Exxon's Guyana Oil Discovery May Be Twice as Large as Thought

(Bloomberg) - Exxon Mobil Corp.’s oil discovery off the coast of Guyana may hold as much as 1.4 billion barrels, twice the size of the previous estimate, making it worth as much as $69.5 billion based on current prices.

The Liza field 120 miles (193 kilometers) from the coast of Guyana is a “world-class discovery” that probably will yield the equivalent of 800 million to 1.4 billion barrels of crude, the Irving, Texas-based company said in a statement on Thursday. Hess Corp., a partner in the field, will see a a 39 percent boost in current proved reserves at the upper end of the estimate.

Exxon’s announcement comes as the oil industry emerges from the worst market slump in decades. Since dipping to a 12-year low in January, the international benchmark for crude has risen nearly 80 percent to about $50 a barrel. The Liza discovery may not add to global oil supplies for years as deepwater finds can take half a decade or more to bring into production.

“This exploration success demonstrates the strength of our long-term investment approach, as well as our technology leadership in ultra, deepwater environments,” Steve Greenlee, president of Exxon Mobil Exploration Company, said in the statement.

Exxon is operator of the Liza discovery and owns a 45 percent stake. Hess holds a 30 percent interest and the remaining 25 percent belongs to CNOOC Ltd.

Hess Reserves

It’s an enormous discovery for Hess. At the high end of the estimate, the New York-based company’s stake equates to 420 million barrels, a 39 percent addition to proved reserves. More exploratory drilling is planned for the Stabroek block that hosts the Liza field, Hess said in a separate  statement.

Hess jumped as much as 4.5 percent after the announcement and traded at 59.30 at 10:53 a.m. in New York. Exxon rose 62 cents to $93.08.

Hess is “very encouraged by the drilling results to date of the Liza prospect, which we believe has the potential to materially contribute to our resource base and future production growth,” Chief Executive Officer John Hess said in the statement.

The upper end of the new estimate is two times larger than the 700 million-barrel figure disclosed by Raphael Trotman, Guayana’s minister of governance, in a July interview with Bloomberg News. 

To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Jim Efstathiou Jr., Stephen Cunningham

Copyright 2016 Bloomberg News.

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