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ExxonMobil Moves Ahead with Liza Project Offshore Guyana


Integrated energy giant ExxonMobil Corporation XOM has made its final investment decision (FID) regarding the first phase development of the Liza field located off the coast of Guyana, among the largest oil finds of the past decade.

It is to be noted that at the beginning of this month, ExxonMobil decided to double its royalty payment out of its offshore oil production to the government of Guyana.

We would like to remind investors that the integrated player’s current oil and gas output is way below the production levels 10 years ago in spite of its several acquisitions. The company produced 4.2 million barrels of oil equivalent per day (BOPD) in the first quarter of 2017, 4% below the year-ago period. Hence, capital spending on the Liza project is expected to increase the company’s output significantly in the coming years.

Phase 1 of Liza Project

The FID involves completion of a floating production, storage and offloading (FPSO) vessel capable of producing up to 120,000 BOPD. Production at Liza is likely to start by 2020. The company projects the cost of this phase to be slightly above $4.4 billion including a lease capitalization cost of around $1.2 billion for the FPSO facility. The facility is expected to generate approximately 450 million barrels of oil equivalent (BOE) from the Liza field, located at a water depth of1500–1900 meters.

The development of Liza phase 1 can also produce significant benefits for the country in the form of job creation, specialized workforce training, increasing government revenues and others.

The 6.6 million acres Liza field is a part of the Stabroek Block. ExxonMobil holds 45% operating interest here while Hess Corporation HES and CNOOC Limited's CEO wholly-owned subsidiary Nexen own 30% and 25% interest, respectively.

Recent Inclusion

ExxonMobil also declared positive outcomes related to the Liza-4 well, stating that it has more than 197 feet of high-quality, oil-bearing sandstone reservoirs, enough to carry out a potential Liza Phase 2 development. The recent turn of events left the company with increased estimated gross recoverable resources for the Stabroek block at 2-2.5 billion BOE. Apart from Liza, the recoverable resources are from successful exploration wells on Liza Deep, Payara, and Snoek.

About the Company

Irving, TX-based ExxonMobil is one of the world’s largest publicly traded oil companies, engaged in oil and natural gas exploration and production, petroleum products refining and marketing, chemicals manufacture, and other energy-related businesses. Approximately 83% of Exxon’s earnings come from its operations outside the U.S. The company divides its operations mainly into three segments: Upstream, Downstream and Chemicals.

Price Performance

In the last one month, ExxonMobil’s shares have increased 1.4%, while the Zacks categorized Oil and Gas – International – Integrated industry lost 1.9%.

Zacks Rank and Stock to Consider

ExxonMobil presently has a Zacks Rank #3 (Hold). A better-ranked stock in the oil and energy sector is Delek US Holdings, Inc. DK. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Delek US Holdings’ sales for 2017 are expected to increase 71.31% year over year. The company delivered a four-quarter average positive earnings surprise of 60.68%.

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