Exxon Announces New Oil Find in Guyana

Exxon Mobil has announced a new, and potentially big, oil and gas find off the coast of Guyana. The oil and gas find was struck in an appraisal well, which is the company’s second success in the tiny South American country.

Last year, Exxon found oil and gas in another offshore well, and at the time, Exxon said that find could be a huge one: a deposit holding up to 700 million barrels of crude worth an estimated $40 billion. Now, after the second successful find, it is planning to drill a third well in the area.

If the estimates of how much oil and gas Guyana has in its shelf come true, it could make a big difference, both for the country and for Exxon.

Guyana does not currently produce any oil and gas, and even with the weak prices for hydrocarbons, its economy would benefit from a new revenue source. In fact, the reserves from the Liza-1 well that was drilled last year—even at current prices—are worth 12 times Guyana’s GDP, which is about $8000 per capita annually. With less than a million people, that brings the GDP to somewhere around $3 billion.

For Exxon, a major new find would be good news in light of its less-than-favorable exploration failure rate, which reached 39 percent in 2014, up from 33 percent in 2013. Now, on top of this, there’s less money for new exploration, which is a problem not unique to Exxon.

Exxon is not the only oil major exploring in Guyana. British Tullow Oil and Spain’s Repsol are also drilling in the area, but have not so far announced any major finds.

By Irina Slav for Oilprice.com

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