oil and gas companies in the world. The speed of their ramp-up in Guyana has been unprecedented, both in terms of time to market and successfully drilled wells,” Deakin said.

He pointed out however, that with another oil major joining the Stabroek consortium, the 10 to 12 wells likely planned for 2024, and the 35-well exploration campaign announced through 2028, activities will actually exceed the original numbers. 

Chevron’s deep pockets could see more “adventurous drilling” in Stabroek Block – Deakin | OilNOW

Exxon got the greenlight from Guyana’s Environmental Protection Agency (EPA) in July for the 35-well campaign. That will be the largest single exploration campaign pursued by any explorer offshore Guyana. The wells are expected to be drilled over several years, beginning in 2023 and concluding in 2027. The Stabroek block has so far delivered 11 billion oil-equivalent barrels. The Exxon-led consortium believes there is multi-billion-barrel potential remaining.

Exxon said that the majority of the wells will be drilled for exploration purposes. However, a few appraisal wells, in proximity to old exploration wells, are also being targeted.

Exxon had identified 10 drill targets for 2023: these included Tarpon Fish-1 in the northwest corner of the Stabroek block and Lancetfish-1, the deep play exploration well, located approximately 2.5 miles northeast of the Fangtooth SE-1 well. Two discoveries were made at the Lancetfish area; one in April and the other in October. There is also the Basher well, which will target a deep prospect in the Fangtooth area, and a well called Blackfin, which will penetrate an updip upper prospect east of the Barreleye-1 discovery. 

Deakin also sees the potential for an increase in production estimates for existing wells. He explained that while the Stabroek consortium already has one of the most, if not the most, competent, technical team in the oil and gas industry with Exxon at the helm, there are technological advances that Chevron could bring to the table that could increase production estimates for Guyana – upwards from the 1.2 million barrels per day projected for 2027. 

The AMI Director added that Chevron’s Chief Executive Officer (CEO), Mike Wirth, discussed a partnership with OpenAI, focusing on utilizing AI technologies for the oil and gas industry. He said that Wirth had emphasized that oil giants gather substantial geological data. 

“Oftentimes, these innovative technologies are siloed inside companies, with Chevron already suggesting that they will introduce new technical capabilities to the Bakken assets owned by Hess,” he continued. And possibly, Guyana. 

Chevron will acquire all of the outstanding shares of Hess in an all-stock transaction valued at US$53 billion, or US$171 per share based on Chevron’s closing price on October 20, 2023. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The total enterprise value, including debt, of the transaction is US$60 billion.

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