Continental Strikes Venezuela Oil Deal with PDVSA

Continental Resources and Venezuela's PDVSA have entered into a memorandum of understanding to develop the Ayacucho 2 Block in the Orinoco Belt. The block is estimated to contain around 30 billion barrels of oil across 126,000 acres in Anzoátegui state. The two companies plan to sign a Contrato de Participación Productiva in the coming weeks, after which Continental will take a 100% stake in the operation.

Continental's CEO Doug Lawler called Ayacucho 2 the most significant resource opportunity in the company's 60-year history, while Founder and Chairman Emeritus Harold Hamm said it elevates the company to a new level. This deal follows a series of moves by American energy firms to aid Venezuela's oil industry revival, after the Trump administration's call for such assistance.

Chevron recently committed over $7 billion to boost its Orinoco Belt output to 600,000 barrels a day, following a 25-year deal aiming for 1.5 million barrels a day from 17 Venezuelan oilfields. Venezuela possesses the world's largest proven crude reserves but currently produces only 742,000 barrels a day, a 70% drop from 2013 levels.

The Orinoco crude is technically challenging and has been a rare area where international oil companies can operate, thanks to the U.S. sanctions. Despite these challenges, Continental is one of the world's largest privately held oil and gas producers, with significant holdings in the Bakken, Anadarko, Powder River, Permian, Vaca Muerta shale, and a joint venture in Turkey.

This marks Continental's first venture into Venezuela. On the same day, Turkish firm Çanak Termik's subsidiary Minerosol Group signed a 20-year agreement with PDVSA to take over production at the CEMA field in Anzoátegui state, with an investment plan of $381.7 million. The CEMA field holds 104.2 million barrels of oil and 499.3 billion cubic feet of gas across 10 fields, with current output of about 400 barrels a day expected to increase to 9,865 barrels a day.