Guyana’s Reported Oil Shares Before and After Exxon’s Cost Recovery

Kaieteur News distinguishes two figures in its account of Guyana’s 2016 Production Sharing Agreement: contractors could take up to 75% of oil produced each month to recover costs, while Guyana received 12.5% of profit oil during the cost-recovery period. The 75% figure is a monthly cost-recovery allocation; the 12.5% figure is Guyana’s reported share of profit oil, so they measure different things.

At a recent Barclays Conference, Exxon Senior Vice President and Chief Financial Officer Neil Hansen said the company had recovered the US$55 billion it invested in exploration and development of the Stabroek Block about two years earlier than expected, according to Kaieteur News. The publication reports that Exxon said its cost bank had been completely cleared and that Guyana’s profit-oil share had risen to 39.8%. These are reported shares at different stages; Kaieteur News does not quantify Guyana’s overall benefit.

The publication also reports that the fifth FPSO is already in Guyana’s waters and that Exxon is looking at advancing a ninth. It raises the terms of future developments as a concern in light of the reported sequence: the agreement’s cost-recovery mechanism, Exxon’s reported clearance of the cost bank, and the later profit-oil share. The article’s concern does not establish what terms future projects will have.