Exxon Mobil Corporation (XOM - Free Report) recently made its 13th oil discovery off the coast of the South American nation Guyana. The company found new oil at the Yellowtail-1 well in the prolific Stabroek block, wherein recoverable resource was earlier estimated at around 5.5 billion barrels of oil equivalent. Notably, the latest discovery at the Yellowtail-1 well marks the fifth one in the Turbot area.
Yellowtail-1 well, which is located about 10kilometersnorthwest of the Tilapia discovery, was drilled at a depth of 5,622 meters in 1,843 meters of water. ExxonMobil found around 89 meters of oil-bearing sandstone reservoir at the site, which is rich in quality. Noble Corporation plc’s (NE - Free Report) Noble Tom Madden drillship, which commenced drilling the well on Mar 27, will next head for the Hammerhead-2 well in the same Turbot region. Its Noble Don Taylor drillship has been recently awarded a one-year contract by ExxonMobil for work offshore Guyana, expected to commence from early October.
Significance of Offshore Guyana
ExxonMobil regards offshore Guyana as a key growth area. The latest discovery, which marks the third in the region this year, further strengthens the company’s upstream portfolio. Earlier, the energy major stated that the 26,800 square-kilometer Stabroek block has the potential to use more than five floating production, storage and offloading (FPSO) units. Total output from the block can exceed the 750,000 barrels of oil per day (BPD) mark by 2025.
Notably, another offshore Guyana project of the company, Liza Phase 1 development is on schedule and expected to come online by first-quarter 2020. It will produce 120,000 BPD with the help of the Liza Destiny FPSO vessel. The Liza Phase 2 is anticipated to come online by mid-2020. Production from this project is expected to be 220,000 barrels per day, supported by the Liza Unity FPSO vessel. The company’s Payara prospect in the Stabroek block is expected to commence in 2023.
Esso Exploration and Production Guyana Limited, a subsidiary of ExxonMobil, is the operator in the Stabroek Block with 45% stake. The respective subsidiaries of Hess Corporation (HES - Free Report) and CNOOC Limited (CEO - Free Report) have 30% and 25% interest in the block.
Price Performance & Zacks Rank
ExxonMobil has gained 1.9% in the past year against 6.8% collective decline of the industry it belongs to. The largest publicly traded energy company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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