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ConocoPhillips to Get Compensation of $2B from PDVSA

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ConocoPhillips (COP - Free Report) has inked a settlement accord with Petroleos de Venezuela, S.A. (PDVSA). Per the terms, an amount of $2 billion will be recovered, which was awarded to ConocoPhillips by an arbitral tribunal constituted under the rules of the International Chamber of Commerce (ICC). PDVSA — the Venezuelan state-owned oil company — is also liable to pay interest during the payment period.

Per the accord, PDVSA will pay an initial amount of about $500 million within a period of 90 days from the date of signing the agreement. The rest of the amount will be paid quarterly over the next four to five years.

Post the settlement, ConocoPhillips has decided to shelve legal enforcement actions of the ICC award, including the Dutch Caribbean. The company has guaranteed that the settlement meets all mandatory U.S. regulatory requirements, comprising any related sanctions imposed against Venezuela by the United States. Additional details of the agreement will not to be disclosed.

In April, an arbitration panel instituted under the ICC found that Venezuela, under the leadership of then-president Hugo Chavez, had illegally seized assets of ConocoPhillips in Hamaca and Petrozuata heavy oil projects in 2007. Thus, the company sought compensation at a local court for the fraudulent behavior.

Moreover, ConocoPhillips has a separate and independent legal action pending against the government of Venezuela before a tribunal under the backing of the World Bank's International Centre for Settlement of Investment Disputes (ICSID). The ICSID tribunal has already ruled that Venezuela’s seizure of the company’s investments dishonored international law. Proceedings are ongoing on the amount of reimbursement payable to ConocoPhillips.

Price Performance

ConocoPhillips has outperformed the industry in the past year. The company’s shares have surged 65.9% compared with the industry's 43.8% rise.



 

Zacks Rank & Stocks to Consider

ConocoPhillips currently carries a Zacks Rank #3 (Hold).

A few better-ranked players in the same sector are Petroleo Brasileiro S.A. (PBR - Free Report) , or Petrobras SA, Helix Energy Solutions Group, Inc (HLX - Free Report) and TC Pipelines, LP . All these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Petrobras is the largest integrated energy firm in Brazil and one of the major players in Latin America. It pulled off an average positive earnings surprise of 10.4% in the last four quarters.

Helix Energy offers specialty services to the offshore energy industry. The company delivered an average positive earnings surprise of 66.7% in the trailing four quarters.

TC Pipelines purchases, owns and actively participates in the management of U.S.-based natural gas pipelines and related assets. The company delivered an average positive earnings surprise of 3.7% in the last four quarters.

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