Citgo Reports $100 Million Profit Amid Intense Parent Company Auction

Citgo Petroleum, the U.S. refining subsidiary of Venezuela, announced a remarkable turnaround with second-quarter net earnings of $100 million, recovering from a loss of $25 million during the same period last year. The Houston-based company disclosed that it concluded the quarter with $2.6 billion in liquidity, reflecting a significant rebound in its financial performance.

The recent earnings surge comes as Citgo navigates a complex U.S. court-ordered auction aimed at compensating creditors due to Venezuela’s longstanding debt defaults and asset seizures. This auction, involving Citgo’s parent company, PDV Holding, has attracted considerable attention from various bidders.

In early July, a U.S. court recommended granting a winning bid of $7.38 billion to mining firm Gold Reserve and investor group Dalinar Energy. This bid exceeds the $3.7 billion “floor price” established in April and represents one of the largest attempted takeovers of a U.S.-based refining entity by creditors in recent history. Citgo had faced challenges in the previous two quarters, primarily due to subdued refining margins, but has now returned to profitability.

The competitive landscape has shifted dramatically with the emergence of a higher bid from an affiliate of Elliott Investment Management, valued at $8.82 billion. Additionally, a contested proposal from Amber Energy, which was lower than Gold Reserve’s bid, has raised concerns regarding alleged violations of auction procedures. The introduction of these competing offers has added layers of uncertainty to the Delaware court-supervised auction, potentially altering Gold Reserve’s position and the overall bidding dynamics for Citgo.

On Thursday morning, Reuters reported that the court-appointed Special Master overseeing the auction requested a delay in the final sale hearing. This decision follows renewed interest from potential bidders and aims to provide additional time for evaluating all qualifying offers. The objective is to ensure a thorough assessment before a winner is selected, which is crucial in addressing the multi-billion-dollar creditor claims against Venezuela.

The outcome of this auction will not only determine Citgo’s future but also serve as a significant indicator of the financial landscape surrounding Venezuela’s economic challenges. The bidding war underscores the intricate balance between creditor interests and the operational viability of one of the United States’ key refining assets.