Conoco collecting $2 billion by the barrel from Venezuelans

Alex Nussbaum 10/25/2018

NEW YORK (Bloomberg) -- ConocoPhillips’ decade-old legal war with Venezuela began paying off this week as the embattled Latin American country started making good on a $2-billion arbitration settlement one barrel of crude at a time.

Conoco has received an initial payment of $345 million in the form of “cash and commodities” from Venezuela’s state-run oil company, the Houston-based company said on Thursday. The remittance helped allay fears the cash-strapped nation wouldn’t be able to pay off the award in a long-running dispute over asset seizures.

Conoco didn’t provide more details in its statement, but people with knowledge of the matter told Bloomberg News on Wednesday that the company loaded about 1.5 MMbbl of Venezuelan crude from terminals in the Caribbean run by Petroleos de Venezuela SA. Conoco resold the cargoes to refineries in the U.S. and Asia, the people said.

The PDVSA payment helped Conoco trounce profit expectations for the quarter. The company’s performance also was boosted by higher commodity prices and production from U.S. shale fields that grew 48 percent year-over-year. The company remains focused on fiscal discipline and shareholder returns, CEO Ryan Lance said in the statement.

“This is what the market can expect from us again in 2019,” he said.

Key takeaways

Conoco said the remainder of an initial $500-million payment from PDVSA is due by the end of the year. The rest of the settlement is to be paid out over 4.5 years. The explorer, which pumps oil and gas on six continents, raised its full-year capital budget projection by almost 2% to $6.1 billion. It’s a figure that could draw scrutiny from investors, who’ve been pressuring oil companies to control spending. Seeking to stay in shareholders’ good graces, Conoco has repurchased $2.1 billion in shares so far this year, part of a plan for as much as $9 billion in buybacks. The report helped kick off what’s expected to be a strong run of third-quarter earnings results from the industry, fueled by rising prices. Norwegian oil major Equinor ASA reported its best quarterly profit in four years earlier on Thursday.

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