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Chevron Corporation (CVX - Free Report) faces increased risks in Venezuela as president Maduro threatens to annex the disputed Essequibo oil-rich region from neighboring Guyana, according to a report by Bloomberg.
Energy market observers are warning of potential significant consequences for Chevron if Maduro follows through on his threats. The Biden administration has reaffirmed its unwavering support for Guyana's sovereignty and pledged to conduct flight operations within the country. Analysts suggest that should Maduro's threats materialize, the United States might reimpose sanctions and revoke Chevron's special license to operate in Venezuela, a privilege granted recently.
In response to Maduro’s threat, Guyana is enhancing security measures, Brazil is increasing its military presence along the border and the United States is urging Venezuela to respect the territory as Guyana's until the dispute is settled in international court.
The timing of the dispute, ahead of a presidential election next year, adds a political dimension. The geopolitical tension coincides with the polls, indicating that Maduro's political opposition is leading. Analysts view the Essequibo threat as a political posturing aimed at rallying nationalist sentiments and bolstering support for the socialist government.
A Wood Mackenzie analyst Luiz Hayum provided insights, asserting that the referendum functioned as a display of backing for Maduro's policies and an effort to foster a sense of unity among voters. Nevertheless, he highlighted the unlikely scenario of the situation escalating into a widespread armed conflict.
Despite the potential risk to Chevron's investment in the oil fields off Guyana, analysts deem the likelihood of Venezuela taking over offshore production as low due to significant logistical challenges.
Matador Resources is among the leading oil and gas explorers in the shale and unconventional resources in the United States. The company’s prime intention is to create more value for shareholders and generate lucrative returns from the capital invested in unconventional plays.
MTDR’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 13.89%.
Liberty Energy is a North American provider of hydraulic fracturing services to upstream energy operators. The company’s multi-basin presence offers an attractive upside opportunity compared with most of its peers. Its strong relationship with high-quality customers provides revenue visibility and business certainty.
LBRT’s earnings beat estimates in three of the trailing four quarters and missed once, delivering an average surprise of 9.88%.
Viper Energy is a variable distribution MLP based in Midland, TX. It generates strong and steady royalty income from mineral interests in Eagle Ford and the Permian Basin. The business strategies of the partnership include acquiring mineral interests from third parties and the parent company.
VNOM’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 92.62%.
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Chevron (CVX) Faces Uncertainty Amid Venezuela-Guyana Dispute
Chevron Corporation (CVX - Free Report) faces increased risks in Venezuela as president Maduro threatens to annex the disputed Essequibo oil-rich region from neighboring Guyana, according to a report by Bloomberg.
Energy market observers are warning of potential significant consequences for Chevron if Maduro follows through on his threats. The Biden administration has reaffirmed its unwavering support for Guyana's sovereignty and pledged to conduct flight operations within the country. Analysts suggest that should Maduro's threats materialize, the United States might reimpose sanctions and revoke Chevron's special license to operate in Venezuela, a privilege granted recently.
In response to Maduro’s threat, Guyana is enhancing security measures, Brazil is increasing its military presence along the border and the United States is urging Venezuela to respect the territory as Guyana's until the dispute is settled in international court.
The timing of the dispute, ahead of a presidential election next year, adds a political dimension. The geopolitical tension coincides with the polls, indicating that Maduro's political opposition is leading. Analysts view the Essequibo threat as a political posturing aimed at rallying nationalist sentiments and bolstering support for the socialist government.
A Wood Mackenzie analyst Luiz Hayum provided insights, asserting that the referendum functioned as a display of backing for Maduro's policies and an effort to foster a sense of unity among voters. Nevertheless, he highlighted the unlikely scenario of the situation escalating into a widespread armed conflict.
Despite the potential risk to Chevron's investment in the oil fields off Guyana, analysts deem the likelihood of Venezuela taking over offshore production as low due to significant logistical challenges.
Zacks Rank & Key Picks
Chevron currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the energy sector are Matador Resources Company (MTDR - Free Report) , Liberty Energy Inc. (LBRT - Free Report) and Viper Energy, Inc. (VNOM - Free Report) . While Matador Resources sports a Zacks Rank #1 (Strong Buy), both Liberty Energy and Viper Energy carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Matador Resources is among the leading oil and gas explorers in the shale and unconventional resources in the United States. The company’s prime intention is to create more value for shareholders and generate lucrative returns from the capital invested in unconventional plays.
MTDR’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 13.89%.
Liberty Energy is a North American provider of hydraulic fracturing services to upstream energy operators. The company’s multi-basin presence offers an attractive upside opportunity compared with most of its peers. Its strong relationship with high-quality customers provides revenue visibility and business certainty.
LBRT’s earnings beat estimates in three of the trailing four quarters and missed once, delivering an average surprise of 9.88%.
Viper Energy is a variable distribution MLP based in Midland, TX. It generates strong and steady royalty income from mineral interests in Eagle Ford and the Permian Basin. The business strategies of the partnership include acquiring mineral interests from third parties and the parent company.
VNOM’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 92.62%.