Increased Oil Price, Production Accelerating Exxonmobil’s Cost Recovery in the Caribbean

• The rising world oil price and increased production are allowing Exxon Mobil Guyana to fast-track the recovery of all of the remaining exploration, production and other costs in the Stabroek Block this year rather than next year, company President Alistair Routledge said
• Currently, historic costs remain about US$5Bn out of an estimated US$40Bn cost bank. He said the current oil price of about US$100 per barrel would allow Exxon Mobil to “accelerate” cost bank recovery this year.
• “What we’re now seeing in this price environment is that it will accelerate. Now, we don’t forecast oil prices, but if you stay at the current oil price, then it will happen this year, based on the level of expenditure and the production that we anticipate. So that’s a significant acceleration,” he told a news conference. According to the top company official, Guyana was currently producing more than 900,000 barrels per day. Mr Routledge said the company began wiping out the accumulated cost bank over the past two years due mainly to higher production. Originally, the company had anticipated recovering historic costs in 2027, largely because of increasing volumes of production that is bringing in higher revenues to offset the ongoing expenditures, plus recover historic costs.
• The top Exxon Mobil official explained that the historic costs date back to 1999 when the contract with Guyana was signed and incurred. After the company began operations in 2019, he said revenue started coming in from 2020, “but at that point, we were still spending faster, and we were generating revenue.” Exxon Mobil says it is committed to spending up to US$60Bn in capital expenditure during the life of its operations in Guyana, apart from annual operating expenses amounting to billions of dollars.
• The Exxon Mobil-Guyana government Production Sharing Agreement allows for up to 75 % of gross revenues to be used to recover costs.

(Source: Caribbean National Weekly)