Several American companies working in fields related to oil production saw major stock price gains Monday as traders reacted to the capture of former Venezuelan dictator Nicolas Maduro by the United States.
President Donald Trump has touted the operation from the weekend as an opportunity to revitalize Venezuela’s oil industry and return U.S. producers to the region. Doing so would be a steep challenge, costing tens of billions of dollars and several years to build new infrastructure.
Most U.S. oil firms have been hesitant to support increased Venezuelan operations publicly, but markets have already declared some majors as “winners” from the strike in the South American country.
Chevron
Chevron was the biggest winner on Monday, seeing its stock price rise by more than 5%, or the equivalent of roughly $15 billion in market capitalization.
Chevron is currently the only U.S. oil firm allowed to ship oil out of Venezuela under U.S. sanctions. The company produces around 200,000 barrels per day and accounts for about 20% of the country’s production.
Chevron also has major interests in neighboring Guyana, thanks to its takeover of Hess, completed last year, which has a major stake in offshore oil in the region. Guyana previously faced threats from Venezuela over its oil fields, but those threats have now largely diminished.
It has yet to be seen whether Chevron will expand its operations in Venezuela in the fallout of the regime change.
“Chevron remains focused on the safety and wellbeing of our employees, as well as the integrity of our assets,” the oil major told the Washington Examiner. “We continue to operate in full compliance with all relevant laws and regulations.”
Exxon Mobil and ConocoPhillips
Other U.S. oil majors who previously operated in Venezuela also saw gains Monday.
Exxon Mobil was up more than 2% and ConocoPhillips was up more than 2.5%.
Both companies now have better odds of seeing the return of assets seized by Hugo Chavez in 2007, JPMorgan analysts said, according to Reuters.
Neither firm has said whether they plan to return their operations to the country.
“ConocoPhillips is monitoring developments in Venezuela and their potential implications for global energy supply and stability,” ConocoPhillips said in a statement to the Washington Examiner. “It would be premature to speculate on any future business activities or investments.”
Exxon Mobil did not respond to a request for comment.
US refiners
The stocks of refiners, who would process any Venezuelan crude shipped to the Gulf Coast, also saw major gains on Monday.
Valero — which handled the largest share of Venezuelan crude last October, around 1.6 million barrels, per data from the Energy Information Agency reviewed by Barron’s — was up more than 9%. Phillips 66 was up more than 7%. Marathon Petroleum was up nearly 6%.
Paulsboro Refining, which took around 1.2 million barrels of oil in October, was up more than 3%.
Oilfield service companies
Another set of immediate winners were the oilfield service companies that could be called on to help ramp up production in Venezuela.
Halliburton was up almost 8%. SLB gained nearly 9%. Baker Hughes was up more than 4%.
Watching and waiting
While the stock markets are certainly moving in favor of these oil majors, refiners, and oilfield service companies, those within the industry are far more skeptical that those gains will last.
“I think that it’s completely unclear and unknown if there will be any winners when it comes to energy or the oil and gas industry, let alone who might benefit more rather than less,” one oil and gas industry source told the Washington Examiner.
The source explained that, as of Monday, there have been no changes to crude operations in Venezuela since Maduro’s removal. Before oil majors can consider expanding their current or new operations, the industry looks for certainty, contract sanctity, reliable partners, and strong rule of law.
“These are all the ingredients that companies need, especially when they’re making investments outside of the United States and in a less familiar political environment,” the source said. “All of the reasons why Venezuela was a very uncertain and riskier investment prospect for the industry are still the same today as they were before this development.”
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Hunter Kornfeind, an analyst with Rapidan Energy Group, told the Washington Examiner that any future investments are related to decadeslong decisions.
“Until there’s further clarity and kind of the political and operating environment on the ground, companies are going to continue to … be hesitant about kind of going full bore back into Venezuela,” Kornfeind said.
