Court pauses Crystallex pursuit of Citgo
A federal court today slowed efforts to sell shares of US independent refiner Citgo to satisfy Venezuelan debts.
Former Canadian mining firm Crystallex and US independent producer ConocoPhillips must wait for Venezuela to exhaust appeals with the US Supreme Court before continuing their pursuit of Citgo, the country's most valuable foreign asset, the US District Court for the District of Delaware decided today.
The court also ruled that at least two other plaintiffs must prove that Venezuela used its oil companies as an alter ego of the government, rather than relying on that finding from previous Crystallex litigation.
The decisions mark a reprieve for Venezuela's US-backed opposition government led by National Assembly leader Juan Guaido, who risks losing one of the only Venezuelan assets his shadow government controls. While the opposition government sought a longer stay and promised to restructure debts voluntarily, the court paused proceedings only long enough for the Supreme Court to review the matter.
"A stay any longer than the one the court is entering today is not, at this time, warranted," Judge Leonard Stark wrote.
The US Department of the Treasury repeated last week that a sale of Citgo shares could not proceed without executive branch approval. The Delaware court today solicited further guidance from the US Department of Justice.
Citgo and plaintiffs Crystallex, ConocoPhillips and OI European Group did not immediately return requests for comment.
Crystallex, controlled by US hedge fund Tenor Capital Management, argued yesterday that there was no reason for the court to delay the process of determining the value of Citgo shares in a sale. The company could not gather the details needed for Treasury to approve a sale process without continued litigation.
The court determined that moving forward could damage Citgo and Venezuelan national oil company PdV without ultimately producing a legal sale.
"Today's decision reflects the court's attempt to carefully balance the many competing interests in a dynamic and internationally sensitive set of circumstances," Stark wrote. "Should Crystallex believe the court's assessment is incorrect or an abuse of discretion, it can move to lift the stay — or seek to appeal this order."
Guaido appointed a parallel board controlling Citgo in February, which has cooperated with US bribery investigations and named new corporate officers.
Venezuelan president Nicolas Maduro continues to control PdV and Venezuelan institutions despite US sanctions aimed at crippling the country's oil sector.
More than a dozen companies, bondholders and other entities have filed in various US courts to seize Venezuelan assets in the US to satisfy more than $150bn in debts. Crystallex last year successfully persuaded the Delaware court that Venezuela used its oil companies as an alter ego of the state, and that Citgo was a fair target to satisfy debts.
The US Third Circuit Court of Appeals upheld that decision this year and rejected a Venezuelan request for a rehearing.
Today's decision was in part to stop "an influx of creditors to the court," Stark wrote.
By Elliott Blackburn
Related news posts
RFS updates not coming this year: White House
RFS updates not coming this year: White House
New York, 8 July (Argus) — The US Environmental Protection Agency (EPA) will not meet a statutory deadline to finalize new biofuel blending targets this year, the White House has indicated, leaving future policy up to the winner of this year's presidential election. Instead, the agency is targeting March 2025 to propose renewable fuel standard (RFS) obligations for 2026 and December next year to finalize the regulation. EPA is technically supposed to finalize 2026 obligations by November this year. The delay is certain to frustrate biofuel producers who have warned that policy uncertainty is risking planned investments and capacity expansions. A summary of the agency's plan, included in a biannual regulatory agenda released by the White House on 5 June, says the regulation will set volume requirements and accompanying percentage standards for cellulosic biofuels, biomass-based diesel, advanced biofuels, and total renewable fuel. The rule will also include "several regulatory changes to the RFS program intended to improve the program's implementation," the agenda said. The Biden administration has flirted with changes to the RFS before, including a potential credit-generating pathway for electricity from renewable natural gas that powers vehicles. The agenda, though brief and thus not necessarily reflective of all of EPA's plans, makes no mention of prospective blending targets for any year beyond 2026 or of adjustments to existing targets. Clean Fuels Alliance America, which represents biomass-based diesel and sustainable aviation fuel companies and which asked EPA last month to hike its 2024 and 2025 blending obligations, said the "announced timing is disappointing" and "will reverberate throughout the program, creating uncertainty for all stakeholders." The full agenda, which includes timelines for hundreds of regulations from various agencies, also appears to make no reference to expected Treasury Department guidance on a clean fuels tax credit kicking off next year or to a related Department of Agriculture effort to quantify the benefits of "climate-smart" agricultural practices. Timelines for finalizing guidance around other Inflation Reduction Act tax credits are included, conversely. Biofuel production margins have slipped this year, as ample supply of renewable diesel has contributed to price declines for RFS and state low-carbon fuel standard credits. These tradeable credits, which covered sources submit to regulators as proof of compliance, also act as a source of revenue and an incentive to produce low-carbon fuels. Biofuels producers and feedstock suppliers have advocated that the Biden administration act quickly in response by setting new renewable fuel obligations and clear guidance around the 45Z credit. Prolonged uncertainty could prompt more biorefinery closures, these groups argue, risking the administration's climate and clean fuel goals. EPA did not immediately provide comment but said last month that it will factor a recent surge of feedstock imports, including used cooking oil, into its decisions about future RFS volume requirements. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Hurricane Beryl passes Houston, heads inland: Update
Hurricane Beryl passes Houston, heads inland: Update
Houston, 8 July (Argus) — Hurricane Beryl swept through the Houston area this morning with heavy rains and wind gusts near 90mph, bringing local flooding and cutting power to more than 2mn customers. Beryl, which has been downgraded to a tropical storm, was about 30 miles north-northwest of Houston according to a 12pm ET bulletin from the National Hurricane Center (NHC). The storm is expected to turn towards the northeast and increase speed tonight and into Tuesday. On its current forecast track, the center of Beryl will pass over eastern Texas today and into the lower Mississippi and Ohio valleys Tuesday and Wednesday. Beryl made landfall earlier today as a Category 1 hurricane near Matagorda, Texas, after regaining strength as it crossed the Gulf of Mexico from an earlier landfall on the Yucatan Peninsula. A weather station in Freeport, Texas, directly south of Houston on the Gulf of Mexico reported a wind gust of 94mph earlier today while a station at the entrance to Galveston Bay and the Houston Ship Channel recorded a gust of 82mph. Nearly 2mn Houston residents are without power as of 11:30am ET according to outages tracked by CenterPoint Energy. Heavy rainfall of 5-10 inches, with 15 inches in some spots, was recorded across the upper Texas coast and eastern Texas, with considerable flash and urban flooding expected to continue, NHC said in its bulletin. Water levels at the Interstate 610 bridge on the Houston Ship Channel -- home to several refineries and petrochemical plants –- were observed at 10 feet above mean low water levels at 11am ET, well into the "major flooding" range, according to data from the National Oceanic and Atmospheric Administration (NOAA). Several petrochemical plants pre-emptively shut down or experienced electrical surges over the weekend before Beryl hit the Texas coast today. US Gulf coast refiners appear to have robust fuel inventories for this time of year should the storm lead to operational issues. The four-week average of Gulf coast gasoline inventories in the week ended 28 June was up by over 4pc from the same period in 2023 and up by 6pc from 2022, after hitting a near six-month high in the penultimate week of June. The second named storm of the 2024 Atlantic hurricane season, Beryl followed tropical storm Alberto, which came ashore in northeastern Mexico late last month. This year's Atlantic hurricane season is expected to be more active than normal, according to the US National Oceanic and Atmospheric Administration, with 4-7 major hurricanes that pack sustained winds of 111mph or higher possible By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US shale deals pivot to lesser-known basins
US shale deals pivot to lesser-known basins
New York, 8 July (Argus) — After a burst of deal-making activity that has sent Permian valuations skyrocketing and seen the best drilling locations already swap hands, buyers' attention is turning to less prominent shale basins that have been overlooked up until now. Such was the case when US independent SM Energy splashed out $2bn for 80pc of the assets of privately held XCL Resources to gain a foothold in the Uinta basin of northeast Utah, best known for its waxy crude that is popular with refiners. The transaction marks a departure from the vast majority of deals in the past year, which have targeted the increasingly consolidated Permian basin of west Texas and New Mexico. It also represents a shift in strategy, given SM Energy is expanding beyond its core operations in the Midland basin and south Texas. Other takeovers have seen companies combine acreage in existing basins to squeeze out savings. Chief executive Herb Vogel told analysts he had looked at other deal options, but his priority was to keep a strong balance sheet and "maintain discipline so that we wouldn't overpay for something". About $41bn of non-Permian merger and acquisition opportunities are on the market, according to consultancy Rystad Energy. With premium acreage becoming increasingly scarce in the top-performing shale play, far-flung regions are poised totake centre stage. Another potential draw for SM Energy may have been that it sawless risk of its transaction being singled out for attention from anti-trust regulators, as several deals involving in-basin consolidation have attracted unwelcome scrutiny. But entry into a new play, as well as concerns over its legacy assets, spooked investors and contributed to a 10pc decline in SM Energy's share price on the day the deal was announced. "It could take a couple of quarters of performance for investors to digest this activity shift and to evaluate the Uinta's potential," analysts at RBC Capital Markets say. Producers are likely to continue the hunt for deals in lesser-known basins as they seek to scale up their inventory at reasonable prices. "A key driver of the deal, like most other transactions seen over the last few years, is adding inventory, particularly at the low end of the cost curve," consultancy Enverus principal analyst Andrew Dittmar says. The Uinta basin offers some of the highest rates of oil recovery per lateral foot in the Lower 48, according to Dittmar. Lubricating the transaction Parts of the basin could achieve oil production performance similar to that of the Permian, according to a recent report by data analyst Novi Labs. "The waxy nature is in high demand by refiners and upper-end lubricant markets," Vogel says. The latest acquisition hands SM Energy around 37,200 net acres, boosting its core net acreage by 14pc. It adds 43,000 b/d of oil equivalent (boe/d), increasing the company's overall production next year to 195,000 boe/d, with oil now making up more than 50pc of the mix. SM Energy also gets 390 drilling locations with breakevens of $43-57/bl, boosting the operator's inventory life by two years. As part of the same deal, US independent Northern Oil and Gas is purchasing 20pc of the XCL assets, helping to offset the total cost for SM Energy. XCL is backed by EnCap Investments and the Rice Investment Group. It was the second exit involving an EnCap-backed company in recent weeks after independent Matador Resources acquired a unit of private equity-backed Ameredev II for $1.9bn to expand in the Permian's Delaware basin. Private equity investors, which have mainly been sellers in recent years, look set to step up their search for undervalued assets as they seek to refill their portfolios. "Combined, those forces should drive a robust market for assets and see valuations rise outside the Permian, although not fully to Permian levels," Dittmar says. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Beryl menaces eastern Texas with storm surge, rain
Beryl menaces eastern Texas with storm surge, rain
New York, 8 July (Argus) — Hurricane Beryl crashed ashore early today, bringing life-threatening storm surge, strong winds and heavy rainfall to southeast Texas. The hurricane was packing maximum sustained winds of 75mph and was about 40 miles southwest of Houston, Texas, according to the latest advisory from the National Hurricane Center (NHC) issued at 8am ET. About 1.1 million Houston area customers are without power, US utility CenterPoint Energy said. Beryl made landfall as a Category 1 hurricane near Matagorda, Texas, after regaining strength as it crossed the Gulf of Mexico. Heavy rainfall of 5-10 inches is forecast across parts of the middle and upper Texas Gulf coast and eastern Texas. The NHC also warned of the risk of flash and urban flooding. A hurricane warning is in effect for the Texas coast from Mesquite Bay north to Port Bolivar, while a tropical storm warning is in place for the coast north of Port Bolivar to Sabine Pass. On its current forecast track, the center of Beryl will cross eastern Texas today, before sweeping through the lower Mississippi valley into the Ohio valley on Tuesday and 10 July, the NHC said. Beryl is forecast to weaken as it moves inland and is expected to be downgraded to a tropical storm later today and to a tropical depression on Tuesday. Disruptions to US Gulf of Mexico oil and gas operations appear to be limited so far, given Beryl's approach to the west of most US offshore oil and gas operations. But some platforms were evacuated late last week. ExxonMobil said on Sunday it was making operational adjustments in advance of the storm but expected minimal impact to production. It shut in output from the Hoover platform and evacuated remaining staff. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more