Editor’s Note: This is a guest post. The guest did not want to reveal his/her identity, so I will keep it anonymous.
Summary
ConocoPhillips (COP) is widely expected to receive $1.5 billion from the proposed Amber Energy (Amber) purchase of PDVH Holding, Inc., the parent of Citgo Petroleum Corp., a U.S. refining giant (PDVH or CITGO).
That Amber deal was approved by a Federal District Court in November 2025, is awaiting appeals, and could close in Q1 2027; however, the valuation of refining equities has doubled since Amber’s auction victory, putting Conoco in a position to recover an additional ~$4 billion from a CITGO settlement, plus billions more from returned upstream assets.
We see material, underappreciated upside in COP shares from these near-term settlements with Venezuela.
The Amber Bid
Amber won the auction for CITGO at an equity valuation of ~$7.7 billion (the combination of PSVSA 8.5 2020s bonds plus the value of Delaware priority claims including discounts).
On a Price-to-Book (P/B) value basis, this Amber bid was 1.21x for CITGO (including an estimate for lock-box cash build), compared to the sector P/B valuation of 1.82x, so Amber paid a ~33% discount.
That acquisition price covers Conoco’s priority #3 claim of $1.4 billion and Conoco’s priority #8 claim of ~$50 million, but fell short of reaching Conoco’s gigantic priority #14 claim of $11 billion.
Current CITGO Value
This year has seen a perfect storm for the global refining market: Hormuz Strait disruptions and increasingly well-targeted drone strikes on Russian refineries have idled ~5% of global refining capacity, limited seaborne products by a similar amount, and sent U.S. refining cracks to the stratosphere.
In turn, the value of U.S. refining equities has blasted from 1.82x P/B in mid-2025, when the Amber bid was priced, to 3.46x today. Amber’s bid is now a 67% discount to where the sector trades.
If CITGO is still worth a 33% discount to the sector, or about ~2.31x P/B, then the current fair market value of CITGO equity has risen from Amber’s $7.7 billion to ~$15.5 billion today, which is more than double the contracted Amber purchase price.
At fair market value, Conoco would become the primary beneficiary of this incremental CITGO value because Conoco’s giant priority #14 claim of $11b is suddenly in the money by ~$3.5 billion (and counting?).
With the prospect of Conoco returning to its former upstream assets in Venezuela, the rapid rise of the refining sector and CITGO’s value has no doubt altered corporate calculus about how to settle to maximize claims recoveries. But is there a way forward on CITGO?
PDVH/CITGO v. Peer group valuation -- Amber Energy 2025 vs Current fair market value claims coverage through COP ICSID -- August 2026:
The Alternative
The Venezuela government, as rational fiduciaries tasked with minimizing liabilities in a sovereign debt restructuring, cannot let slip the massive CITGO valuation uplift and the opportunity to accelerate Conoco’s return to Venezuela.
Luckily for Venezuela and Conoco, the Amber Energy Share Purchase Agreement of 2025 (SPA) can be terminated by the Federal Court should the Venezuela Parties (PDVSA, or the Venezuela government itself) or an entity acting in concert with the Parties make a so-called Superior Proposal at any time before Amber closes on the purchase. We believe this is a very underappreciated fact in the marketplace.
Conoco leadership should seize this opportunity to engineer a settlement agreement that offers billions in additional recovery for its shareholders and unlocks ~$8 billion of additional debt relief mainly for the Republic, while also positioning the company ahead of other creditors in the sovereign restructuring and accelerating its inevitable return to significant upstream production in Venezuela.
Conclusion
Conoco is uniquely positioned to act in concert with Venezuela and secure U.S. Government approval for a fair market-value transaction of CITGO that finally puts the everlasting litigation over myriad expropriations to a happy conclusion.
If Conoco is willing to take a leadership role in negotiating and underwriting a fair settlement agreement, COP shareholders stand to recover ~$5 billion in cash and/or equity value from a CITGO settlement, leaving a residual >$7 billion of deficiency claims that can be converted into upstream assets in-country. In sum we see ~10% uplift to COP shares through near-term settlements with Venezuela related to CITGO and upstream assets in country.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours.