Chevron has pledged $7 billion to Venezuela's energy industry, staying in the country through years of political uncertainty while ExxonMobil exited after the industry's nationalization. With Venezuela's new leadership opening up to foreign investment, Chevron's persistence now looks like a head start Exxon does not have.
Exxon exits, Chevron stays
The U.S. government's arrest of former leader Nicolas Maduro has reshaped Venezuela's political landscape. Maduro was replaced by his vice president, Delcy Rodríguez, who has so far been very willing to work with the United States.
That shift matters because Exxon pulled out of Venezuela after former president Hugo Chavez nationalized the oil industry, in line with its conservative culture, while Chevron remained. That decision was a thorn in Chevron's side for years, but it now looks like a strategic edge. Venezuela is estimated to hold the world's largest oil reserves, a resource base that could draw renewed Western interest if the country's politics stay stable.
Chevron's $7 billion commitment
Chevron has already pledged $7 billion to Venezuela's energy sector, which has fallen into disrepair after years of neglect. The company will not deploy that capital in a month or two; instead, the spending signals a long-term commitment that should let Chevron increase its oil output in the country over time.
Exxon, meanwhile, says Venezuela is not yet stable enough to justify investment, even as it looks likely to want back in if conditions hold. There is no guarantee the country avoids another swing into political uncertainty, but for now Chevron's willingness to stay has paid off.
Dividend gap adds to the case
Beyond Venezuela, Chevron's 3.4% dividend yield sits nearly a percentage point above Exxon's 2.5%, even though both companies rank among the world's largest energy producers with decades of annual dividend increases. Combined with its Venezuela head start, most dividend investors will probably find Chevron the more appealing of the two energy giants today.
Source: The Motley Fool
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