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ExxonMobil (XOM) Increases Guyana Crude Production Target

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Exxon Mobil Corporation (XOM - Free Report) reportedly increased its guidance for production from Guyana. The company’s fourth deepwater project in Guyana is expected to boost output.

Reports stated that the company will likely reach a production of 800,000 barrels per day (bpd) by 2025, per its latest environmental permit application. The figure reflects an increase from the previous projection of 750,000 bpd by 2026. Furthermore, production is expected to reach 1 million bpd by 2027.

From the Yellowtail project, the company is expected to produce 250,000 bpd of oil. This will mark the highest output from a single project in the region. It is likely to commence output by 2025-end. Importantly, it made a significant oil discovery (19th) at the Uaru-2 well in the Stabroek Block at April-end, which would add to the previously-discovered gross recoverable resource estimate of more than 9 billion barrels of oil equivalent in the block.

ExxonMobil’s wholly-owned subsidiary Esso Exploration and Production Guyana Limited (“EEPGL”) is the operator of the Stabroek Block, with a 45% ownership interest. The remaining stakes are owned by subsidiaries of Hess Corporation (HES - Free Report) and CNOOC Limited, holding 30% and 25% interest, respectively. In a virtual Scotia Howard Weil Energy Conference, Hess stated in March that it expects multibillions of exploration potential to be still left in Guyana. It estimates Liza Phase 1 development to have a breakeven Brent price of $35 per barrel of oil. The Liza Phase 2 development will have a breakeven Brent price of $25 per barrel. The Payara project, third development at the site, will likely have a breakeven Brent price of $32 per barrel.

The low breakeven prices from the Guyana assets are expected to generate massive profits for ExxonMobil and its partners in the block. Moreover, analysts expect that the cash generated from Guyana operations can support the company’s environmental ambitions. ExxonMobil chalked out a new plan to lower greenhouse gas emissions over the next five years after the leading integrated energy firm was repeatedly targeted by activist investors over climate change concerns. While European energy majors like BP plc (BP - Free Report) and Equinor ASA (EQNR - Free Report) rapidly boosted investments on renewables, there is mounting pressure on ExxonMobil to follow suit.

Importantly, ExxonMobil’s new 2025 targets comprise cutting the intensity of emissions from upstream operations by 15-20% from 2016 levels. Over a five-year span, it will also reduce methane intensity by 40-50% and flaring intensity by 35-45%. Elimination of routine flaring in the next decade is another plan that will align with the initiative of World Bank, as stated by the energy giant.

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