ExxonMobil Consortium Reports $10.4B Profit From Guyana in 2024

ExxonMobil and its partners, Hess and CNOOC, reported a combined $10.4 billion profit from their Guyana oil operations in 2024, a 64% increase year-over-year driven by rising output, which reached 668,000 bpd in mid-Q2, and favorable fiscal terms; ExxonMobil's share of the profit was $4.7 billion, contributing significantly to its overall earnings. The consortium projects output to reach 1.7 million bpd by the end of the decade amid rising investment, further solidifying ExxonMobil's dominance in the region following the revocation of a rival consortium's license.

Analysis

The ExxonMobil-led consortium, including Hess Corporation and CNOOC, reported a significant 64% year-on-year increase in combined profit from its Guyanese oil operations, reaching $10.4 billion in 2024, driven by expanded production capacity and favorable fiscal terms. ExxonMobil's individual share of these adjusted earnings amounted to $4.7 billion, a substantial contribution to its $33.46 billion global earnings. Production output from the consortium demonstrated strong growth, averaging 631,000 barrels per day (bpd) in Q1 2024, a 3% year-over-year increase, and climbing to 668,000 bpd by mid-Q2 2024, supported by facility upgrades. The consortium projects a robust production trajectory, expecting to exceed 900,000 bpd in the near term with a fourth FPSO, and ultimately reach 1.2 million bpd by 2027 and 1.7 million bpd by the end of the decade. While total expenses in Guyana rose 42% to $4.9 billion in 2024 due to ramped-up development activity, the operations still generated a pre-tax profit of $12.8 billion. The strategic importance of Guyana as a low-cost, high-margin basin for ExxonMobil is further underscored by the recent revocation of a rival consortium's license by the Guyanese government, consolidating the XOM group's control over the offshore oil basin. The consortium is also beginning to assess natural gas development to meet Guyana’s domestic energy needs, indicating a potential new avenue for growth. Despite these strong operational results and positive outlook for its Guyana assets, the article notes that XOM currently carries a Zacks Rank #4 (Sell), while also highlighting Subsea 7 S.A. (SUBCY) and RPC Inc. (RES) as better-ranked investment alternatives within the energy sector.

Key Decisions for Investors

• Investors should recognize the substantial positive financial impact and significant future growth potential of the Guyana operations for ExxonMobil, with production projected to increase substantially by 2030 and currently contributing significantly to global earnings.
• Consider the strengthened competitive moat of the ExxonMobil consortium in Guyana due to favorable fiscal terms and the recent government action to revoke a rival's license, which reinforces the long-term value proposition of these low-cost, high-margin assets.
• While operational performance and growth prospects in Guyana are exceptionally strong for ExxonMobil, its current Zacks Rank #4 (Sell) warrants careful consideration; investors seeking exposure to the energy sector might also evaluate the alternative, higher-ranked stocks mentioned, Subsea 7 S.A. (Zacks Rank #1, Value Score A) and RPC Inc. (Zacks Rank #2, Value Score A), which are presented with positive attributes and growth prospects.