Exxon Defends Guyana Deal Amid Criticism, Seeks Quick Production

Instant Max AI

(Seeking Alpha, Carl Surran, 1.May.2018) – Exxon Mobil defends its oil production contract with Guyana after the International Monetary Fund recommended the country rewrite its tax laws to increase its share of profitable oil and close out loopholes.

“We wouldn’t see any need to renegotiate,” says Erik Oswald, XOM’s VP for exploration in the Americas. ‘The experts are saying there’s nothing unusual or strange about the 2016 contract. [It’s a] middle of the road average contract” for a frontier country, citing studies by Wood Mackenzie and Rystad Energy.

Guyana has become a critical area for XOM, which is struggling to stem production declines across its global business; the company’s deepwater discoveries there are enormous and highly profitable, as breakeven costs including taxes are only ~$26/bbl vs. current Brent prices of ~$75/bbl.

Oswald says a dry hole drilled recently, only the second among seven successes, hasn’t dimmed XOM’s view of Guyana’s potential, as plenty of “headroom” remains for the discovery to increase beyond the 3.2B barrels already found.

“The most important thing… is this is production coming out super quickly,” Oswald says. “We’re going to get real high quality, extremely profitably production, early 2020. That’s a reasonable target.”
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