Dear Editor,
In a recent KN Article (https://kaieteurnewsonline.com/2026/04/19/exxon-and-partners-profits-soar-to-us29b-in-5-years-while-guyana-received-us5-4b-in-50-50-partnership/[1]), it was pointed out that during the period 2020 to 2024, Guyana’s share of profit oil, which should have amounted to 50 percent of total profit (Article 11.4, 2016 PSA), was far less than expected. In fact, instead of Guyana receiving US$14.5 Billion, Guyana only received US$5.4 Billion, a shortfall of US$9.1 Billion (US$14.5B – US$5.4 B).
Since the Government of Guyana (GOG) might not explain this profit shortfall, even though they have the legal authority to seek comprehensive clarification and equitable compensation, the purpose of this letter is to show how this profit shortfall for Guyana is derived, using the published financial statements of the companies, the published export oil information by the Bank of Guyana, and stipulations in the lopsided 2016 PSA.
First, during the period 2020 to 2024, the total oil revenue earned from reported oil sales in the companies’ financial statements is US$43.5 Billion (Table1). During the same period, 536.2 million barrels of oil were exported (Bank of Guyana Annual Reports), yielding an average selling price of US$81.06 per barrel of oil (US$43.5 Billion / 536.2 million).
Second, since the published financial statements listed total profit (TP) as US$29.0 Billion and total revenue (TR) as US$43.5 Billion (Table 1), this implies that the total cost (TC) of oil extraction is US$14.5 Billion (US$43.5B – US$29.0B). Furthermore, the average cost of a barrel of oil under this accounting methodology, defined as the shareholders’ model, is US$ 26.98 (US$14.5Billion/ 536.2 million), and the average profit for a barrel of oil is US$54.08 (US$29.0 Billion/ 536.2 Million). Interestingly, the average cost of a barrel of oil (US$26.98) is within the cost range between US$25.00 to US$35.00, as established by Hess for Liza 1 and 2, and Payara projects (https://www.hess.com/docs/default-source/investor-decks/hess-october-2020-ir-presentation.pdf?sfvrsn=41f5746b_2[2]). As a result, if Guyana profit share was derived under this accounting methodology, the 50 percent profit share would be US$14.5 Billion (50 percent X US$29.0 Billion); but this is not the approach used in the 2016 PSA, which generates a much smaller profit amount that Guyana receives.
Third, the 2016 PSA accounting methodology stipulates that cost recovery (CR) is defined as: CR = 75 percent of Total Revenue (TR). Since total revenue (TR) is US$43.5 Billion, this implies that the amount captured in cost recovery (Table 2) is US$32.6 Billion (0.75 X US$43.5 Billion). Therefore, the average cost of a barrel of oil under this accounting methodology is US$ 60.80 (US$32.6 Billion/ 536.2 million); and the average profit for a barrel of oil is US$20.26 (US$10.9 Billion/ 536.2 million), with Guyana 50 percent profit share being US$5.4 Billion (Table 2). It should be noted that the average cost of a barrel of oil (ACpB) under the PSA is inflated, because it includes the average price per barrel of oil (P): ACpB = (0.75PQ)/ Q) = 0.75P. Therefore, when the price (P) of a barrel of oil increases (decreases), the cost increases (decreases). For example, when the price increases to US$100.00, the average cost is US$75.00 per barrel, and more revenue is allocated to cost recovery, even though the cost of a barrel of oil did not increase, but just the price of a barrel of oil increase. This outcome of a significant oil price increase is a current war-experience resulting from the middle-east war, where oil supplies are reduced. In contrast, if the price of a barrel of oil falls below the cost of a barrel of oil, this loss is automatically covered by the revenue earned in the next month revenue stream (PSA Article 11.3).
Fourth, since the accounting methodology in the shareholders’ model (Table 1) is different than the accounting method employed in the 2016 PSA (Table 2), the profit amount under these two methods are different, with Guyana receiving only US$5.4 Billion (Table 2), instead of US$14.5 Billion (Table 1).
Consequently, this profit shortfall of US$9.1Billion (Table 3) has a significant impact on the Guyanese economy due to the following:
Given the circumstances outlined above, the question is: Will the Government of Guyana address this two-pocket accounting matter that is generated under the lopsided 2016 PSA? Do not hold your breath!