The shares of Exxon Mobil (XOM), which have declined by nearly 35% during the past year, have increased by 10.3% over the past two weeks despite OPEC +’s voluntary decision to reduce oil production generally.

In an unexpected move, Saudi Arabia announced on Tuesday that it would cut output by one million barrels per day in February and March. However, Russia and Kazakhstan were permitted to increase their production by 75,000 barrels per day in the next two months. In response to the news last week, Brent crude rose to 55.22 a barrel by Friday’s close. However, experts warn that due to COVID-19 continuing to threaten around the world, a new drop-in price might occur at a level of $50 per barrel.

In the meantime, Exxon Mobil (XOM) has the chance to reduce its huge debt and generate a lot more revenue and profits by increasing its production of cheap oil at a price (net of cost) of $35 per barrel or less. A majority stake in the Stabroek Block shelf of the Guyana-Suriname Basin is held by Exxon Mobil, which owns 45% of the oil fields. It has begun drilling Bulletwood-1, a new well, in addition to established production in 18 fields. According to the Guyana Maritime Administration Department, the Bulletwood-1 well is expected to be completed by February 23 and is expected to contain 500 million barrels of oil.

A reason for Exxon’s investment in this new field is remarkably low costs associated with the production of crude oil; the oil, which is lacking in sulphur content, is processed into high-quality fuels at a lower cost. As an example, Exxon produces crude oil using the Liza field on this shelf, with an injection capacity of 120,000 barrels per day. The crude price, in this case, is $35 per barrel. One of the partners in this project, responsible for the production and refining of the oil, is Hess. It owns 30% of the company, while 25% of the company is China’s biggest oil and gas company, CNOOC.

Liza will start ramping up its production capacity in 2022, once the vessel’s second floating production, storage, and offloading (FPSO) unit becomes operational, enabling it to pump oil at a much lower price of about $25 per barrel.

Exxon Mobil (XOM) also announced in December 2020 that it, together with national oil partner Petronas, had discovered significant oil potential in the Sloanea-1 drilling project offshore Suriname. The company previously announced that it was planning to reduce its domestic and international dry natural gas assets soon to focus on high-potential assets, including Guyana and Suriname and the Permian Basin in West Texas and southeastern New Mexico.

Exxon Mobil (XOM) will generate new revenue streams and profits as these fields are tapped, and production rises.

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