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BP Halts Development Talks on Manakin-Cocuina Gas Project

BP plc BP has put on hold its negotiations with Venezuela regarding the development of the Manakin-Cocuina gas field, which straddles the maritime border between Venezuela, and Trinidad and Tobago, per a Reuters report.

The decision follows the expiration of a crucial U.S. license in April 2024, which previously permitted some level of engagement with the Venezuela government under sanctions.

The Manakin-Cocuina field, boasting an estimated reserve of 1 trillion cubic feet, has been a focal point of discussions between BP, Venezuela, and Trinidad this year. However, the cessation of the U.S. Office of Foreign Assets Control's general license 44, which allowed certain transactions with Venezuela’s energy sector, has forced BP to temporarily freeze these talks.

BP’s interest in the region is part of its broader strategy to boost natural gas production in Trinidad, where it has witnessed a significant decline. From a high of 2.2 billion cubic feet per day (bcf/d) five years ago, the production levels have plummeted 45% to just 1.2 bcf/d.

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The decline in production has led to operational adjustments at the Atlantic LNG gas-processing plant in Trinidad, in which BP holds a 45% stake. The facility, capable of producing 15 million metric tons per annum of LNG, has had to mothball one of its production trains and reduce overall production.

The geopolitical landscape has heavily influenced the pace and feasibility of developing the Manakin-Cocuina fields. Initially unitized in 2015, progress stalled significantly after the U.S. imposed sanctions on Venezuela in 2019, severely restricting international investments and collaborations.

In March 2024, Venezuela's state-run oil company, PDVSA, announced that it was considering the issuance of a license for exploring and developing non-associated gas on its side of the shared field, signaling potential future developments independent of external collaborations.

BP has expressed its intention to resume discussions on the Manakin-Cocuina project as soon as it is legally permissible. This pause highlights the complex interplay of international law, geopolitical issues and business strategy in global energy projects. The outcome of these stalled negotiations will likely have significant implications not only for BP's operations in the region but also for the energy markets in both Trinidad and Venezuela.

Zacks Rank & Key Picks

BP currently carries a Zack Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked stocks like SM Energy Company SM, Marathon Petroleum Corporation MPC and Hess Corporation HES. SM Energy and Marathon Petroleum sport a Zacks Rank #1 (Strong Buy), and Hess carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

SM Energy is set to expand its oil-centered operations in the coming years with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company’s attractive oil and gas investments can create long-term value for shareholders.

The Zacks Consensus Estimate for SM’s 2024 and 2025 earnings per share (EPS) is pegged at $6.60 and $7.46. The company has a Zacks Style Score of B for Value and Momentum. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

Marathon Petroleum's acquisition of Andeavor has expanded its foothold in the Permian Basin, creating an enviable retail and marketing portfolio. MPC’s emphasis on operational excellence, safety and environmental responsibility, coupled with investments in low-carbon initiatives, positions it well for sustainable growth and continued value creation for shareholders.

The Zacks Consensus Estimate for MPC’s 2024 and 2025 EPS is pegged at $19.28 and $16.78. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2025 in the past 30 days.

Hess operates primarily in two areas — the Bakken shale and the Stabroek project offshore Guyana. It is currently in the process of being acquired by supermajor Chevron in an all-stock deal worth $53 billion. HES currently has a Growth Score of B.

The Zacks Consensus Estimate for 2024 and 2025 EPS is pegged at $9.54 and $11.15, respectively. The company has a Zacks Style Score of A for Growth and B for Momentum. The company has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

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BP p.l.c. (BP) : Free Stock Analysis Report

Hess Corporation (HES) : Free Stock Analysis Report

SM Energy Company (SM) : Free Stock Analysis Report

Marathon Petroleum Corporation (MPC) : Free Stock Analysis Report

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