November 14, 2016 • Vol. 6, No. 6docFinder alert
docFinder alert

Exxon’s giant Liza discovery ignites new exploration in Guyana–Suriname Basin


Liza resources climb with appraisal successes

Hess Corp

September 8, 2016

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Major players on deck in Guyana–Suriname Basin

CGX Energy

May 21, 2015

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In May 2015, operator ExxonMobil announced a significant oil discovery with its Liza-1 exploration well on the Stabroek block about 120 miles offshore Guyana. Lisa turned out to be the largest oil discovery of the year and one of the largest in the last 10 years. An appraisal well, Liza-2, expanded the resource potential to 800 MMboe to 1.4 Bboe, and the recently released results from Liza-3 suggest the potential is at the upper end of that range. This success seems to confirm that the US Geological Survey was correct when it ranked the Guyana-Suriname Basin as the world’s second most prospective, underexplored basin, with an estimated 14 Bbbl yet to be found. We wondered what other oil and gas companies held exploration acreage in this emerging play, which could contain resources that would substantially increase their valuations. So, we turned to docFinder, the most comprehensive and accessible source of global oil and gas financial and operational information. We found out that several major international firms have licensed blocks in the basin, including Anadarko, Chevron, Repsol, Petronas, Tullow, Apache, Inpex, RWE, CEPSA and Kosmos Energy. This list doesn’t include ExxonMobil’s partners in the Stabroek block, Hess Corp. (45% WI) and CNOOC (25% WI).

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Although these companies held most of their acreage before announcement of the blockbuster Liza discovery, the plunge in oil prices led to severe cutbacks in global greenfield offshore oil exploration. However, the Liza results rekindled interest in the region for reasons beyond the volumes discovered. The Liza-3 appraisal reached a depth of 18,100 ft, compared with depths of 22,000 to 30,000 ft for Lower Tertiary discoveries in the US Gulf of Mexico, making the wells less expensive to drill. Also, significant oversupply has resulted in sharply lower dayrates for deepwater drillships. According to Hess, this now makes development of discoveries like Liza economic at current oil prices and even more economic under an optimistic oil-price scenario. ExxonMobil and partners are following the three Liza wells with an exploration well at the Payara prospect 10 miles northwest and a second exploration well on the Stabroek block.

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featured.slides from docFinder

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Prospect has Liza potential at lower cost

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Orinduik license updip of Liza boosts exposure

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Araku prospect has 500 MMbbl potential

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Hess farms into Kosmos/Chevron block

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One of the first movers in the Guyana-Suriname Basin. Tullow Oil says the Liza discovery significantly de-risked its acreage. The Kanuku licenses, which Repsol operates with 40% WI and Tullow owns 30% WI and RWE 30% WI, is updip of Liza-1. Tullow says the Kaieteur prospect on the Kanuku license is in the same stratigraphic interval as Liza, which makes a compelling argument that it is charged by the same system. Another advantage of Kaieteur is that it is in shallow water (100 m), which dramatically lowers well costs to about $50 million. The Repsol/Tullow partnership is shooting 3D seismic in 2017 in preparation for drilling in 2018.

The Liza discovery motivated Tullow to obtain another Guyana license, Orinduik, in January 2016 (See PLS’ Global M&A Database), where it holds a 60% operated interest with partner Eco Atlantic. Orinduik is also updip of Liza-1 and Liza-2, northwest of ExxonMobil’s acreage. With the Kanuku block to the southwest, Tullow surrounds Liza like a baseball mitt. Orinduik is also in shallow water, giving it the same drilling-cost advantage as the Repsol-operated block. Although the contract with the Guyana government gives the Orinduik partners four years to complete 3D seismic, the partners have agreed to significantly advance the program in light of ExxonMobil’s continuing drilling success.

The Liza discovery also enhanced the prospectivity of significant acreage across the Guyana-Suriname Basin, including large blocks offshore Suriname. The most prospective may be Block 54, where Noble Energy farmed in for 20% of operator Tullow Oil’s stake in November 2015 (Statoil holds the remaining 50% interest in the block). The partners have completed a 3D survey and are fast-tracking data analysis for 2018 drilling. The first well will be on the Araku prospect, with a 500 MMbo potential supported by four-way closure and good seismic amplitude. Again, the well cost estimate is an attractive $47 million. The partners have also identified multiple additional prospects for drilling beyond 2018.

Operator Kosmos Energy and its partner, oil major Chevron, are preparing for late 2017/early 2018 drilling on Block 42 and Block 45 offshore Suriname. The multi-billion-barrel potential of the Aurora prospect on Block 42 attracted the interest of Liza partner Hess, which farmed in for a 16.7% interest in 2016 (Kosmos retains 33.3% interest, Chevron 50%). Kosmos completed 3D seismic exploration on the block in 2016. Also slated for early exploration is the Anapai prospect on Block 45. Nearby exploration wells are also planned by the Apache/CEPSA and Petronas/RWE partnerships.


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For more on this play and other industry activities, please refer to PLS other products including Research (InternationalDeals, International Scout, InternationalCapital); PLS M&A Database (metrics and comparables); Petroluem Listings (OpFinder, Deals For Sale); and PetroWire (project database and abstract service). Additionally, PLS consulting arm recently worked on a farmout in the Guyana-Suriname Basin for one of the key operators. Clients can engage PLS for consulting and advisory services by contacting David Kessler or Brian Lidsky.