Exclusive: Trinidad, ExxonMobil agree to terms for deepwater blocks, government sources say

Trinidad and Tobago has agreed to award ExxonMobil (XOM.N) seven ultra-deepwater exploration blocks, renamed Ultra Deep 1, off its east coast, with a formal signing anticipated as early as next week. This strategic move marks ExxonMobil's return to the country after over two decades and is significant given the blocks' proximity to its prolific Stabroek block in Guyana, with a TGS study suggesting potential for similar resource discoveries. The agreement, which includes a signing bonus, a three-phase exploration program, royalties, and profit sharing, aligns with Trinidad's efforts to rejuvenate offshore investment and ExxonMobil's stated strategy of continuously replacing its oil and gas reserves.

Analysis

ExxonMobil is set to re-enter Trinidad and Tobago after more than two decades by securing seven ultra-deepwater exploration blocks, a strategic move that significantly expands its upstream footprint in the Atlantic Margin. The acreage, designated Ultra Deep 1, is located northwest of Exxon's highly prolific Stabroek block in Guyana, where over 11 billion barrels of recoverable resources have been confirmed. This proximity underpins the deal's potential, with a TGS study suggesting the new blocks could unlock similar resource scale. The agreement aligns directly with Exxon's stated corporate strategy of actively replacing produced reserves with economically advantaged resources. For Trinidad and Tobago, this deal represents a critical step toward rejuvenating offshore investment to support its LNG and petrochemical industries, a need amplified by the recent shelving of a key gas project with Venezuela. The terms, which include a three-phase exploration program, signing bonus, royalties, and profit sharing, establish a clear framework for development, signaling a renewed, favorable investment climate in the country.

Key Decisions for Investors

• Investors should view this agreement as a long-term positive for ExxonMobil, as it provides a significant, high-potential exploration catalyst that reinforces its successful reserve replacement strategy in a proven hydrocarbon region.
• The primary risk is geological, as ultra-deepwater exploration is inherently uncertain; progress on the multi-phase exploration program, especially initial drilling results, should be monitored closely as a key de-risking milestone.
• This development has negligible direct impact on Chevron, as its involvement is limited to the separate Stabroek block in Guyana, warranting no change in investment thesis based on this news.
• The deal signals a positive shift in Trinidad and Tobago's investment climate, potentially creating new opportunities for energy companies and service providers active in the Caribbean and South American Atlantic Margin.