By When they address analysts on Friday, executives from Exxon Mobil and Chevron will likely face a host of questions about Venezuela.
This change in emphasis comes after the US apprehended and overthrew Venezuelan President Nicolas Maduro earlier this month, a significant geopolitical event that made it possible, though challenging, for large US oil companies to tap the nation’s vast petroleum reserves.
The shift follows President Donald Trump’s announcement of a plan for $100 billion in additional US investment to increase and regulate Venezuelan oil production.
The incident has brought Venezuela squarely back into investors’ attention at a time when oil prices are already being influenced by several geopolitical factors, even though the future remains unclear.
In the spotlight: Chevron
Since Chevron is now the only American oil major operating in Venezuela, it is expected to attract particular attention.
However, according to Stephanie Link, chief investment strategist at Hightower Advisors and a significant shareholder in both Chevron and Exxon, quoted in a Reuters report, the issue is likely to affect the broader industry.
Around 1% to 2% of Chevron’s operating cash flow comes from oil production in Venezuela.
According to Jason Gabelman, managing director of energy equities research at TD Cowen, that contribution could rise by an additional 1% to 2% if the company increases output in the coming years.
Analysts caution that significant uncertainty remains despite this potential.
According to a Bank of America Global Research note by Jean Ann Salisbury, there are still too many unresolved issues to assess Venezuela’s long-term value to Chevron’s operations.
Although Chevron is considered to be in a strong position due to its existing workforce, relationships, and payment mechanisms in the country, analysts say greater visibility would be required to assign meaningful value.
Analysts generally expect companies to avoid providing detailed plans on Venezuela in upcoming earnings calls, given the long timelines associated with oil projects.
Operational and market pressures
In a separate development, Kazakhstan’s largest oilfield, Tengiz, valued at $38 billion, faced a production halt earlier this month after Ukrainian naval drones were able to strike its main export route.
Tengiz is a key asset for Chevron, which operates the joint venture that hosts the field and also holds a stake in the project, along with Exxon.
Market conditions have added further pressure. Exxon has said that lower crude prices could reduce its downstream earnings by as much as $1.2 billion in the fourth quarter compared with the previous quarter.
Analysts expect Exxon’s adjusted earnings to be $1.68 per share, slightly higher than a year earlier, while Chevron’s adjusted earnings are forecast at $1.46 per share, sharply lower year on year.
During the fourth quarter, Brent crude fell 7.5% to an average of $63.08 a barrel, while US natural gas prices jumped 32% to $4.04 per million British thermal units.
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