Hess completes sale of interest in Gulf of Mexico field; shifts focus to “world-class investment opportunity” in Guyana

Hess Corp CEO John Hess
CEO John Hess 

Thirty percent stakeholder in the Stabroek Block, Hess Corporation, has completed the previously announced sale of its 28% working interest in the Shenzi Field in the deepwater Gulf of Mexico to BHP, the field’s operator, for a total consideration of $505 million, with an effective date of July 1, 2020.

According to Chief Executive Officer John Hess, “this transaction brings value forward in the current low price environment and further strengthens our cash and liquidity position.”

Hess explained that the proceeds from the sale will be used to fund the company’s “world class investment opportunity in Guyana.”

The Shenzi field had produced an average of 11,000 net barrels of oil equivalent per day in the first eight months of 2020.

Just recently, Hess Corp. announced plans to invest approximately US$1.8 billion in the Payara Development project, excluding pre-sanction costs and Floating Production Storage and Offloading (FPSO) purchase cost.

The company had said that it made a final investment decision to proceed with development of the Payara Field offshore Guyana after the development plan had gotten the go-ahead from the Government of Guyana.

The Stabroek Block is 6.6 million acres. ExxonMobil affiliate Esso Exploration and Production Guyana Limited is the operator and holds 45 percent interest. Along with Hess’ 30 percent, CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds 25 percent interest  in the Stabroek Block.

Payara is the third Field Development Plan (FDP) in the Stabroek Bock to gain approval. The first FDP that the Guyana Government approved was for Liza Phase One, while Liza Phase Two is expected to start up in 2022.

The Liza Phase 1 development, with a production capacity of 120,000 gross barrels of oil per day, achieved first oil in late 2019. Liza Phase 2 remains on track to achieve first oil by early 2022. It will produce up to 220,000 gross barrels of oil per day at peak rates using the Liza Unity FPSO, which is under construction in Singapore.

The US$9 billion Payara development will target an estimated resource base of about 600 million oil-equivalent barrels and is considered to be the largest single investment ever made in Guyana.

The project is expected to produce up to 220,000 barrels of oil per day after startup in 2024, using the Prosperity FPSO vessel.

The Guyana Government has said that it remains committed to managing and harvesting Guyana’s oil and gas resources sustainably “in keeping with internationally recognised acceptable environmental standards and transparency for the benefit of all Guyanese”.

It has also assured that oil revenues will go towards developing modern infrastructures and ensuring that citizens benefit from improved social services.