ExxonMobil seals US$1.26B deal with SBM to purchase Liza Unity FPSO

– 3Q report highlights Whiptail FEED contract, delivery of Prosperity

United States oil giant, ExxonMobil, has completed the payment of some US$1.26 billion to its affiliate, Dutch-based SBM Offshore, for the purchase of the Liza Unity floating production, storage and offloading (FPSO) vessel.
In a brief statement on Friday, SBM Offshore disclosed the two companies completed the purchase transaction a few months ahead of the end of the maximum lease term, which was set for February 2024.
“The purchase allows ExxonMobil Guyana to assume ownership of the unit while SBM Offshore will continue to operate and maintain the FPSO up to 2033,” the missive detailed.
According to SBM, “The transaction comprises a total cash consideration of US$1.26 billion. The net cash proceeds will primarily be used for the full repayment of the US$1.14 billion project financing and as such will decrease SBM Offshore’s net debt position.”
In fact, Chief Executive Officer of SBM Offshore, Bruno Chabas said in the company’s Third Quarter Report that given this purchase transaction, they revised their revenue and EBITDA (earnings before interest, taxes, depreciation, and amortisation) guidance upwards to reflect this. Consequently, the 2023 EBITDA guidance increased from US$1 billion to around US$1.3 billion.
The Liza Unity FPSO was commissioned for the Liza Phase Two project – Exxon’s second development in the oil-rich Stabroek Block Offshore Guyana.
This vessel has been on hire since February 2022 and this year, was operated through the integrated operations and maintenance model combining SBM Offshore and ExxonMobil’s expertise and experience delivering outstanding operational performance.
Production using the <<<Liza Unity>>> FPSO commenced in February 2022 with the maximum capacity to produce up to 220,000 barrels of oil per day (bpd). It also has the capacity to have associated gas treatment of some 400 million cubic feet per day (mmcfd), and a water injection capacity of 250,000 b/d. This vessel can store around two million barrels of crude oil (bbl).
The Liza Phase Two development has a total of six drill centres with 30 wells, including 15 oil-producing wells, nine water injection wells, and six gas injection wells.
The Stabroek Block is 6.6 million acres (26,800 square kilometres). Exxon, through its local subsidiary Esso Exploration and Production Guyana Limited (EEPGL), holds 45 per cent interest in the block. Hess Guyana Exploration Ltd holds 30 per cent interest and CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds the remaining 25 per cent interest.
Exxon, along with its partners, is currently producing some 400,000 bpd in the Stabroek Block from the Liza Phase One and Two projects.
Recent data from the Natural Resources Ministry revealed that the US oil major’s projects in the Stabroek Block have produced approximately 91 million barrels of crude. According to the Ministry’s Petroleum Management Programme, the average output for this year is pegged at some 377,850 bpd with the Liza Unity demonstrating high volumes.
While the Liza Phase One has produced around 36 million barrels at 148,330 bpd, the Liza Phase Two project has generated some 56 million barrels at 231,080 bpd and this amount has increased in recent months.
ExxonMobil has said it anticipates at least six projects offshore Guyana, including the Whiptail project, will be online by 2027. With production already ongoing at the Liza Phase 1 and 2 projects, Exxon is expected to start up its third development, Payara, before the end of this year.
In addition to Unity, SBM Offshore has already built the Liza Destiny FPSO for the Liza Phase One project and the Prosperity vessel for the Payara project. The Prosperity FPSO arrived in Guyana in April this year. The Dutch company will also build the One Guyana FPSO for Exxon’s fourth project – Yellowtail.
Only last month, SBM Offshore announced that it has bagged the contracts to perform Front End Engineering and Design (FEED) for the FPSO vessel for the Whiptail Development project – Exxon’s sixth development offshore Guyana. The Dutch company said it will eventually construct and install the FPSO upon the completion of the FEED contract.
This FEED contract and the delivery of the Prosperity FPSO were some of the highlights presented in SBM Offshore’s Third Quarter Report.
According to CEO Chabas, “We are pleased to have been awarded a further FEED contract in Guyana for an FPSO for the Whiptail development project. This project, subject to Government approvals and a final investment decision by ExxonMobil Guyana, will be the fifth for the company in Guyana and is based on a new commercial model: the FPSO’s ownership is expected to be transferred to the client at the end of the construction period. SBM Offshore is then expected to operate the FPSO using its innovative integrated operations and maintenance model. This combines SBM Offshore and ExxonMobil’s expertise and experience, leveraging key learnings and the operational excellence of the units currently deployed in Guyana.” (G-8)