KN publisher’s commentary on US$4B payment to ExxonMobil is utterly false, misleading

Dear Editor, KAIETEUR

News publish- er Mr Glenn Lall, circulated one of his recent short videos on a popular social media platform in which he made an outrageously false and misleading assertion that Guyana is paying ExxonMobil some US$4 billion in interest annually.

Please permit me, therefore, to correct this misleading and callous statement by Mr Lall. It is public knowledge that the audited financial statements of Esso Exploration and Production Guyana Limited (EEPGL), CNOOC, and Hess are publicly available and accessible to all of the media houses.

The consolidated financial statements of EEPGL,

CNOOC and Hess for FY 2020 and FY 2021 revealed that the lease and financing cost in 2020 amounted to US$40 million and US$35 million, respectively?thus, bringing the cumulative total to US$75 million.

Guyana’s earnings in both profit oil and royalty for those two years amounted to US$609 million. As such, the debt-financing cost for these two years represented 12 per cent of Guyana’s share of profit oil and royalties and four per cent of the total comprehensive income?cumulatively as of FY 2021.

In FY 2021, the lease-interest cost represented 1.21 per cent of the gross revenue (from the sale of crude) and finance cost represented 0.15 per cent of gross revenue.

Accordingly, the esteemed publisher has effectively?whether deliberately, mischievously, misleadingly or by error, overstated the interest expense of ExxonMobil Guyana by more than one hundred (100) times.

The oil companies’ capital structure comprised both debt financing and equity financing, with a modest level of debt financing. ExxonMobil’s weighted average cost of capital (WACC) is 10.25 per cent.

More so, it should be noted that the financing cost is a deductible expense on the profit-and-loss statement for any type of business operations?hence, it is cost recoverable in the oil and gas business. The simple explanation is that it is the cost