US$19 billion to be added to Exxon, co-venturer’s US$7 billion cost bank

ExxonMobil and its co-venturers, Hess and CNOOC, are set to add US$19 billion to their cost recovery bank, in addition to the approximately US$7 billion that remains to be recovered from existing investments in the prolific Stabroek Block offshore Guyana. 

This is according to Guyana’s Vice President, Bharrat Jagdeo. This brings the total of pending cost recovery to around US$26 billion, as the companies continue to expand oil operations. He said the US$19 billion to be added includes expenses associated with the sanctioned Yellowtail, Uaru and Whiptail projects, and a small balance for the Gas-to-Energy project. 

The Stabroek Block operator and its co-venturers have already recovered substantially since oil production began in December 2019. According to mid-year 2024 data, the group most recently recovered US$7.5 billion in the first half of the year, pushing cumulative cost recovery beyond the US$25 billion mark. 

Total cost recovery is expected to surpass US$32 billion by the end of 2024. The steady climb in production, driven by the Liza Phase 1, Liza Phase 2, and Payara projects, has accelerated the pace of cost recovery. 

Guyana’s production sharing agreement with ExxonMobil allows for 75% of annual production to be directed toward recovering exploration, development, and operational costs, with the remaining ‘profit oil’ shared with the government. Once the companies have substantially recovered their investments, they will need less than 75% of annual production for that purpose, setting the stage for Guyana’s revenue from oil sales to balloon further. However, with ExxonMobil seeking government approval for a new oil development and the potential establishment of liquefied natural gas (LNG) facilities, the cost bank may have substantial additions in the future. 

ExxonMobil and its partners have committed more than US$50 billion in investments to offshore development in Guyana. This has so far resulted in oil production rates exceeding 600,000 barrels per day (b/d). This output is expected to more than double, reaching 1.3 million b/d by 2027.