ExxonMobil partner hit by sharp dip in share value

first_imgLocal oil sector…says Guyana investments not in danger After a dip in the value of its shares on the New York Stock Exchange (NYSE), ExxonMobil’s partner, Hess Corporation, assured that the financial setback will not affect its operations in Guyana, such as investments leading up to oil production in 2020.During trading last week, Hess shares dipped by 13 cents to US$46.61. It has subsequently recovered, but the dip was enough for Hess to assure that its investment in the Guyana Stabroek Block, where it shares a block with ExxonMobil and other affiliates, would be unharmed.According to a report originating from Reuters, Hess will be taking action to mitigate any financial fallout. This includes buying back its own shares, which will see the company fast-tracking the purchase of US$500 million in shares. It is expected that they will have bought an estimated US$1 billion by year end.Companies buy back shares for a variety of reasons. The most relevant one to Hess’s predicament is a move to reduce threats to its share value by limiting their availability on the open market.In an interview with the international news agency, Chief Executive Officer John Hess was quoted saying “We can expand the buyback authorisation without compromising our ability to fund this world-class investment (Liza Project).”Elliott Management, a hedge fund firm which owns more than six per cent of Hess, threw its support behind the buyback. In a statement, the firm praised Hess’s plans to review its operations in view of its investments in Guyana.“We are encouraged that the company has indicated that they are committed to closing the value gap and will be dynamic in exploring further steps to do so,” Elliott said in a statement before beginning to produce oil from the project in Guyana.The Stabroek Block is 6.6 million acres. Esso Exploration and Production Guyana Limited is the operator and holds a 45 per cent interest in the Stabroek Block. Hess Guyana Exploration Ltd, Hess Corporation’s subsidiary, holds a 30 per cent interest, and CNOOC Nexen Petroleum Guyana Limited holds a 25 per cent interest.Since ExxonMobil’s 2015 oil find in Guyana, the country has attracted international attention and precipitated intense sensitisation exercises. In May 2015, Exxon confirmed that more than 295 feet of high-quality oil-bearing sandstone reservoirs was encountered at its Liza 1 exploration well.In late June 2016, Exxon’s drilling results at Liza 2 revealed more than 58 metres of oil-bearing sandstone reservoirs in Upper Cretaceous formations. The well was drilled to 5475 metres at 1692 metres water depth. Drilling results confirmed recoverable resources to be between 800 million and 1.4 billion barrels of oil equivalent.The company had announced that it made its third significant discovery in its drilling explorations offshore Guyana. Its partner, Hess Corporation, had noted that the Liza 3 exploratory well’s net value could be US$6.2 billion based on calculations from the Bank of Montreal (BMO) Capital Markets.Drilling on Payara began on November 12, 2016, with initial total depth reached on December 2, 2016. In January of 2017, the oil giant had announced it had struck some 95 feet of oil reservoirs in its Payara-1 well, targeting the same type of reservoirs as the well’s Liza counterpart.Oil was discovered in the Turbot-1 well in October of 2017. According to the oil company following the discovery, the well reservoir was 75 feet deep. Drilling has been ongoing at the Turbot well since August 2017.More oil was found at the Pacore-1 drill site, some 107 miles from the coast of Guyana. This would be the seventh major find by Exxon since May 2015. It is understood that additional exploration drilling is planned on the Stabroek Block for 2018, including potential appraisal drilling at the Ranger discovery.last_img

Leave a Reply

Your email address will not be published. Required fields are marked *