How Will the Oil Discovery In

Guyana Aid Exxon Mobil (XOM)?

Smart Stock News looks at how the recent discovery of oil in Guyana by Exxon Mobil
and Hess Corp will aid these companies and the country as well

Earlier this week on Thursday, January 12, Exxon Mobil Corporation (NYSE:XOM) and
Hess Corp (NYSE:HES) revealed some positive development from its operations on
the Stabroek block located on the shores of the South American country. Both the
North American companies did not disclose the amount of reserves that the site
may contain but forecasted that a deeper reserve of 100 million to 150 million
barrels of oil equivalent may exist directly underneath their previously found Liza
field on the block. At present crude oil prices, the maximum value of this reserve
would stand at around $7.5 billion.

Exxon Mobil has 45% ownership of the block, followed by Hess and CNOOC Ltd
(ADR) (NYSE:CEO) with 30% and 25% ownership respectively. However there was no
significant spike in the stock price of the Irving, Texas-based oil giant following this
development. This may be because investors may be pondering over the costs and
challenges related to the development of an offshore facility. However, the impact
of this development would be incorporated as a long-term catalyst for the company,
which would be further amplified as crude oil prices recover further.

It is a great development for the country with a population of less than a million
people. This means that output from any discovery would be exported. The
production from these fields is expected to be commenced by 2020. The
development by both these North American companies came days after the
Guyanese government revealed a $500 million plan to develop a petroleum
processing and service center on Crab Island. This is a very significant investment
for a country that is considered one of the underprivileged nations in the region.

According to initial estimates, Guyana is home to reserves of four billion barrels of

oil equivalent. At current prices, this much reserve carries a value of more than
$200 billion. However, the country severely lacks the production and transportation
infrastructure.

The discovery out of Guyana further changes the dynamics of global crude oil
production. The North American and South American region is gaining more
importance due to new discoveries. North American is led by the shale boom in the
US and the oil sands from Canada. Meanwhile, in South America, Brazil and
Colombia are already established players, and Argentina joined the party after
Chevron Corporation (NYSE:CVX) along with other international oil companies
promised an investment of $5 billion in the coming years across various shale
basins in the country.