Continue reading Venezuela starts collecting new windfall profits tax on oil companies

Venezuela starts collecting new windfall profits tax on oil companies originally appeared on BloggingStocks on Fri, 18 Apr 2008 14:47:00 EST. Please see our terms for use of feeds.

Lawyers for the Venezuela state-owned oil company PDVSA are back in court in London. They are trying to convince a judge there that the $12 billion that Exxon (NYSE: XOM) has seized through the courts in exchange for its assets that have been nationalized is excessive.

According to Reuters, "PDVSA lawyer Gordon Pollock said the amount frozen was excessive. He said a claim that PDVSA would try to hide its assets was not credible and the English court which awarded the freeze had exceeded its jurisdiction." PDVSA's argument is based partially on a theory that the calculation Exxon has used for reparations sets the face value of its property too high.

The legal challenge from Hugo Chavez's government has one significant flaw. His country has no right to take the Exxon assets in the first place. There would be no court hearing at all if Venezuela had not violated international law.

Several courts have agreed that the $12 billion in PDVSA overseas assets that Exxon has been able to seize is based on rational calculations. If the Venezuelan government does not want to pay fair value, then it should give the property back or reap the financial whirlwind.

Douglas A. McIntyre is an editor at 247wallst.com.

Venezuela disputes Exxon asset seizure originally appeared on BloggingStocks on Sat, 01 Mar 2008 14:40:00 EST. Please see our terms for use of feeds.

Last year I wrote a story in support of Exxon's massive profits, arguing that they were not extraordinary given the company's size and that many other companies, large and small, had much higher profit margins. I could have re-posted the same story this year since Exxon Mobil (NYSE: XOM) reported similar results and the same short-sighted folks whined about it in the same knee-jerk reaction. The stock closed last Friday at $85.37 per share, up about 13% in a year, not including the 1.7% yield.

In last year's article I even commented on the difficulty XOM faced in dealing with Mr. Putin and Mr. Chavez, and I guess my words rang all too true given the current mess in Venezuela. In order to play on the world stage, you have to be big and this is particularly evident in the oil business.

So I'm on record that I do not mind Exxon's size or profits. Let me go further and state clearly that I also support its lawsuit to freeze Venezuelan assets until XOM is compensated for the theft of its investment. If it were not for Exxon's investment and technological know-how, the government and people of Venezuela would be a lot poorer.

Continue reading Big profits (XOM) and free trade are essential

Big profits (XOM) and free trade are essential originally appeared on BloggingStocks on Tue, 19 Feb 2008 15:40:00 EST. Please see our terms for use of feeds.

Over the weekend there was a referendum in Venezuela that would have scrapped constitutional the term limits for president Hugo Chavez. He has been president of Venezuela since 1998 and constitutional term limits will not allow him to run again in for reelection in 2012. The left- leaning Chavez has been following in the steps of Fidel Castro and turning Venezuela into a communist state. He has enacted emergency powers, nationalized oil infrastructure, expelled foreign missionaries and allowed crime to run rampant. In order for him to constitutionally stay in office though he needed to get rid of the presidential term limits. That referendum this weekend failed, which is good news for democracy.

Venezuela is the forth largest oil exporter to America after Canada, Saudi Arabia, and Mexico. About one half of its 2.3 million exported barrels a day come to the US representing about 9% of all US oil imports. Like Iranian President Mahmoud Ahmadinejad, Chavez likes to talk and can move oil prices higher with off handed remarks and his railing against US foreign policies.

The Venezuelan people led by Chavez have headed down the road to socialism and almost a Cuban style dictatorship. While by no means the end of the story, this referendum is a win for democracy and should help the long term stability in the region which is important for US oil prices. Exxon Mobil (NYSE: XOM) and ConocoPhillips (NYSE: COP) have both been had investments in the country in past years.

Kevin Kersten is an Options Analyst with InvestorsObserver.com. Disclosure note: Mr. Kersten owns and or controls a diversified portfolio of long and short positions that may include holdings in companies he writes about.

Chavez referendum fails -- good news for oil originally appeared on BloggingStocks on Mon, 03 Dec 2007 13:01:00 EST. Please see our terms for use of feeds.

Hugo Chávez, the head of Venezuela, is hardly the most stable leader of a large nation. He may rank with Kim Jong il of North Korea in a race for odd-ball national presidents.

The mental state of the chief of a South American country may not seem terribly important until, that is, he threatens to cut off the supply of oil to the U.S. According to The Wall Street Journal (subscription required), "in a fiery speech before tens of thousands, President Hugo Chávez alleged the U.S. was planning to sabotage a vote Sunday on proposed constitutional changes and threatened to cut off oil shipments if Washington did so."

The odds that the CIA or some other organization is actually trying to mess with the elections in Venezuela are fairly small. But, given the history of the American intelligence community, they cannot be ruled out altogether.

Humor aside, if Mr. Chávez does make good on his threat, even if only because he is mad, the effect could be much greater than the explosion last week on one of the oil pipelines between Canada and the U.S. Hugo can take the price of a barrel of crude up to $100 all by himself.

As December rolls in, oil watchers will be turning their attention south. Oil's assault on $100 was turned back last week, but that was not the end of it.

Douglas A. McIntyre is an editor at 247wallst.com.

As politics in Venezuela get dicey, oil may rise again originally appeared on BloggingStocks on Sat, 01 Dec 2007 13:40:00 EST. Please see our terms for use of feeds.

It does not make much sense that oil prices should rise again. Crude has recently dropped from $78 a barrel to under $72. Traders believe that credit market problems could slowdown the large economies that represent most of the demand. Most industry observers appear to think oil will go lower.

But not Venezuela's president Hugo Chavez, who does not seem to be the most stable character. He is predicting $100 oil. His argument is that demand will continue to increase . And, he predicts that countries like his will not be willing to up output to save the big nations from a spike in price.

Chavez is not alone in his opinion. The International Energy Agency is warning that low oil supply will move prices up soon. The FT quotes that agency as saying "Undersupplying the market in this context could bear considerable risks," the IEA said, referring to ongoing OPEC crude oil production cuts.

If these predictions are accurate, the recent drop in oil prices is only a mirage brought on by fear of a global economic slowdown, and lack of supply will drive oil prices higher again soon.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Venezuela sees $100 oil originally appeared on BloggingStocks on Mon, 13 Aug 2007 08:00:00 EST. Please see our terms for use of feeds.

Chavez pays market price for Verizon's CANTV stake originally appeared on BloggingStocks on Tue, 13 Feb 2007 11:30:00 EST. Please see our terms for use of feeds.

Hugo Chavez may be in a tough spot originally appeared on BloggingStocks on Wed, 10 Jan 2007 14:23:00 EST. Please see our terms for use of feeds.