ExxonMobil Reaches High Profits on Increased Production of Cheap Oil



ExxonMobil can reduce its huge debt and increase revenues and profits by increasing its production of cheap oil offshore Stabroek Block in the Guyana-Suriname Basin, South America. Brent crude oil production price of one of the fields: $ 35 per barrel against the current market level of about $ 55.

Exxon Mobil (XOM), which has lost almost 35% in the past 12 months, rose 10.3% in the past week amid OPEC + ‘s decision to cut overall oil production on the back of a voluntary cut by Saudi Arabia.

On Tuesday, Saudi Arabia unexpectedly announced that it would cut production by 1 million barrels per day in February and March, while Russia and Kazakhstan were allowed to increase production by 75,000 barrels per day in the next two months.

Brent crude rose on news last week to $ 55.22 a barrel as of Friday’s close. However, experts warn of the risks of a new decline to the level of $ 50 per barrel due to the continuing threat of COVID-19 around the world.

At the same time, Exxon Mobil has the opportunity to reduce its huge debt and increase revenues and profits by increasing the volume of production of cheap oil with a production price (net of costs) of $ 35 per barrel or below.

Exxon owns 45% of the oil fields on the Stabroek Block shelf in the Guyana-Suriname Basin (South America), in addition to established production in 18 fields, the company has begun drilling a new well Bulletwood-1. Drilling in the area is expected to be completed by February 23, and the Bulletwood-1 well has a potential of 500 million barrels of oil, according to Guyana’s Maritime Administration Department.

Exxon is betting on this new field because of the lower costs of producing crude oil, which, due to its low sulfur content, is processed into high quality fuel at a lower cost. For example, Exxon produces crude oil from the Liza field on this shelf with an injection capacity of 120,000 barrels per day at a price of $ 35 per barrel. Part of the proceeds from this oil production and processing belongs to partners: 30% of the American oil and gas company Hess, 25% – the leading state oil company of China CNOOC.

Liza’s production ramp-up will begin in 2022, when the second floating production, storage and offloading (FPSO) unit becomes operational, allowing it to pump oil at an even lower price of about $ 25 per barrel.

In December 2020, Exxon also announced that it had discovered significant potential in the Sloanea-1 exploration well offshore Suriname, together with national oil partner Petronas.

ExxonMobil previously said it would reduce its domestic and international dry natural gas assets and focus its future capital priorities on high-potential assets such as fields in Guyana and Suriname, as well as the Permian Basin of West Texas and southeastern New Mexico.

As production from these fields begins and grows, Exxon will receive new revenue streams and profits.

Libertex [CPS] WW

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