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CVX to Commence Venezuelan Oil Output Amid Easing Sanctions

Chevron CVX has been granted a license to recommence oil production in Venezuela by the Biden administration after U.S. sanctions halted all drilling activities in the South American nation almost three years ago. The respite was followed by the resumption of talks by Venezuela’s political groups with a deal to work together on a humanitarian spending plan.

The oil major received a six-month license from the U.S. Office of Foreign Assets Control, OFAC. The new policy authorizes the company to produce crude oil and petroleum products in its projects in Venezuela.

While no new drilling is approved, CVX will be able to overhaul and do the maintenance of oil fields. The decision allows the San Ramon, CA-based company to revive existing oil projects in Venezuela and bring new oil supplies to refiners in the United States.

However, the arrangement limits cash payments to Venezuela, which could reduce the amount of oil available to Chevron. Per the new policy, profits from the sale of energy will be directed to paying down the debt owed to CVX rather than providing profits to the Venezuelan state-owned oil firm PDVSA.

U.S. sanctions against Venezuela were introduced in 2019 by the Trump administration. In 2020, before the United States ordered a complete halt of drilling operations, Chevron’s share of Venezuelan crude oil output was 15,000 barrels a day.

The current U.S. dispensation’s decision to ease some of those sanctions came after the resumption of talks over the weekend between the government of Nicolas Maduro and the Venezuelan opposition. The talks led to the signing of a U.S.-brokered accord between the government and the opposition to resolve the country’s political turmoil.

Chevron, the American oil major, is one of the largest publicly traded oil and gas companies in the world with operations spanning worldwide. The only energy component of the Dow Jones Industrial Average, CVX is fully integrated as it participates in every aspect related to energy, from oil production to refining and marketing.

Chevron currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the energy space that warrant a look include Exxon Mobil XOM, Phillips 66 PSX and Valero VLO, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Exxon Mobil’s 2022 earnings is pegged at $13.92 per share, indicating an increase of about 158.7% from the year-ago earnings of $5.38.

The consensus estimate for XOM’s 2022 earnings has been revised upward by about 9.4% over the past 60 days from $12.72 per share to $13.92 per share.

Estimates for Phillips’ 2022 earnings stand at $20.39 per share, up about 257.7% from the year-ago earnings of $5.70.

PSX beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 28%.

Valero beat estimates for earnings in all the trailing four quarters, the average being around 25.1%.

The consensus mark for VLO’s 2022 earnings stands at $28.37 per share, which implies an increase of about 909.6% from the year-ago earnings of $2.81.

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Chevron Corporation (CVX) : Free Stock Analysis Report

Exxon Mobil Corporation (XOM) : Free Stock Analysis Report

Valero Energy Corporation (VLO) : Free Stock Analysis Report

Phillips 66 (PSX) : Free Stock Analysis Report

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