The economics for the Liza Phase One Project, which is being developed on the Stabroek Block, is just exceptional; according to a 2019 industry report by Canadian research firm Canaccord Genuity Corporation, ExxonMobil’s subsidiary Esso Exploration and Production Guyana Limited, Hess Corporation and CNOOC/NEXEN are expected to generate positive free cash flow by 2022, about two years after first production.
The report notes that the free cash flow is assuming that the operators will get US$65 per barrel. The Guyana Standard understands that each producer is forecast to ultimately recover about 63 million barrels of oil from the project.
The Liza Phase One development is expected to produce up to 120,000 barrels of oil per day, recovering some 500 million barrels of oil equivalent resource over its life. The project, which is estimated to cost $3.7B, will mark a major milestone for Guyana.
Furthermore, the $3.7B estimate, down from the original approximation of $4.4B includes $1.2B in lease capitalisation costs for the FPSO facility. According to Canaccord, wells are expected to cost approximately $67M each to drill, down from the original estimate of $85M due to improved drilling performance.
Additionally, it was noted that exceptional reservoir quality, the large scale of resources, attractive fiscal terms, top-quartile execution and the rapid pace of development are expected to drive attractive economics for the Liza project.
The Guyana Standard understands that the Phase One breakeven oil price is estimated at $30- 35/bbl, which is among the lowest of global offshore developments and shale plays.
As for the Liza Phase Two development, Canaccord said it is expected to have an even lower breakeven oil price of approximately $25/bbl, underscoring the economic attractiveness of the project.