Exxon Mobil Corporation (XOM - Free Report) has accelerated the development of the Liza Phase 1 after commencing development drilling offshore Guyana.
Development drilling for the first of 17 wells planned for Phase 1 was initiated in May. This facilitated the start of production scheduled for 2020.The Liza prospect, operated by Exxon Mobil, is located about 120 miles (193 kilometers) offshore Guyana in the Stabroek block and spreads across 6.6 million acres (26,800 square kilometers). Exxon Mobil and its co-venturers have encountered estimated recoverable resources of more than 3.2 billion oil equivalent barrels on the Stabroek block.
The Liza Phase 1 is estimated to generate more than $7 billion in royalty and profit oil revenues, which will prove beneficial for Guyana. The country will also gain from other development projects currently being planned. An oil tanker will be converted into a floating, production, storage and offloading (FPSO) vessel named Liza Destiny as part of Liza Phase 1 development along with four undersea drill centers with 17 production wells. More than a dozen countries are constructing FPSO and subsea equipment.
Liza Destiny will have a production capacity of 120,000 barrels of oil per day. A second FPSO is being planned as part of the Liza Phase 2 development and expected to have a capacity of 220,000 barrels per day. The third one is under consideration for the Payara development. Cumulatively, these three developments will yield more than 500,000 barrels of oil per day.
More than 50% of Exxon Mobil’s workforce including employees, contractors and subcontractors are Guyanese. The number of Guyanese employees is expected to increase with more operations in the region. In 2017, Exxon Mobil spent about $24 million with more than 300. Consequently, the company opened the Centre for Local Business Development in Georgetown, Guyana, to support the establishment and aid growth of small- and medium-sized local businesses. The centre has facilitated provisions for training and capacity-building support for more than 275 local businesses.
Exxon Mobil affiliate Esso Exploration and Production Guyana Limited holds 45% interest in Liza Phase 1. Hess Corporation (HES - Free Report) holds 30% interest and CNOOC Limited (CEO - Free Report) holds 25% interest.
In the past three months, Exxon Mobil’s shares have gained 10.6% compared with the industry’s 12.8% rise.
Zacks Rank & Key Picks
Exxon Mobil carries a Zacks Rank #3 (Hold).
A better-ranked player in the same sector is Occidental Petroleum Corporation (OXY - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Occidental Petroleum is an international oil and gas exploration and production company. It pulled off an average positive earnings surprise of 30.2% in the last four quarters.
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