Kick Chevron (CVX) out of Venezuela and you simply hand over influence in the oil-rich South American nation to Russia and China.
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That’s the view of the Chevron CEO Mike Wirth, who is seeking to protect the firm’s special license to operate in Venezuela against calls for a halt on exports.
The boss of the number two U.S. oil producer told the Financial Times the company would try to work with the White House to safeguard its operations in the sanctions-hit country. Perhaps as a gesture of support, Chevron referred to the “Gulf of America” in its earnings release today rather than Gulf of Mexico.
Calls for CVX to Quit Venezuela
Wirth’s comments comes after Trump’s Secretary of State Marco Rubio said the US should reconsider Chevron’s sanctions waiver that allows it to operate in Venezuela. He said the Biden administration had “got played” in negotiations with Venezuela’s president, Nicolas Maduro.
“Now they have these general licenses where companies like Chevron are actually providing billions of dollars of money into the regime’s coffers, and the regime kept none of the promises that they made,” Rubio said. “So all that needs to be re-explored.”
Joe Biden’s administration granted a license to Chevron to expand its Venezuela business in 2022, while broader oil sanctions on the country were lifted in October 2023. However, President Nicolas Maduro backtracked on his commitment to hold free and fair elections, leaving the U.S. to reimpose oil sanctions in April last year.
While Chevron’s exemption was kept in place, allowing it to produce around 180,000 barrels per day in the country, the new administration could take a stricter line. For Wirth this would risk ceding power to rival nations.
“In Venezuela, in particular, what you have seen when countries from the west leave, you’ve seen companies from China, from Russia, increase their presence as a result,” he told the FT.
The comments from Wirth came as CVX posted quarterly earnings below Wall Street estimates, hit by lower oil and gas prices and weak refining margins. Adjusted earnings per share (EPS) of $2.06 were below Wall Street’s $2.11 estimate and down from $3.45 a year ago. The company has been hit by weak U.S. fuel sales, which declined 3% year-over-year. Shares fell 2.8% early on Friday on Wall Street.
Is CVX a Buy, Sell or Hold?
Overall, Wall Street has a Strong Buy consensus rating on CVX stock, based on 16 Buys and three Holds. The average CVX price target of $175.56 implies 15% upside from current levels, with the stock having risen 10% in the last 12 months.
