Exxon earns $1.2 trillion profit in 2024 but costs yet to be recovered

…Guyana poised for GY$2 trillion annual oil windfall by decade’s end

It was revealed on Tuesday that ExxonMobil Guyana Limited (EMGL) recorded GYD$1.255 trillion in profit before tax in 2024, and that by the end of the decade, Guyana’s take home from profit oil and royalty will be as much as US$10 billion (GYD$2 trillion) per year. This was according to EMGL Vice President (VP) and Business Services Manager, John Colling, in his first local media briefing since being appointed to replace Phillip Reitema. Despite Exxon’s profits, however, Colling emphasised that the company was still in the red.
That being said, however, Colling noted that Guyana could stand to benefit from as much as US$10 billion per year by the end of the decade… once cost oil has been recovered, as per its 2016 Production Sharing Agreement (PSA).
“ExxonMobil Guyana and its partners have invested US$40 billion to date. And have only recovered US$33 billion. So, there is a cost recovery ongoing. In the future, once all of those costs have been recovered, a larger component of the revenue will be available from profit oil.”
“From splitting between EMGL and its partners and the Government of Guyana, we expect by the end of the decade, that the Government of Guyana will be receiving US$10 billion per year in profit oil and royalty. Which is equivalent to GYD$2 trillion,” he said.
According to the financials shared with the media, Exxon’s total operating expenditures were GYD477.6 billion last year, with total royalty paid, GYD34.1 billion. Depreciation and amortisation were meanwhile the largest single sources of operating expenses, recorded at GYD$301.8 billion last year as against GYD182.4 billion in 2023.
The operating expense also includes GYD22.7 billion in exploration costs, a reduction compared to 2023, and GYD61.2 billion in production costs, an increase compared to 2023 that is due to the operationalisation and ramping up of production on the Prosperity Floating Production Storage and Offloading (FPSO) vessel.
“In 2024, ExxonMobil Guyana Limited generated G$1.7 trillion in revenue, which is up about 60 per cent from the prior year, and that’s really driven by the Prosperity FPSO coming online and higher production volumes. And you will see similarly, net income of G$995 billion driven by, primarily the Prosperity FPSO,” Colling further explained.
Under the terms of the 2016 PSA, ExxonMobil is allowed to recover its investment in the Stabroek Block, via cost recovery. Specifically, no more than 75 per cent of revenue from ExxonMobil’s share of oil lifts goes towards cost recovery.
However, it has been pointed out by some, including VP Bharrat Jagdeo, that Guyana’s share can increase dramatically, ahead of schedule, once amortisation is completed. This is because the cost bank and the contractual requirement for oil giant ExxonMobil to recover its investment is one of the primary reasons Guyana’s current take of the profits from the Stabroek Block is 14.5 per cent.
Since taking office, the People’s Progressive Party/Civic (PPP/C) Government has also produced an improved model PSA that, among other things, reduces the cost recovery ceiling from 75 per cent to 65 per cent. This ensures that from the initial investment, more revenue from oil production comes to Guyana.
Other features in the PSA under the new fiscal terms include signing bonuses as high as US$20 million signature for companies that secure deep-water blocks, and US$10 million for the shallow-water blocks.
Additionally, all future PSAs would include the retention of the 50-50 profit-sharing after cost recovery; the increase of the royalty from a mere two per cent to a fixed rate of 10 per cent and the imposition of a 10 per cent corporate tax.
This model PSA is being applied to future oil contracts.