Continental Resources signed a memorandum of understanding with Venezuela’s state oil company PDVSA on Wednesday to operate and develop the Ayacucho 2 Block in the Orinoco Belt, the company announced, with an estimated 30 billion barrels of resource in place across roughly 126,000 acres in Anzoátegui state.
The two sides intend to advance a long-term Contrato de Participación Productiva agreement in the coming weeks; once it’s signed, Continental will operate the block with a 100% working interest.
The deal is one in a flurry of deals following the Trump administration’s call for American energy companies to help rebuild Venezuela’s oil industry. CEO Doug Lawler called Ayacucho 2 “one of the most significant resource opportunities in Continental’s nearly 60-year history,” and Founder and Chairman Emeritus Harold Hamm said the agreement takes the company “to an entirely new level.”
Continental’s deal comes shortly after Chevron’s September 2 commitment of more than $7 billion over five years to roughly double its own Orinoco Belt output to 600,000 barrels a day, days after the Trump administration announced a 25-year deal targeting 1.5 million barrels a day across 17 Venezuelan oilfields. Venezuelan Vice President Delcy Rodriguez said that the deal could generate more than $200 billion, with Secretary of State Marco Rubio putting near-term private investment at nearly $100 billion.
Venezuela holds the world’s largest proven crude reserves, but produced just 0.8% of global crude output that year, 742,000 barrels a day, a 70% decline from 2013 levels. Extracting the country’s mostly extra-heavy Orinoco crude requires technical expertise international oil companies possess but have been largely barred from deploying under years of U.S. sanctions.
Continental is the world’s largest privately held oil and gas producer and it holds core U.S. positions in the Bakken, Anadarko, Powder River and Permian basins, also recently expanding into Argentina’s Vaca Muerta shale and a joint venture in Turkey’s Diyarbak?r Basin. Ayacucho 2 is its first foray into Venezuela.
Also on Wednesday, Turkish firm Çan2 Termik’s subsidiary Minerosol Group signed a separate 20-year agreement with PDVSA, taking over production at the CEMA field in Anzoátegui state under a $381.7 million investment plan. The field holds 104.2 million barrels of remaining oil reserves and 499.3 billion cubic feet of gas across 10 fields. Current output of about 400 barrels a day is targeted to rise to 9,865 barrels a day.
By Charles Kennedy for Oilprice.com
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