Nine Rigs Today, 41 by November: NABEP Defends Venezuela Mega-Deal

Nine drilling rigs are currently boring new wells in Venezuela for North American Blue Energy Partners — and the company says that count will reach 41 of a planned 60 rigs by November, its most concrete answer yet to skeptics questioning what the White House has called "the biggest oil deal in world history."

The pushback came this weekend after Reuters, citing more than a dozen oil workers, contractors, and industry experts, reported that NABEP could struggle to hire crews, compete for rigs, and secure capital to develop the huge resource base it now controls. The company disputed the account, saying the publication ran only the parts of its detailed response that suited a "biased narrative."

The stakes are enormous. After U.S. forces captured Nicolas Maduro in January, the U.S.-backed interim government rewrote the legal, regulatory, and commercial framework, drawing investors back into the country. The White House says the interim authorities granted NABEP 100-year concessions covering 17 oilfields with proven reserves of roughly 65 billion barrels, in a program that could involve as much as $100 billion in new oil infrastructure investment.

What does the rig fleet actually look like?

NABEP laid out the details itself. Of its nine active rigs:

• Three are drilling in the Junín 10 block of the Orinoco Belt;
• Three more will start work there soon;
• Three are being refurbished or moved into position;
• Four additional rigs are being shipped from Houston, Brazil, and Colombia.

"We are paying for every one of these rigs with the oil we produce. It's the same reinvestment strategy we used to successfully grow production tenfold in two years," CEO Alejandro Betancourt, the Venezuela-born businessman who leads NABEP, said in a statement.

By the company's account, output has climbed from 18,000 bpd to 223,000 bpd in two years on roughly $1 billion of company-funded investment. The near-term target is production above 1 million bpd. The firm says it controls rights to commercialize more than 65 billion barrels of P1 reserves and plans nearly $100 billion in spending to expand production capacity and upgrade oil-and-gas infrastructure. The takeaway: the rig count is real and growing, but it's still a fraction of the announced fleet.

Where would the money come from?

That's the question the closely held company hasn't fully answered. NABEP says its business plan "doesn't currently contemplate raising outside funding or offering new equity stakes," adding: "We've already proven we can grow without outside money, and that's our focus for the time being: we're reinvesting hundreds of millions of dollars more into expanding production with every passing month."

Outside analysts see a gap between rhetoric and commitment. "NABEP's $100 billion figure represents a long-term funding requirement, not committed near-term capital, and the company has not disclosed a detailed financing structure," Rystad Energy said in September. The company has released few details on how it finances operations. In plain terms: nobody outside NABEP has verified the balance sheet behind the plan.

Who else is coming back?

Whatever happens to NABEP, Venezuela's production curve points up. Chevron has pledged over $7 billion over five years to more than double its Venezuelan output to about 600,000 bpd by 2031. Eni and Repsol are back, and Halliburton has signed deals to help drill.

Continental Resources has signed a Memorandum of Understanding with PDVSA to operate and develop the Ayacucho 2 block in the Orinoco Belt — with 100% interest and an estimated 30 billion barrels of resource in place. Eni has taken operatorship of Junín-5, a heavy oil field with 35 billion barrels of certified oil in place currently producing around 12,000 bpd. BP, ADNOC's investment arm XRG, and Qatar's UCC Oil and Gas Holding, meanwhile, secured a license for the Loran offshore gas field northeast of the Orinoco Delta, near the maritime boundary with Trinidad and Tobago.

The watch item: whether NABEP actually has 41 rigs turning in November — the first hard checkpoint in judging whether the mega-deal can deliver.