Venezuela's IOUs Pile Up, Keeping US Oil Servicers in Tow

[thackney]

Venezuela's IOUs Pile Up, Keeping US Oil Servicers in Tow
http://www.rigzone.com/news/oil_gas/a/151501/Venezuelas_IOUs_Pile_Up_Keeping_US_Oil_Servicers_in_Tow
August 23, 2017

For Schlumberger Ltd. and Halliburton Co. the road to payment for services in Venezuela is increasingly long and winding.

The latest twist is Petroleos de Venezuela’s decision to give some contractors -- including the two oilfield service companies -- promissory notes that are essentially IOUs. It’s the second straight year that oilfield contractors have agreed to take the notes, representing some $2 billion owed.

The decision has opened new debate on how best to deal with a country carrying $19.8 billion in unpaid bills beyond the notes, according to a financial report earlier this month. In October and November, Venezuela and PDVSA must make $3.53 billion in debt payments to keep from getting cut off from global bond markets. The promissory notes help Venezuela preserve a key link with service companies needed to keep the oil and money flowing, said Tom Curran, an analyst at FBR Capital Markets in New York.

Although PDVSA has been chronically late on its bills since the global financial crisis, the company “has nevertheless steadily chipped away at them, however erratically and unpredictably," Curran said in an interview. More importantly, PDVSA has repeatedly signaled its intention to pay, he said.

Both sides get some benefit from the promissory notes. Venezuela stays connected to the servicers. The companies get to collect interest off their unpaid bills and, at the same time, they’ve established a stronger legal claim to the money they’re owed, according to Brian Youngberg, an analyst at Edward Jones in St. Louis....

[IsailedawayfromFR]

That's the risk of doing business with people who do not do business well.

The companies should have all of that properly factored in when they bid on service to Venezuela.

If they did not, then they deserve the problems they are facing to get their money out of a bankrupt country.

They particularly deserve that if they have a $2 billion tab due.

[Cyber Liberty]

Looks like SOP to me.  If I owe you $100 and can't pay, I have a problem.  If I owe you $2 Billion and can't pay, you have a problem.

[Cyber Liberty]

That's the risk of doing business with people who do not do business well.

The companies should have all of that properly factored in when they bid on service to Venezuela.

If they did not, then they deserve the problems they are facing to get their money out of a bankrupt country.

They particularly deserve that if they have a $2 billion tab due.

They probably do have that factored in.  There is nothing new in the way Venezuela has been doing business with foreign companies, ever since Hugo came to rule the country.  The companies will wait to get paid in the sweet by-and-by, while the government there tells them to be happy they haven't had all the capital equipment "nationalized" (stolen).

[Fishrrman]

From the article:
"For Schlumberger Ltd. and Halliburton Co. the road to payment for services in Venezuela is increasingly long and winding."

Fishrrman's credo:
Reality is what it is. It is not what we believe it to be.

These people aren't going to be paid. Can't they see that?

[Suppressed]

From the article:
"For Schlumberger Ltd. and Halliburton Co. the road to payment for services in Venezuela is increasingly long and winding."

Fishrrman's credo:
Reality is what it is. It is not what we believe it to be.

These people aren't going to be paid. Can't they see that?

When it comes to divvying up the place, or prices rebound, they will be at the front of the line, though.