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Hess signage displayed on a gas station in the United States. (Photo: Business Insider)

Hess Corp pumps more funds into Guyanese projects

Hess signage displayed on a gas station in the United States. (Photo: Business Insider)

American oil exploration and production (E&P) company Hess Corp continues to reallocate resources to its lucrative joint ventures in Guyana while trimming its portfolio holdings elsewhere.

In a release, the company announced that it had entered into an agreement for the divestment of its subsidiary Hess Denmark ApS, for a consideration of US$150 million, to Ineos E&P AS.

Hess Denmark ApS’ operation in the South Arne Field (Photo courtesy of Hess Corp)

As a consequence, Ineos A&P would acquire Hess’s 61.5 per cent interest in the South Arne Field effective January 1, 2021

“The sale of our Denmark asset enables us to further focus our portfolio and strengthen our cash and liquidity position,” CEO John Hess stated.

“Proceeds will be used to fund our world-class investment opportunity in Guyana,” he continued.

CEO of Hess Corporation John Hess (File photo)

However, since the sale agreement is subject to government approvals and closing conditions, both parties expect the transaction will wrap up in the third quarter of 2021.

This is not the first time Hess has reallocated funds from a divestment towards its Guyana-based operations.

In November last year, the company shared that the proceeds from its sale of 28 per cent working interest in the Shenzi Field in the deepwater Gulf of Mexico to BHP, the field’s operator, for a total consideration of US$505 million, would support operations in the Caricom member state.

Making Guyana a priority

Earlier this year, Hess revealed that it would allocate more than 80 per cent of its 2021 budget to its operations in Guyana and at the Bakken Formation in North Dakota, USA.

Hess Corp commits majority of 2021 budget to Guyana

“The majority of our 2021 budget is allocated to Guyana, where our three sanctioned oil developments have a Brent breakeven oil price of between $25 and $35 per barrel… By investing only in high-return, low-cost opportunities, we have built a differentiated portfolio of assets that we believe will provide industry leading cash flow growth over the course of the decade,” the CEO said then.

Hess has 30 per cent interest in Guyana’s Stabroek block, which it shares with partners Esso Exploration and Production Guyana Limited — a subsidiary of ExxonMobil — and China’s CNOOC.

Within the block, the three have discovered commercial quantities at the Liza-1, Liza-2 and Payara wells. They began production at Liza-1 in December 2019.

Liza Destiny FPSO, Guyana’s only offshore oil production facility (Photo: Hess Corp)

At the same time, Hess and Esso Exploration and Production Guyana Limited share E&P rights to another block offshore the South American country — Kaieteur, where both have completed the exploration of the Tanager-1 well and appraised the Redtail-1 well.

Notwithstanding the boon of discoveries, Hess reported a Q4 2020 loss of US$97 million, though lower that US$222 million in the corresponding period in 2019. For the year, losses totalled US$3.093 billion.