President Trump meets with oil executives about Venezuela at White House
Speakers
Brian Sullivan
— Anchor, CNBC (Last Call / Power Lunch)
Summary
Brian Sullivan reports from the White House after President Trump met with oil executives about Venezuela. Trump pitched heavy investment in Venezuela's oil industry and promised safety and security. Sullivan identified potential stock beneficiaries across oil majors, oil services, and refiners, while questioning whether the return on investment justifies the risk at $58-$59 WTI.
- Trump met oil executives to encourage investment in Venezuela's oil industry.
- Trump promised total safety and security for companies operating there.
- ExxonMobil and ConocoPhillips were expelled from Venezuela in 2007 and are owed billions.
- ConocoPhillips won about $9B in a legal judgment but has not collected.
- Sullivan named XOM, CVX, and COP as oil-major stocks to watch.
- Sullivan named SLB, BKR, and HAL as oil-service stocks to watch.
- Sullivan named VLO and, to a lesser extent, CSX on the refining side.
- Sullivan questioned the ROI at $58-$59 WTI given rebuilding costs.
Ideas
Venezuela rebuild could lift oil majors.
President Trump's push for oil companies to reinvest in Venezuela could benefit oil majors. ExxonMobil and ConocoPhillips were expelled in 2007 and are owed billions, with ConocoPhillips holding an uncollected $9B legal judgment, and Trump indicated they could recover funds through new Venezuelan oil production. Chevron is also named as an oil-major exposure, with SLB described as its partner on the ground.
Valero favored for Venezuela heavy crude.
Refiners that can handle Venezuela's heavier sour crude could benefit; he would look at Valero and, to a lesser extent, CSX on the refining side. Valero is notable because its CEO is at the White House, and the stock had already moved earlier in the week.
Service firms lead Venezuela oil rebuild.
Oil service companies would likely be first in to triage and rehabilitate Venezuela's dilapidated oil infrastructure, which produces only about 900,000 barrels a day and poses environmental risks. He would look at SLB and BKR on the services side; SLB is Chevron's partner on the ground, and HAL is also mentioned among the services companies that would have to go in first.
