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ExxonMobil (XOM) Announces Start of Production in Liza Phase 2

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Exxon Mobil Corporation XOM announced the commencement of production from the second phase of the Liza development, situated on the Stabroek Block offshore Guyana.

ExxonMobil operates the Stabroek Block, with a 45% ownership interest. The latest development takes the total production capacity in the country to more than 340,000 barrels per day (bpd) in seven years after its first discovery.

The company now has two production facilities operating offshore Guyana. Notably, ExxonMobil is responsible for the country’s entire oil and natural gas production. The company began production from the Liza Phase 2 development with the help of the Liza Unity vessel. It is the first floating, production, storage, and offloading vessel (FPSO) in the world, which has been awarded the Sustain-1 notation by the American Bureau of Shipping due to its sustainable design and operating techniques.

The total recoverable resources of the Stabroek Block are currently estimated to be more than 10 billion barrels of oil equivalent. The second phase of the Liza project is expected to reach the peak production of 220,000 bpd of oil this year. The current recoverable resources have the capacity to support up to 10 projects. ExxonMobil expects that four FPSOs will be operational on the Stabroek Block by 2025-end, with a capacity exceeding 800,000 barrels per day.

Payara, a third development at the Stabroek Block, is currently under construction. It is set to deliver first oil in 2024, with a production capacity of 220,000 bpd. A field development plan for a fourth Stabroek development (Yellowtail project) has been submitted to the Guyana government for approval.

Guyana depends on imported fossil fuels for most of its energy requirements. This makes electricity costly and often unreliable. ExxonMobil is making great efforts in reframing the country as a new energy hub. Notably, the development of the new projects and continued exploration success offshore would enable the steady progress of Guyanese capabilities and enhanced economic growth.

Company Profile & Price Performance

Headquartered in Irving, TX, ExxonMobil is one of the leading integrated energy companies in the world.

Shares of ExxonMobil have outperformed the industry in the past six months. XOM has gained 43.9% compared with the industry’s 39.1% growth.

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Zacks Rank & Other Key Picks

ExxonMobil currently sports a Zack Rank #1 (Strong Buy).

Investors interested in the energy sector might look at the following companies that presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chevron Corporation CVX is one of the largest publicly traded oil and gas companies in the world. CVX has a market cap of more than $250 billion and it divides its operations into two main segments — Upstream (exploration & production) and Downstream (refining).

Chevron is expected to see an earnings growth of 36.3% in 2022. As of Dec 31, the company had $5.6 billion in cash and cash equivalents, and total debt of $31.4 billion, with a debt-to-total capitalization of a modest 18.4%. CVX also carries a high investment grade rating of AA from S&P, which translates into low borrowing rates.

Oasis Petroleum OAS is an independent explorer engaged in the acquisition and development of oil and natural gas resources. OAS recently exited Chapter 11 Bankruptcy with a clean balance sheet. It has managed to wipe out $1.8 billion in debt and now the figure stands at just $400 million

Oasis Petroleum is expected to see an earnings growth of 62.3% in 2022. OAS’s quality asset base and balance sheet strength will support free cash flow generation and, consequently, shareholder returns. Oasis Petroleum currently pays a quarterly dividend of 50 cents ($2 annualized), while it has undertaken a $100-million share repurchase program.

Patterson-UTI Energy, Inc. PTEN is an oilfield services company. PTEN is one of the largest North American land drilling contractors, having a large, high-quality fleet of drilling rigs. It has a market capitalization of $2.8 billion.

Patterson-UTI is expected to see earnings growth of 74.6% in 2022. Based on contracts currently in place, Patterson-UTI expects its fourth-quarter 2021 rig count to average 53 rigs under term contracts. As the onshore driller foresees a ramp-up in drilling activity, the company expects 106 rigs, on average.


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