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Continental Resources on Wednesday announced that it reached an agreement with Venezuela’s state-owned oil company to develop oil in the South American country’s prolific Orinoco Belt.
The memorandum of understanding with Petroleos de Venezuela S.A. (PDVSA) will see Continental Resources operate and develop the Ayacucho 2 Block in the Orinoco Belt, which is the main oil field in the country. The announcement indicated that the two parties plan to enter into a long-term production agreement in the coming weeks.
The Ayacucho 2 Block is located north of the Orinoco River in the Venezuelan state of Anzoategui and covers about 126,000 acres, with an estimated 30 billion barrels of oil in the tract. Once the long-term production agreement is executed, Continental will operate the block with a 100% interest, according to the release.
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Continental Resources said in its announcement that “Ayacucho 2 represents one of the most significant resource opportunities in Continental’s nearly 60-year history,” expanding its long-term development inventory and an expansion of its international presence in a portfolio anchored by its U.S. base.
The company said in its announcement that the Trump administration’s call for American energy companies to help rebuild the Venezuelan oil industry led it to perform an independent evaluation of opportunities in the country. That evaluation, along with changes made by Venezuela’s government to its legal framework for hydrocarbons, opened the door for Continental to pursue the opportunity.
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“We are excited to participate in the revitalization of Venezuela’s energy industry, bringing further economic strength to Venezuela and its people as well as global energy markets. Ayacucho 2 is an extraordinary addition to our portfolio and will contribute significantly to Continental’s growth trajectory,” said Continental Resources CEO Doug Lawler.
“Continental was built to recognize great resource opportunities and have the conviction to pursue them,” said Harold Hamm, founder and chairman emeritus of Continental Resources. “What this company is doing today builds on that foundation while taking Continental to an entirely new level. I could not be more proud of the company, our people and the future we are building.”
Continental said that the memorandum of understanding allows it to bring private capital, technology, technical expertise and large-scale operating capabilities to the effort to redevelop Venezuela’s oil industry. It added that it plans to evaluate additional opportunities in the country, as well as those in the U.S. and around the world.
An analysis by the U.S. Energy Information Administration (EIA) that was last updated in Feb. 2024 noted Venezuela had the world’s largest proven crude oil reserves in 2023 with about 303 billion barrels, which represented 17% of global reserves.
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Despite having a significant share of the world’s oil reserves, Venezuela only produced 0.8% of global crude oil output in 2023, and the total output of 742,000 barrels per day represented a 70% cumulative decline from the country’s production levels in 2013.
Most of Venezuela’s reserves are extra-heavy crude oil from the Orinoco Belt, and the EIA noted that the “extraction of extra-heavy crude oil requires a higher level of technical expertise, which international oil companies possess but their involvement has been limited by international sanctions.”
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“Furthermore, budgetary constraints at Venezuela’s state oil company PDVSA and a lack of qualified technical personnel and foreign direct investment have all hampered Venezuela’s oil and natural gas development,” EIA added.
