Chevron eyes up to $700 million cash flow upside from Venezuela

(Bloomberg) – Chevron Corp. could grow its cash flow by as much as $700 million a year from increasing oil production in Venezuela as the Trump administration seeks to control the South American country’s crude supplies, one analyst says. 

Chevron, the only U.S. oil major currently operating in Venezuela, has a “differentiated opportunity among peers to increase production,” Jason Gabelman, an analyst at TD Cowen wrote in a note Friday. Its efforts could add between $400 million and $700 million a year, representing about 1% to 2% of the company’s cash flow from operations, he said. 

American oil executives, including representatives from Chevron, are scheduled to meet at the White House on Friday as President Donald Trump outlines his vision for rebuilding Venezuela’s oil industry, which has been run down after decades of corruption and mismanagement. Home to the world’s largest oil reserves, the country is an attractive long-term opportunity for the oil industry, but companies are cautious about investing in the short term due to uncertainty around security and the rule of law. 

Chevron will likely boost production from its existing assets rather than commit large amounts of new capital to the country, according to the note. 

“We suspect Chevron will be hesitant to invest material incremental capital to Venezuela until there is a stable government and fiscal regime,” Gabelman wrote. 

Chevron’s joint ventures currently produce about 240,000 bpd from Venezuela, per TD Cowen. The company shares this production roughly equally with state-run Petróleos de Venezuela SA.

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