Hess Sanctions Yellowtail Development, Offshore Guyana

Rhea-AI Summary

Hess Corporation (NYSE: HES) has announced the final investment decision for the development of Yellowtail offshore Guyana, following regulatory approval. Yellowtail will be the fourth and largest oil development on the Stabroek Block, producing approximately 250,000 gross barrels of oil per day starting in 2025. The project is expected to cost around US$2.3 billion net for Hess, with specified expenditures across 2022 to 2026. This initiative promises significant resource potential, contributing to the projected production capacity of over 1 million barrels per day by 2027.

Positive

• Development of the Yellowtail project is expected to produce approximately 250,000 gross barrels of oil per day starting in 2025.
• The total estimated resource base for Yellowtail is around 925 million barrels of oil.
• Hess' share of development costs is projected at US$2.3 billion, indicating substantial investment in future production.

Negative

• None.

• Development of Yellowtail receives government approval
• Yellowtail expected to produce ~250,000 gross barrels of oil per day starting in 2025
• This fourth oil development is the largest to date on the Stabroek Block

NEW YORK--(BUSINESS WIRE)-- Hess Corporation (NYSE: HES) today announced it has made a final investment decision to proceed with development of Yellowtail offshore Guyana after receiving government and regulatory approvals. Yellowtail, the fourth oil development and the largest on the Stabroek Block, is expected to produce approximately 250,000 gross barrels of oil per day starting in 2025.

Yellowtail will utilize the ONE GUYANA floating production, storage and offloading vessel (FPSO), which will develop an estimated resource base of approximately 925 million barrels of oil. Six drill centers are planned with up to 26 production wells and 25 injection wells.

Hess’ net share of development costs, excluding pre-sanction costs and FPSO purchase cost, is forecast to be approximately US$2.3 billion, of which approximately US$210 million is expected in 2022, US$430 million in 2023, US$585 million in 2024, US$390 million in 2025 and US$295 million in 2026.

“We are excited to sanction our fourth oil development and the largest FPSO to date on the Stabroek Block,” CEO John Hess said. “We look forward to continuing to work with the Government of Guyana and our partners to realize the remarkable potential of this world class resource for the benefit of all stakeholders. The world will need these low cost oil resources to meet future energy demand and help ensure an affordable, just and secure energy transition.”

The Liza Phase 1 development, utilizing the Liza Destiny FPSO, began production in December 2019; its production capacity is expected to increase to more than 140,000 gross barrels of oil per day following production optimization work currently under way. The Liza Phase 2 development, utilizing the Liza Unity FPSO, began production in February 2022 and is expected to reach its production capacity of 220,000 gross barrels of oil per day later this year as operations are safely brought online. The third development on the block at Payara is on track for production startup in 2024, utilizing the Prosperity FPSO with a production capacity of approximately 220,000 gross barrels of oil per day.

At least six FPSOs with a production capacity of more than 1 million gross barrels of oil per day are expected to be online on the Stabroek Block in 2027, with the potential for up to 10 FPSOs to develop gross discovered recoverable resources of more than 10 billion barrels of oil equivalent.

The Stabroek Block is 6.6 million acres. ExxonMobil affiliate Esso Exploration and Production Guyana Limited is operator and holds 45% interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds 30% interest and CNOOC Petroleum Guyana Limited holds 25% interest.

Hess Corporation is a leading global independent energy company engaged in the exploration and production of crude oil and natural gas. More information on is available at www.hess.com.

Cautionary Statements
This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as “anticipate,” “estimate,” “expect,” “forecast,” “guidance,” “could,” “may,” “should,” “would,” “believe,” “intend,” “project,” “plan,” “predict,” “will,” “target” and similar expressions identify forward-looking statements, which are not historical in nature. Our forward-looking statements may include, without limitation, the expected number, timing and completion of our development projects and estimates of capital and operating costs for these projects; estimates of our crude oil and natural gas resources and levels of production; and our future financial and operational results. Forward-looking statements are based on our current understanding, assessments, estimates and projections of relevant factors and reasonable assumptions about the future. Forward-looking statements are subject to certain known and unknown risks and uncertainties that could cause actual results to differ materially from our historical experience and our current projections or expectations of future results expressed or implied by these forward-looking statements. The following important factors could cause actual results to differ materially from those in our forward-looking statements: fluctuations in market prices or demand for crude oil, NGLs and natural gas, including due to COVID-19, competing or alternative energy products and political conditions and events; potential failures or delays in increasing oil and gas reserves, including as a result of unsuccessful exploration activity, drilling risks and unforeseen reservoir conditions, and in achieving expected production levels; changes in laws, regulations and governmental actions applicable to our business, including legislative and regulatory initiatives regarding environmental concerns, such as measures to limit greenhouse gas emissions and flaring, fracking bans as well as restrictions on oil and gas leases; the ability of our contractual counterparties to satisfy their obligations to us, including the operation of joint ventures which we may not control and exposure to decommissioning liabilities for divested assets in the event the current or future owners are unable to perform; unexpected changes in technical requirements for constructing, modifying or operating exploration and production facilities and/or the inability to timely obtain or maintain necessary permits; potential disruption or interruption of our operations due to catastrophic events, including COVID-19 or climate change; and other factors described in Item 1A—Risk Factors in our Annual Report on Form 10-K and any additional risks described in our other filings with the Securities and Exchange Commission. As and when made, we believe that our forward-looking statements are reasonable. However, given these risks and uncertainties, caution should be taken not to place undue reliance on any such forward-looking statements since such statements speak only as of the date when made and there can be no assurance that such forward-looking statements will occur and actual results may differ materially from those contained in any forward-looking statement we make. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise.

We use certain terms in this release relating to resources other than proved reserves, such as unproved reserves or resources. Investors are urged to consider closely the oil and gas disclosures in Hess Corporation’s Form 10-K, File No. 1-1204, available from Hess Corporation, 1185 Avenue of the Americas, New York, New York 10036 c/o Corporate Secretary and on our website at www.hess.com. You can also obtain this form from the SEC on the EDGAR system.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220401005508/en/

Investor Contact:

Jay Wilson

(212) 536-8940

jrwilson@hess.com

Media Contact:

Lorrie Hecker

(212) 536-8250

lhecker@hess.com

Source: Hess Corporation

FAQ

What is the Yellowtail oil development by Hess Corporation?

Yellowtail is Hess Corporation's fourth oil development project in Guyana, expected to produce approximately 250,000 gross barrels of oil per day starting in 2025.

When is production expected to start at the Yellowtail project?

Production at the Yellowtail project is anticipated to commence in 2025.

How much is Hess Corporation investing in the Yellowtail project?

Hess Corporation's net share of development costs for Yellowtail is forecasted to be approximately US$2.3 billion.

What is the estimated resource base for the Yellowtail development?

The Yellowtail project has an estimated resource base of approximately 925 million barrels of oil.

What is the significance of the Yellowtail project for Hess Corporation?

Yellowtail is the largest development on the Stabroek Block, contributing to Hess Corporation's strategy to enhance oil production and resource development.