October 22, 2015
LONDON -- With Exxon Mobil reported to be moving the Liza discovery in deepwater Guyana into pre-Front-End Engineering Design (FEED) less than five months after confirming the find, the project has the potential to yield significant returns for investors, according to analysts with research and consulting firm GlobalData.
The company’s latest analysis states that an FPSO development at the field would return above 19.8% in a flat-oil-price scenario of $61.68/bbl.
“While there is risk around the assumed initial production rates of 20,000 bpd per development well, there is upside in additional cost efficiencies as low oil prices have been accompanied with decreases in FPSO leasing terms and drillship dayrates,” Anna Belova, Ph.D., GlobalData’s senior upstream analyst, said.
Economies of scale
“Additionally, the 201 MMbbl of recoverable reserves estimate falls on the lower end of 700 MMbbl of oil reserve suggestions from Guyana’s minister of governance. Higher reserve scenarios, recovering upward of 600 MMbbl, have an internal rate of return over 35% while capturing the economies of scale realized with FPSO developments,” Belova added.
While the cost metrics for the Liza scenarios are consistent with other global developments with a leased FPSO productionconcept, the economic metrics are more favorable than global averages due to the competitiveness of the Guyaneseproduction sharing agreement regime.
Matthew Jurecky, GlobalData’s head of oil & gas research and consulting, says the project will benefit from the prevailing low-cost environment.
“The Liza project will also be well-placed to benefit from any uplift in oil prices post-development. Its commercial success could redefine the basin as a global deepwater production player,” he said.