Dear Editor,
Kaieteur News – Mr. John Colling’s commitment to “transparency and open, fact-based discussions” regarding ExxonMobil’s operations in Guyana is a welcome breath of fresh air. His July 2 letter provides an excellent opportunity to address fundamental questions about the 2024 financial statements of the Stabroek Block partners and several unresolved historical issues. He boldly asserts that ExxonMobil’s financial statements comply with International Financial Reporting Standards (IFRS), which unlike US GAAP, is based on the substance over form principle.
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IFRS 15 requires disaggregation of revenue into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Why is there no breakdown showing what portion of reported revenue represents taxes paid by the Government, sales from 2024 Profit Oil, and prior year cost recovery? How can stakeholders assess true operational performance when the composition of revenue is deliberately obfuscated?
Even if cost oil was sold to customers, the proceeds represent recovery of past investments, not compensation for current-year services. The economic substance is reimbursement, not revenue generation. When 65% of reported “revenue” is actually cost recovery from prior years, this fundamentally misleads users about operational performance.
Basic accounting principles require expenditures with future economic benefits to be recognised as assets. The Petroleum Agreement creates contractual rights to cost recovery – guaranteed rights backed by legal force. Why do the 2024 financial statements fail to recognise these guaranteed recoverable costs as assets? This selective application – treating guaranteed recoveries as uncertain while booking deferred tax liabilities that Guyana pays – violates basic IFRS principles and accounting integrity.
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The 2024 statements show significant deferred tax liabilities that will never be paid since Guyana covers these through cost recovery mechanisms. Would Mr. Colling disclose to Guyanese which government agency issued the tax certificates under Article 15.4 of the 2016 Agreement and the total value of those certificates in 2024? The failure to explain that Guyana effectively subsidizes the companies’ tax burden while they book these as concrete liabilities represents a fundamental failure of disclosure.
What is the exact value of unrecovered costs carried forward as of December 31, 2024? As the operator, how soon does ExxonMobil expect to reach full cost recovery? These are material facts that stakeholders need to assess the duration and scale of cost recovery impacts on Guyana’s revenues.
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CNOOC’s 2024 financial statements reveal its involvement in the Gas-to-Energy project. Would Mr. Colling disclose the total expenditure of all Stabroek Block partners – ExxonMobil, Hess, and CNOOC – on this project claimed as recoverable cost in 2024, the amount carried forward to 2025, and the total amount of expenditure on this project to which they are committed?
When reported profits bear no relationship to the actual profit oil received ($10.4 billion reported vs. $1.9 billion actual entitlement), how do these statements meet IFRS’s overriding requirement for true and fair presentation? The statements create more confusion than clarity about the companies’ actual financial relationship with Guyana.
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IAS 24 contains extensive requirements of disclosures concerning Related Parties. Does Mr. Colling honestly believe that the few lines in Note 14 to Exxon’s financial statements meet these requirements?
Mr. Colling’s commitment to fact-based engagement also provides an opportunity to address several historical irregularities that have gone unaddressed for years.
- In 2018, I analysed the audited financial statements of all three companies and found their claimed US$460 million in pre-contract costs at year end 2015 exceeded by at least US$92 million the total investment shown in their own financial statements? Almost a decade later, this discrepancy remains unexplained.
- Esso was the sole contractor under the 1999 Stabroek Agreement. Shell bought in and later exited before discovery. Can Mr. Colling explain whether the proceeds from that transaction and subsequent sales to Hess and CNOOC were brought into the books of the local branch or were paid offshore? If the latter, that would not only violate the 2016 Agreement but raise serious integrity issues.
- Can Mr. Colling tell us whether as an external company, Exxon was granted a licence for the land on which its Head Office is being constructed and whether the company will recover those costs under the Agreement?
The similarities between Mr. Colling’s letter and the Ministry of Natural Resources’ statement a few days earlier is cause for suspicion. While using identical talking points, they studiously avoid the actual compliance violations repeatedly raised. Mr. Colling now has a further opportunity to demonstrate his stated commitment to transparency. If ExxonMobil’s financial reporting truly provides the “consistency and transparency” claimed, addressing these questions should be straightforward.
While I sincerely wish to take Mr. Colling at his word, having considered his responses and for the reasons set out, I still hold that Exxon’s accounting is indefensibly lacking. As a public interest company, Exxon shows no respect for the people of Guyana, weaponising accounting complexity to avoid informed public scrutiny. Just like the Government does.
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By 2057, when these companies depart with their profits, our children will inherit the bitter legacy of resource wealth managed through financial statements designed to confuse rather than illuminate.
Respectfully,