In spite of the immediate industry outlook which is characterized by low oil prices and depressed demand, Guyana continues to shine as a global exploration hotspot with its proven plays, large discovered volumes and prodigious exploration success rates. This was recently noted by Westmount Energy Limited, a UK firm with shares in partners working on the Canje and Kaieteur Block.
As a result of the current state of the industry, Westmount alluded to the fact that several drilling projects across the world have had to go on pause for later this year while some have been delayed until further notice. The company noted however that this is not the case for Guyana which carries low break-even costs (US$25/bbl to US$32/bbl). Westmount said that the low costs for developing the sweet, light crude offshore Guyana continues to sustain the country as a major investment growth area for large incumbent players, in spite of the near term sector headwinds in the form of collapsing oil prices and poor economic growth prospects due to the Coronavirus (COVID-19) pandemic.
While the major incumbent players in the Guyanese offshore sector such as ExxonMobil and Hess Corporation have been guiding reduced capital investment for 2020, Westmount said that the picture so far suggests that near term discretionary exploration drilling, offshore Guyana may be less affected by these immediate budgetary adjustments than drilling in other regions. It noted that the main impact of COVID-19 is likely to be the only potential to delay some operational activities as travel restrictions upset the international flow of offshore workers.
At this stage, Westmount Energy said that it is not experiencing any major disruption to its business model from COVID-19. The Guyana Standard also understands that Westmount’s current investment portfolio offers shareholders exposure to potentially, a minimum of three ExxonMobil operated Upper Cretaceous wells, across the Canje and Kaieteur Blocks, over the next 12 months.
Current guidance from the various deepwater operators also indicates that Westmount is likely to be the only London quoted junior player offering exposure to drilling offshore Guyana in 2020.