Why Requisite Capital's Talkington says Chevron has most to gain right now
Speakers
Bryn Talkington
— Managing Partner, Requisite Capital Management
Summary
CNBC's Closing Bell discusses oil markets after the capture and removal of Venezuela's President Maduro. Bryn Talkington of Requisite Capital Management says Chevron is the strategic tactical winner due to its boots on the ground, while she would fade the rallies in oil-service and refining names that have already priced in an optimistic outcome. She also owns Diamondback and Viper Energy and may add on weakness as the geopolitical situation unfolds.
- Venezuela's President Maduro was removed and appeared in New York court.
- Oil markets and related equities are being watched for supply implications.
- Chevron was called the strategic tactical winner because it has boots on the ground.
- Halliburton and Schlumberger rallied about 10% on hopes they rebuild infrastructure.
- Valero and Marathon Petroleum rallied about 10% on heavy crude refining demand.
- Talkington would fade the oil-service and refining rallies rather than initiate new positions.
- She owns Diamondback and Viper Energy and may add on weakness.
- A future Venezuelan oil glut is seen as a risk to energy prices, but not imminent.
Ideas
Chevron is Venezuela strategic tactical winner.
Chevron is the strategic tactical winner from the removal of Venezuela's President Maduro because it already has boots on the ground and direct operating exposure, giving it the most to gain from any normalization or rebuild of Venezuelan oil production.
Fade oil-service Venezuela rebuild rally.
Halliburton and Schlumberger rallied about 10% because they would be the service companies going in to rebuild Venezuela's disarrayed oil infrastructure, but Talkington thinks the market has already priced in a very optimistic outcome and it is very early days, so she would fade those names rather than initiate new positions.
Fade refiners on Venezuela heavy-crude hopes.
Valero and Marathon Petroleum rallied about 10% because Venezuela produces heavy crude that needs complex refiners like theirs. But with the market pricing a very optimistic outcome and the situation still in early days, she would fade those names rather than take new positions.
Add owned energy names on weakness.
She owns Diamondback Energy and Viper Energy, a Diamondback subsidiary focused on mineral rights and royalties. While a future glut of Venezuelan oil would be negative for energy prices, she thinks that is not imminent and geopolitical events of this size rarely end quickly, so she will watch owned names that are down today and may add on weakness.
