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ExxonMobil (XOM) Lowers Liza-1 Production in Offshore Guyana

Zacks.com logo Zacks.com 4/15/2021

Exxon Mobil Corporation XOM recently decreased production in offshore Guyana due to mechanical issues. The company’s famous Liza-1 project’s crude production has been reportedly reduced to 30,000 barrels per day (bpd) from 120,000 bpd.

Production at the Liza Destiny floating production, storage and offloading (FPSO) vessel in the Stabroek block started in December 2019. Since then, production was curbed thrice. During 2020-end, it reached the original target of 120,000 bpd output at the site. The recent setback was caused after the discharge silencer started facing technical problems. The company curbed production to alleviate hydrates formation in the subsea systems and minimize gas flaring.

The energy giant is working with SBM Offshore and MAN Energy Solutions for repairing the discharge silencer. Notably, the Liza Phase 1 has a breakeven Brent price of $35 per barrel of oil. Despite delay in operations due to the coronavirus pandemic, the Liza Phase 2 development is expected to remain on schedule and commence production in early-2022. It is expected to have a breakeven Brent price of $25 per barrel, which will bring massive cash flows.

Markedly, the company has made 18 world-class oil discoveries at the Stabroek Block, located off the coast of Guyana. It estimates gross resources of more than 9 billion barrels of oil equivalent from the promising discoveries. The discoveries made so far on the block have the potential of adding 10 FPSO vessels that will be capable of yielding more than 750 thousand barrels per day of production by 2026.

ExxonMobil, with a 45% interest, is the operator of the Stabroek Block that covers 6.6 million acres. Partner Hess Corporation HES owns a 30% interest in the block. The remaining 25% stake is held by a wholly-owned subsidiary of CNOOC Limited.

Price Performance

The stock has gained 39.1% in the year-to-date period compared with 18.7% rise of the industry it belongs to.

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Zacks Rank & Other Stocks to Consider

Currently, ExxonMobil sports a Zacks Rank #1 (Strong Buy). Other top-ranked players in the energy space include CrossAmericaPartners LP CAPL and Equinor ASA EQNR, each having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CrossAmerica’s bottom line for first-quarter 2021 is expected to surge 166.7% year over year.

Equinor’s bottom line for first-quarter 2021 is expected to rise 188.2% year over year.

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