Exxon-led Guyana oil group's 2023 earnings soar, margins surpass Nvidia's

Exxon-Led Consortium Nets Record Profits in Guyana Amid Controversy

In the rapidly evolving oil sector of South America, an Exxon Mobil-led consortium in Guyana amassed impressive revenue last year, totaling $6.33 billion in profit, according to government data. This figure translates to a combined net margin of 56% for the trio, surpassing the 49% net margin reported by tech giant Nvidia Corp. during the same fiscal period.

The revenue surge, which saw a 23% increase from the prior year reaching $11.25 billion, can be attributed to the operational expansion facilitated by the addition of a third production vessel. Currently, the consortium is extracting approximately 630,000 barrels of oil daily from its three operational vessels, with plans for three more vessels on the horizon.

Despite these lucrative results, the favorable contract terms have sparked significant controversy. Chevron's ambitious $53 billion bid to acquire Hess Corporation has propelled a conflict with Exxon, which is contesting the sale. Of particular note, Hess's profits from the joint venture experienced the highest growth rate among the three partners, increasing by 22% last year. This growth was notably higher, partly due to lower income tax expenses compared to its partners. Hess’s profits exceeded the $1.62 billion earnings by the Guyanese government through its oil share.

Breakdown of Profits

Exxon Mobil emerged with a net profit of $2.9 billion, while Hess Corp. earned $1.88 billion, and CNOOC recorded $1.52 billion from the Stabroek offshore oil venture. These results stem from favorable contract terms that were originally established when exploration risks were high, and Guyana's oil potential remained uncertain.

Revised Oil Contracts

In recent developments, Guyana has revised its oil contract terms for future ventures, setting a new standard where the government's share is expected to double, reaching 27.5%. However, these updated terms will not apply to the existing Stabroek block agreements.

Future Projections

According to Marcelo de Assis, an oil consultant with a focus on Latin American markets, high profits are anticipated during the investment phase. However, as the consortium recovers its costs, the tax burden will increase, potentially reducing overall profits.

The shifting dynamics of Guyana's oil sector and the ongoing disputes among major players highlight the complexities and controversies inherent in the industry's lucrative but competitive landscape.