Yahoo Finance ExxonMobil's (XOM) Hammerhead Project Fuels Guyanese Production
Exxon Mobil Corporation XOM, a U.S. oil and gas giant, has decided to proceed with the Hammerhead discovery as its seventh project in Guyanese waters. Discovered in 2018, the Hammerhead field is part of the prolific Stabroek Block off the coast of Guyana. The field is known to have approximately 60 meters of high-quality sandstone reservoirs containing oil.
ExxonMobil has filed an application with the government of Guyana for an environmental permit to proceed with a new investment that’s aimed at boosting the country’s oil production. The company plans to bring the Hammerhead discovery online by 2029, pending government approval. If XOM receives the approval by mid-2025, the Hammerhead project will help maintain its track record of bringing a new project online in Guyanese waters every 18 months.
The Hammerhead oil field will use a floating production, storage, and offloading (FPSO) vessel that has a production capacity of 180,000 barrels of oil per day for the extraction. The production capacity of the FPSO is slightly lower than those contracted for the Yellowtail, Uaru and Whiptail fields by ExxonMobil. However, the energy major has stated that the FPSO has been chosen to align with the requirements of the target oil field.
ExxonMobil is currently producing around 650,000 barrels per day from Guyana, and the Hammerhead FPSO is expected to ramp up the production to 1.5 million barrels per day. The Hammerhead field is situated a few kilometers toward the southwest of the Liza and Payara fields.
ExxonMobil is committed to boosting oil production in the scarcely populated nation in South America. The company’s aggressive efforts have contributed to making Guyana the third fastest-growing oil-producing nation in the world, bringing it on par with the production levels of the OPEC member, Nigeria. This makes Guyana one of the fastest-growing oil-producing countries outside the OPEC member nations.
The South American nation has been pivotal in ExxonMobil's stock recovery following the COVID-19 pandemic. The primary reason for this is the profitability of the crude oil extracted from Guyana, which boasts one of the lowest break-even costs outside the Middle East. A low break-even cost implies higher profitability for ExxonMobil, even when crude prices are on the lower side.
In conclusion, the crude extracted from Guyana offers ExxonMobil a competitive advantage in terms of profitability per barrel of crude oil produced.
Zacks Rank and Key Picks
Currently, XOM carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the energy sector are Archrock Inc. AROC, SM Energy SM and Hess Midstream Partners LP HESM. Archrock and SM Energy presently sport a Zacks Rank #1 (Strong Buy) each, while Hess Midstream carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.
SM Energy is an upstream energy firm operating in the prolific Midland Basin region and the South Texas region. For 2024, the company expects its production to increase from the prior-year reported figure, signaling a bright production outlook.
Hess Midstream owns, operates, develops and acquires a wide range of midstream assets, providing services to Hess Corporation and other third-party customers. The partnership has a stable fee-based revenue model secured via long-term commercial contracts. Since Hess Midstream operates through 100% fee-based contracts, it is exposed to minimal commodity price risks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
SM Energy Company (SM) : Free Stock Analysis Report
Archrock, Inc. (AROC) : Free Stock Analysis Report
Hess Midstream Partners LP (HESM) : Free Stock Analysis Report
