Eni (E), Repsol to Restore Venezuela Oil Terms, Focus on Gas

Eni SpA E and Repsol SA REPYY are engaged in advanced negotiations for new agreements with Venezuela, as the South American nation aims to reclaim its position as a significant global oil producer following the relaxation of U.S. sanctions, per a Bloomberg report. The companies are finalizing the terms of contracts for their oil ventures with the state-owned Petroleos de Venezuela SA. A potential agreement is anticipated to be reached by the end of the year.

Eni and Repsol aim to follow Chevron Corp. CVX, which obtained a special license to recommence production in Venezuela in late 2022. CVX was granted a license to recommence oil production in Venezuela by the Biden administration after U.S. sanctions halted all drilling activities in the South American nation almost three years ago.

Chevron received a six-month license from the U.S. Office of Foreign Assets Control. The new policy authorizes the company to produce crude oil and petroleum products in its projects in Venezuela.Given the market’s eagerness to increase oil supply from the nation possessing the world’s largest oil reserves, Venezuela is anticipated to not only boost production but also redirect a greater share of its existing production to U.S. refineries. This move could contribute to stabilizing gasoline prices within the United States, a crucial consideration as President Joe Biden seeks reelection in 2024. In November, Repsol sent a negotiation team to Caracas to discuss contracts and explore options for accessing heavy crude for its Spanish refineries. Talks are likely to center on compromises benefiting both Repsol and PDVSA, including a review of PDVSA’s long-term debt for oil and gas sales.

Repsol operates four oil ventures, while Eni runs five in Venezuela. PDVSA has over 40 oil partnerships, with some companies suspending activities due to challenging business conditions. Zacks Rank & Stocks to Conside Eni currently carries a Zack Rank #3 (Hold).Investors interested in the energy sector might look at the following company that presently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The Williams Companies WMB reported third-quarter 2023 adjusted earnings of 45 cents per share, which beat the Zacks Consensus Estimate of 40 cents. The guidance for the 2023 dividend increased 5.3% on an annualized basis to $1.79 per share from $1.70 in 2022. Williams Companies’ debt maturity profile is in good shape, with its $4.5-billion revolver maturing in 2023. Williams is also paying its shareholders an attractive dividend yielding around 5%. Besides this, the company has a share repurchase program worth $1.5 billion, highlighting its commitment to shareholders.

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Source: nasdaq.com