Hess sells interest in Gulf of Mexico field “to fund world-class investment opportunity in Guyana”

CEO John Hess

Thirty percent stakeholder in the Stabroek Block, Hess Corporation, has entered into an agreement to sell its 28% working interest in the Shenzi Field in the deep-water Gulf of Mexico to BHP Billiton, the field’s operator, for a total consideration of US$505 million.

The deal is subject to customary adjustments, with an effective date of July 1, 2020.

According to Hess, the field produced an average of 11,000 net barrels of oil equivalent per day in the first eight months of 2020.

“Proceeds will be used to fund our world class investment opportunity in Guyana,” CEO John Hess said in a brief statement on Monday.

“This sale is aligned with our strategy to preserve cash and preserve the long term value of our assets in the current low oil price environment,” Hess said.

The transaction is expected to close before year end 2020 and is subject to customary closing conditions.

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 said that it made a final investment decision to proceed with development of the Payara Field offshore Guyana after the development plan got the go-ahead from the Government of Guyana last Wednesday.

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.

“We are excited to sanction our third oil development on the Stabroek Block,” Hess said following the approval of the licenses.

“We thank the Government of Guyana for their support and look forward to realising the full potential of this world class resource,” he added.

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.