Listen to this article 5 min
Spring-based Exxon Mobil Corp. (NYSE: XOM) has reached a final investment decision for its $12.7 billion Whiptail project in the Stabroek Block offshore Guyana.
This will be the sixth project in the Stabroek Block. The offshore area is the subject of a dispute between Exxon and Chevron Corp. (NYSE: CVX), which plans to acquire Hess Corp. (NYSE: HES), another Stabroek partner.
Exxon’s affiliate ExxonMobil Guyana Ltd. is the operator and holds a 45% stake in the Stabroek Block. Hess Guyana Exploration Ltd. holds 30% interest, and CNOOC Petroleum Guyana Limited holds 25% interest.
“Our unrivaled success in developing the Guyana resource at industry-leading pace, cost and environmental performance is built on close collaboration with the government of Guyana, as well as our partners, suppliers, and contractors,” Liam Mallon, president of ExxonMobil Upstream Co., said in a press release.
The FID comes after the Whiptail project received its government and regulatory approvals. The project will produce 250,000 barrels of oil per day, bringing Guyana's total production capacity to approximately 1.3 million barrels per day, Mallon said.
The Whiptail project will include up to 10 drill centers with 48 production and injection wells. Jaguar, the floating production storage and offloading vessel for the Whiptail project, is currently under construction. Jaguar will join three other FPSOs — Liza Destiny, Liza Unity and Prosperity — in operations offshore Guyana.
“We are excited to sanction Whiptail, our sixth oil development on the Stabroek Block, and remain on track to have six FPSOs online by the end of 2027,” Hess CEO John Hess said in another release. “We are proud to work with the Government of Guyana to realize the remarkable potential of this world-class resource for the benefit of all stakeholders.”
Last month, Exxon filed for arbitration to get first dibs on Hess’s Stabroek stake because Chevron reached a $53 billion deal to acquire Hess.
The parties in the Stabroek Block — Exxon, Hess and China National Offshore Oil Corp. — have a pre-existing joint operating agreement that contains a provision that provides the parties a right of first refusal. This provision details that if one of the parties in the Stabroek Block is being acquired, in this case Hess, the other companies have the right to acquire the company’s participating interest in the Stabroek Block if it is applicable to the merger agreement.
Chevron and Hess have disagreed with Exxon on whether the joint operating agreement gives Exxon a right of first refusal for Hess’s interest in the Stabroek Block if Chevron were to acquire Hess.
Hess’ assets in Guyana are the most valuable part of the Chevron deal, making up about 80% of the acquisition's total value, Andrew Dittmar, senior vice president at Enverus Intelligence Research, said when the deal was announced in October. The acquisition, which would mark Chevron's entry into Guyana's offshore production, would give the California-based company access to the largest oil discovery in the past decade.
The Stabroek Block currently has three developments in operation: Liza Phase 1, Liza Phase 2 and Payara, which started production in November. Together, they produce more than 640,000 gross barrels of oil per day. The fourth and fifth developments, Yellowtail and Uaru, are targeting startups in 2025 and 2026 respectively, together adding 500,000 bpd of capacity.
In a Feb. 26 filing, Chevron said the Hess acquisition may not close if it is decided the right of first refusal provision does apply to the transaction, as this would violate a closing condition of the deal.
Chevron is based in San Ramon, California, but it employs thousands of people in the Houston area. Hess is based in New York, but its Hess Midstream LP (NYSE: HESM) master limited partnership is based in Houston.
Sign up here for the Houston Business Journal’s free morning and afternoon daily newsletters to receive the latest business news impacting greater Houston. For more business intelligence, follow us on LinkedIn, Facebook, X (formerly known as Twitter) and Instagram.