RE:They must have read my posts today …lol Hey Frank, I see you on the fec and oyl boards a lot and know that you know how they like to track xom's progress offshore Guyana. They're on track, ahead of schedule actually, to be producing 1.3 million bbl/day of light, sweet oil by 2027. I think that they're talking 6 FPSOs eventually. They have 4 going right now if memory served. Yellowtail is pending approval by the Guyanese government. And that's just xom. The Total/Apache project on Block 58 in Suriname is probably gonna be FID'd Q4 this year. Block 58, together with xom's stuff is all part of the "Golden Lane" as you know. Chevron is gonna drill offshore Suriname as well and they're working on the final acquisition of Hess which are partners in xom's projects offshore Guyana.
The entire golden lane could easily be putting 2 to 3 million bbl/day of light, sweet on the market in a couple of years and maintian high levels of production for at least 20 years. The geologists say that all of that used to be connected to Africa's prolific offshore areas in Nigeria, Angola etc on the super continent Pangea 200 million years ago which plate tectonics and continental drift broke apart into the continents we see today. Anyway there may be west africa type recoverable reserves offshore the north coast of South America.
My question is if those operations in the golden lane isn't kind of like the elephant in the room that nobody talks about on this board. Why does the oil price not go up? Maybe because xom is putting increasingly more barrels online from offshore Guyana? And if Venezuela comes back online then oil futures traders must be factoring all of that in. Plus Saudi needs the cash so I can't see them cutting by a whole bunch. They're gonna manage supply in order to optimize netbacks without throwing the economy into stagflation. Right now xom's break even cost offshore Guyana is about $30 per barrel according to them, royalties included. So their netbacks must be running in the 40 to 50 dollar per barrel range. I think that we'll see a narrow range of oil prices over the next few years with no major spikes or drops cause lots more oil is coming online. I think that the only way for these companies to increase profits is by reducing break evens in order to increase netbacks becsuse relying on oil prices going over $100 to increase netbacks is unlikely to occur. What do you and others think?