California Wildcatter PCEC Near Deal on Venezuela Oil Fields

A Petroleos de Venezuela SA oil pumpjack on Lake Maracaibo in Cabimas, Zulia state, Venezuela. Photographer: Bloomberg/Bloomberg Photo by Bloomberg /Photographer: Bloomberg/Bloomber

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(Bloomberg) — Pacific Coast Energy Co., a small California producer, is nearing a deal to operate two Venezuelan oil fields as the US-backed government in Caracas presses potential partners to sign contracts by the end of July.

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The firm is one of several that are negotiating joint ventures and production-sharing contracts with state-owned Petroleos de Venezuela SA, or PDVSA, ahead of a July 28 regulatory deadline.

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“PCEC is in close negotiations for approval to operate two oil fields,” company spokesperson Joe Householder said in a text message.

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The fields are part of the Petrodelta joint venture in eastern Venezuela, according to people familiar with the impending deal who weren’t authorized to speak publicly about it. PDVSA would hold a majority stake in Petrodelta, with PCEC holding a minority share but with control over operations, the people said.

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PCEC, based in Orcutt, California, declined to specify the assets under negotiation. The company is part of a group of wildcatters that are pushing for deals in Venezuela to reinvigorate its production after years of neglect, vaulting ahead of more established oil majors.

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PCEC, which specializes in reviving older fields, used to produce oil in California but has curtailed much of the operations in its home state as part of its land gets repurposed into housing. 

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Large oil producers prefer to do extensive due diligence before taking the plunge on investments, especially in a country like Venezuela that’s still subject to some US sanctions. The speed with which the South American country aims to move is making it hard for them to keep up with the wildcatters. The Venezuelan government, in turn, is under pressure from the Trump administration to approve deals quickly to ramp up production. 

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In a meeting with numerous industry chambers in Caracas on Friday, Venezuelan oil officials insisted that all contracts must be signed by the July 28 deadline, generating unease among companies that are still engaged in sensitive negotiations, the people said. While deals can be legally signed after that date, some attractive fiscal terms of the government’s contract structures could change.

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Another US firm, Lionheart Capital, said this week it signed a non-binding letter of intent for a $400 million deal for a stake in another Venezuela oil field. 

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Partner Swap

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Petrodelta has a long history of false starts and controversy. PDVSA’s previous partner was DP Delta Finance BV, once led by Venezuelan mogul Oswaldo Cisnernos, who died in 2020. His widow Mireya Blavia-Cisneros and their children are now looking after his interests.

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DP Delta Finance didn’t respond to a request for comment.

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Venezuela’s oil ministry revoked DP Delta Finance’s minority participation in the venture in May, alleging that the company failed to fulfill investment commitments and production plans, according to two people with knowledge of the situation and documents seen by Bloomberg.