The Hidden Gold Mine in ExxonMobil's Q2 2017 Earnings

You'd never think that anything about oil industry giant ExxonMobil (NYSE: XOM) would be overlooked. As an oil major, and a Dow Jones Industrial Average and S&P 500 component, the company has its finances and reports scrutinized by armies of analysts from around the world. No fewer than 18 analysts sat in on the company's most recent Q2 2017 earnings call.

A lot of the earnings coverage was focused on the fact that the company missed those analysts' earnings expectations, unlike fellow oil major BP (NYSE: BP), which beat its earnings projections. In fact, coverage was so focused on Exxon's earnings miss that it virtually ignored a potentially game-changing situation that was revealed on the call.

Liza and Payara: more than good baby names

"Liza" and "Payara" are the names of two of the petroleum discoveries in a South American offshore exploration block to which Exxon owns the drilling rights. The following map shows the south-central Liza and Payara fields in green, right on top of one another, and a third discovery, named Snoek. (Who comes up with these names?)

Liza, Snoek, and Payara are all part of the large western Stabroek exploration block. Other adjacent ExxonMobil-operated blocks include the northern Kaieteur and the southeastern Canje.

The graphic on the lower left of the slide shows that the Liza-4 exploration well -- in other words, the fourth test well drilled in the Liza field -- was drilled early in the second quarter, while the nearby Payara-2 delineation well was drilled late in the second quarter. Additional exploration wells, called Turbot and Ranger, will be drilled in Q3.

Both Liza-4 and Payara-2 found better-than-expected amounts of petroleum. Liza-4 discovered "more than 197 feet of high-quality oil-bearing sandstone reservoir," according to Jeff Woodbury, ExxonMobil's vice president of investor relations and secretary, who gave the earnings presentation. Meanwhile, Payara-2 discovered 60 feet of high-quality oil-bearing sandstone, which Woodbury announced was "deeper than the previous lowest-known oil in the first Payara well."

According to the company, this means the 6.6 million acre Stabroek block alone contains 2.3 billion to 2.8 billion recoverable barrels of oil equivalent. And that's just what we know about from a handful of wells. The upcoming Turbot and Ranger test wells -- and subsequent wells planned for Q4 and beyond -- could find even more.

More to come

ExxonMobil has moved quickly to exploit its finds in the Guyana Basin. It only made its initial hydrocarbon discovery here -- the first significant one in Guyana's history -- in 2015. Now the company plans to develop the Liza field and expects first oil to flow by 2020, which is incredibly speedy by deepwater standards. Woodbury even referred to the five-year turnaround as "industry-leading."

Phase 1 of the project will see 450 million barrels of oil developed from the field, with production capacity of 120,000 barrels per day and a total cost of $4.4 billion. That works out to less than $10 per barrel. Exxon is projecting double-digit returns at $40 per barrel, which would be impressive.

And there could be more where that came from -- or, rather, from next door to where that came from. ExxonMobil is currently completing 3D seismic testing in the neighboring Kaieteur block and has purchased a stake in "Block 59" in neighboring Suriname. In response to an analyst's question about whether upcoming developments might be accelerated, Woodbury replied that "to the extent that we can standardize that template, I think it's going to allow us to move quicker."

More cheap oil brought online faster than ever sounds like good news to me.

Why it matters

Obviously, any large oil or gas find matters to an oil and gas company. BP, for example, is currently crediting offshore gas finds in nearby Trinidad for much of its new production in 2017. But these offshore Guyana discoveries have additional significance for ExxonMobil.

The company's production numbers have been falling in recent quarters, which should concern investors. Peer BP saw its numbers go up by 10% in the most recent quarter. For ExxonMobil, whose exploration and production arm has been a drag on overall earnings for years, declining production is the last thing the company needs.

But if Exxon can start bringing these kinds of valuable finds to market more quickly, that could change. Woodbury even said on the earnings call, "We're looking for things like Guyana: with really high quality, really good, if you will, risk-reward structure on how we manage this portfolio going forward."

Now, it won't happen all at once, but the fact that it's happening at all should give investors confidence.

Investor takeaway

While no oil investment has been immune from the slump in oil prices, ExxonMobil has done just about as well as one could during these troubled times for the industry. But its production numbers have been declining, and its entire production arm has been dragging on the company's finances.

These new discoveries in Guyana -- and the new accelerated timeline the company has adopted for them -- could help to solve both of those problems. Of course, things may not pan out. BP, for example, just wrote down $750 million as a result of unsuccessful offshore operations in Angola.

But smart investors should keep an eye on the company's Guyana operations in subsequent quarters to see if it's really the gold mine it has the potential to be for Exxon.

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John Bromels owns shares of Apache. The Motley Fool owns shares of ExxonMobil. The Motley Fool has a disclosure policy.