Chevron Corporation CVX reportedly plans to significantly boost its oil production in Venezuela by the end of 2024. This move — to add 65,000 barrels per day (bpd) — is part of the U.S. energy giant’s strategy to recover $3 billion in debt and unpaid dividends from its ventures in the South American nation. It also aligns with Venezuela's goal to surpass 1 bpd of oil production.
Currently, Chevron's joint ventures with the Venezuelan state oil company PDVSA are yielding around 135,000 bpd, a 70% increase compared to the previous year's average. They have also exported 124,000 bpd in 2023, nearing pre-sanction levels from 2019.
The company's drilling expansion plans are expected to fall within the scope of its existing license, acquired in November 2022. This means Chevron may not require new approvals from U.S. authorities to proceed.
However, to achieve its ambitious production increase goal, Chevron plans to deploy two large specialized rigs of 1,000-1,500 horsepower. Finding such sophisticated machinery in Venezuela can be difficult, and importation may be necessary.
However, their procurement from outside poses a challenge due to stringent U.S. sanctions. American oil service providers in Venezuela are currently allowed to maintain existing assets and personnel in the country but require authorization for importing new equipment or taking on contracts with PDVSA.
Chevron asserts that it is operating in compliance with relevant laws, regulations, and U.S. sanctions imposed by the Office of Foreign Assets Control. How the company navigates these regulatory challenges to acquire the necessary rigs remains to be seen.
Zacks Rank & Stock Picks
Chevron carries a Zacks Rank #3 (Hold) at present. Meanwhile, investors interested in the energy sector might consider the operators mentioned below. These companies currently sport a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Pioneer Natural Resources PXD: It beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters at an average of 4.3%.
PXD is valued at around $53.5 billion. Pioneer Natural Resources has seen its shares edge down 0.8% in a year.
CVR Energy CVI: It beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. Over the past 60 days, CVR Energy saw the Zacks Consensus Estimate for 2023 move up 43.1%.
CVR Energy is valued at around $3.4 billion. CVI has seen its shares gain 12.8% in a year.
Matador Resources MTDR: It beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. Over the past 60 days, Matador Resources saw the Zacks Consensus Estimate for 2023 move up 4.3%.
Matador Resources is valued at around $7.1 billion. MTDR has seen its shares gain 10.5% in a year.
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