A Citgo fueling terminal. (Source: Citgo)
The fate of Venezuela’s U.S.-based refining arm Citgo Petroleum is closer to reaching a resolution as a court-ordered sale date approaches.
According to U.S. District Court documents, the sales process could start in late October.
Houston-based Citgo has been entangled in the legal spat for almost six years. At least 21 creditors including Canada’s Crystallex and U.S.’ ConocoPhillips are seeking compensation for asset expropriations in Venezuela.
According to Reuters, the claims are worth over $23 billion, nearly twice the $12 billion Citgo value Venezuelan officials have quoted in recent months. Citgo is on track to generate an annualized EBITDA of around $5 billion. Using a 5x times EBITDA multiple would translate into a value of $25 billion, according to Hart Energy calculations.
RELATED: Has US Policy Toward Venezuela Already Failed?
Citgo owns three refineries with processing capacity of 807,000 bbl/d. They include refineries in Corpus Christi, Texas, with 167,000 bbl/d capacity; Lemont, Illinois, with 177,000 bbl/d; and Lake Charles, Louisiana, 463,000 bbl/d.
Also, the company, wholly and/or jointly owns 38 active terminals, six pipelines and three lubricants blending and packaging plants. Citgo branded marketers sell gasoline and other motor fuels through more than 4,200 independently owned, branded retail outlets, all located east of the Rocky Mountains.
According to the court documents, the Citgo sale or auction process will involve as many shares of PDV Holding, an indirect sole stockholder of Citgo, as necessary to satisfy the financial judgments.
And it’s not just companies. Bondholders also want a piece of Citgo after state-owned Petroleos de Venezuela (PDVSA) defaulted on its 2020 bonds which were backed by a majority stake in Citgo.
To date, two things have worked in Citgo’s favor: the location of its assets and protection from creditors afforded by Washington.
But Venezuela’s opposition parties aren’t likely to win presidential elections in 2024, and both political and energy pundits ponder the merits of Washington’s continued shielding of Citgo until a so-called U.S.-friendly government is in place in Venezuela.
The lingering question now is whether Venezuela’s opposition — still divided on their approach to running against the ruling party in elections in 2024 — will be able to delay the Citgo auction to change the company’s fate.
Only time will tell but it’s quickly running out.
Recommended Reading
VTX Energy Quickly Ramps to 42,000 bbl/d in Southern Delaware Basin
2024-09-24 - VTX Energy’s founder was previously among the leadership that built and sold an adjacent southern Delaware operator, Brigham Resources, for $2.6 billion.
US Drillers Cut Oil, Gas Rigs for Third Week in a Row
2024-10-04 - The oil and gas rig count fell by two to 585 in the week to Oct. 4.
EY: How AI Can Transform Subsurface Operations
2024-10-10 - The inherent complexity of subsurface data and the need to make swift decisions demands a tailored approach.
Bowman Consulting to Manage, Monitor Delaware Basin Wells
2024-10-14 - Bowman Consulting Group’s scope of work includes conducting detailed field surveys of above-ground infrastructure assets across well sites of up to to 8 acres.
E&P Highlights: Oct. 7, 2024
2024-10-07 - Here’s a roundup of the latest E&P headlines, including a major announcement from BP and large contracts in the Middle East.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.