If you look at the rundown of the S&P 500 today, the best performers are energy companies and it's no surprise why. Many had exposure to Venezuela and many others are likely to be tapped if/when Venezuelan oil is given back to US companies.
Here are the nine biggest winners:
Slumberger (SLB): +11.97%
Valero Energy (VLO): +10.74%
Halliburton (HAL): +11.18%
Phillips 66 (PSX): +7.83%
Marathon Petroleum (MPC): +7.08%
Chevron (CVX): +5.81%
Baker Hughes (BKR): +5.73%
ConocoPhillips (COP): +3.96%
Exxon Mobil (XOM): +2.59%
In terms of market cap, that's a $62.8 billion one day gain.
Also note the curious rally on Friday.
I would caution that profiting from Venezuelan oil is going to be a monumental task. The crude is locked up deep into the mountainous country and the original infrastructure that produced 3 million barrels per day (now less than 1 mbpd) is dilapidated or destroyed.
In order to extract real value from Venezuela oilsands, it will need to be completely rebuilt, including the transportation, upgrading and export facilities. That could take on the magnitude of a $500 billion investment, in a region that isn't exactly going to be instantly-friendly with the United States.
I'm skeptical that money is ever going to come, though I'm sure there are some smaller wins available.
My guess is that there is some irrational exuberance in some of these names that is going to fade in the coming days. These are not shale oil wells, they're mega-projects that take nearly a decade to come online and produce for decades afterwards. It's not like shale oil where you can drill a well and you get a 4-month payout.
The flipside of this drop is that Canadian oilsands names are getting beaten up but I just don't see why a company would invest in Venezuela rather than Canada, which has long-term stability and oil that's not quite and heavy or with as much heavy metals.
In short, these moves are a fade.
