On Wednesday, oil services giant Halliburton reported losses totaling $148 million in connection with operations in Venezuela. The company agreed to take a promissory note in exchange for unpaid invoices tied to Venezuela.
PDVSA, a state oil company out Venezuela, has accrued over $19 billion in debts to providers like Halliburton. The debt grows as PDVSA takes on low oil prices and a dying socialist economy which in turn have caused some leading service companies to reduce operations.
Eulogio del Pino, president of PDVSA, said that his company had been in talks about financial agreements with Halliburton, Schlumberger NV, and Weatherford International PLC to securitize debts.
In a quarterly report, Halliburton claimed to have swapped $200 million in trade receivables for a promissory note with its “primary customer in Venezuela.”
Later, the company stated to have “recorded the note at its fair market value at the date of exchange, resulting in a $148 million pre-tax loss.” The only firms legally permitted to work in Venezuelan oil fields are PDVSA and its affiliates.
In the company’s 2015 earnings report, PDVSA said that it had distributed $831 million in promissory notes to pay off debt to providers. The notes pay 6.5 percent interest and are set to mature in 2019.
Analysts say that issues with payment to providers are attached to reports of waning production at PDVSA. However, del Pino has renounced these reports and maintains that all debts are currently reaching resolution.
Article written by HEI contributor Briana Steptoe.