Dear Editor,
KAIETEUR News’ publisher 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.

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% of Guyana’s share of profit oil and royalties and four percent of the total comprehensive income?cumulatively as of FY 2021.

In FY 2021, the lease interest cost represented 1.21% of the gross revenue (from the sale of crude) and finance cost represented 0.15% 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%. 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 incurred to raise the capital requirements of the business to fund its operations as well as exploration and development activities.

Editor, in closing, I wish to urge the news entity’s publisher/editor to examine the financial statements of FY 2020 and 2021, to confirm the interest expense and make the necessary correction.

Yours sincerely,
Joel Bhagwandin
Financial, Economic & Public Policy Analyst