Citgo Reports $100M Profit Amid Intensifying Bidding War

Citgo Petroleum has reported a net profit of $100 million for the second quarter of 2023, marking a significant recovery from a loss of $25 million during the same period last year. The Houston-based refining company, owned by Venezuela, ended the quarter with a liquidity position of $2.6 billion, as detailed in its recent financial statement.

This return to profitability comes after Citgo faced losses in the previous two quarters due to weaker refining margins. The current financial rebound coincides with a U.S. court-ordered auction aimed at compensating creditors for Venezuela’s historic debt defaults and asset seizures. Citgo is under the control of its parent company, PDV Holding, which is at the center of this high-stakes bidding process.

A U.S. court in early July 2023 recommended a winning bid of $7.38 billion from mining firm Gold Reserve and investor group Dalinar Energy for PDV Holding. This bid is significantly above the $3.7 billion floor price established in April, setting the stage for what could be the largest attempted takeover of a U.S.-based refining asset by creditors in decades.

As the bidding progresses, new developments have emerged. A higher bid of $8.82 billion from an affiliate of Elliott Investment Management has complicated the situation for Gold Reserve. Additionally, a lower bid from Amber Energy has faced objections for allegedly violating auction procedures, adding layers of complexity to the auction process.

The ongoing challenges to the competing bids have introduced uncertainty into the Delaware court-supervised sale. This has the potential to significantly alter Gold Reserve’s standing and reshape the competition for control of Citgo.

On Thursday morning, Reuters reported that the court-appointed Special Master overseeing the auction requested a delay for the final sale hearing. This decision comes amid renewed interest from potential bidders and aims to provide additional time to evaluate all qualifying offers. The move seeks to ensure a thorough assessment of bids before selecting a winner, which is critical to addressing multi-billion-dollar creditor claims against Venezuela.

The developments surrounding Citgo and PDV Holding reflect broader economic challenges faced by Venezuela, where the government has struggled with significant debt and asset management issues. As the auction evolves, the implications for Citgo’s future and the potential beneficiaries of its assets remain closely watched by stakeholders in the energy sector.