Table 1: Notional multi-phase development at Guyana: about $22/sh to Hess
Gross Barrels Full Project NPV Hess 30% Interest NPV net to (mmboe) $MM NPV Hess (mmboe) $mm $mm $/sh Liza Early Production System 425 4258 1,277 $3.9 Phase 1 600 4,932 1,480 $4.6 Phase 2 600 3,821 1,146 $3.5 Liza Total 1,625 13,010 3,903 $12.0 Payara (spec) Early Production System 425 3,392 1,018 $3.1 Phase 1 600 3,668 1,100 $3.4 Phase 2 600 2,682 805 $2.5 Payara spec Total 1,625 9,742 2,923 $9.0 Guyana Total 3,250 22,753 6,826 $21.1
Source: BofA Merrill Lynch Global Research estimates; Hess shares fully dluted 324.2mm shares after prefernce convert
Note that at current strip oil prices of ~$55 Brent, this is closer to $14.4/sh of which Payara is ~$6/sh or $2.0bn. On a ‘risked’ basis, we believe this is a reasonable development scenario representative of any incremental discovery that resembles Liza recalling that the partners have identified over 20 additional drilling prospects. On the assumption of a ‘plus three year’ development scenario after Liza, the potential impact on incremental production and cash flow is significant for Hess while the cumulative impact also becomes significant for XOM.
The charts below show our latest assessment of how a compound timeline for a Liza / Payara development could look, if Payara as a project does indeed prove to be a look
alike to Liza. Exhibit 9: Hess theoretical production profile for Liza / Payara Exhibit 10: Hess net production profile (by phase) 300 60 - 2a0) 50 4 200 40 4 150 30 + 100 20 4 50 10 4 ; 2016 A018 2020 2022 2024 2016 2021 2026 2031 | MlizaEardyPS omLizaPhase? wm Liza Phase} ——LizaEalyPS m—LizaPhase2 ——LizaPhase3 @ Payera Early PS @ Payera Phase ? § Payera Phase 3 —— Payara Early PS ——=Payara Phase 2 —=Payara Phase 3 Source: BofA Merrill Lynch Global Research estimates Source: BofA Merrill Lynch Global Research estimates
Critically, Guyana is now being described as a ‘DHI play’ meaning seismic and core have been sufficiently calibrated as to provide direct hydrocarbon indicators and hence de- risking future exploration tests. This appears confirmed again by the latest ‘Snoek’ SUCCESS.
XOM’s development plan calls for an FPSO (floating production and storage offloading vessel} with production capacity of about 150,000 boepd for every 450mm barrels of recoverable reserves, with plateau production extending up to 10 years. We suggest management’s commentary supports gross production capacity from current discovered resource of at least 600,000 boepd.
Bankof America
Merrill Lynch Hess Corp. | 11 April 2017 7
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