Exxon Mobil Corp.’s (IW 500/1) oil discovery off the coast of Guyana may hold as much as 1.4 billion barrels, twice the size of the previous estimate, making it potentially worth about $70 billion based on current prices.
The Liza field 120 miles (193 kilometers) from the coast of Guyana is a “world-class discovery” that probably will yield the equivalent of 800 million to 1.4 billion barrels of crude, the Irving, Texas-based company said in a statement on Thursday. Hess Corp., a partner in the field, will see a 39% boost in current proved reserves at the upper end of the estimate.
Exxon’s announcement comes as the oil industry emerges from the worst market slump in decades. Since dipping to a 12-year low in January, Brent, the international benchmark for crude has risen nearly 80% to about $50 a barrel. The Liza discovery may not add to global oil supplies for years as deepwater finds can take half a decade or more to bring into production.
“This exploration success demonstrates the strength of our long-term investment approach, as well as our technology leadership in ultra, deepwater environments,” Steve Greenlee, president of ExxonMobil Exploration Co., said in the statement.
Exxon saw signs the field was massive as early as May 2015, after logging data and rock chips from the initial exploratory well showed indications of a large presence of crude, the company said in an entry on its Energy Factor blog. The project was led by Kerry Moreland, Exxon’s Guyana basin manager, and drilled from Transocean Ltd.’s Deepwater Champion drillship.
Exxon is operator of the Liza discovery and owns a 45% stake. Hess holds a 30% interest and the remaining 25% belongs to CNOOC Ltd.
It’s an enormous discovery for Hess. At the high end of the estimate, the New York-based company’s stake equates to 420 million barrels. More exploratory drilling is planned for the Stabroek block that hosts the Liza field, Hess said in a separate statement.
Hess jumped as much as 4.5 percent after the announcement and closed 4% higher at $60.10. Exxon rose 1.4% to $93.74.
Hess is “very encouraged by the drilling results to date of the Liza prospect, which we believe has the potential to materially contribute to our resource base and future production growth,” Chief Executive Officer John Hess said in the statement.
The upper end of the new estimate is two times larger than the 700 million-barrel figure disclosed by Raphael Trotman, Guayana’s minister of governance, in a July interview with Bloomberg News.
By Joe Carroll