ConocoPhillips Files Court Motion to Preserve Creditor Priority

HOUSTON (Reuters) – ConocoPhillips (NYSE:COP) has filed a court motion aiming to maintain its high priority status among Citgo Petroleum creditors for cash proceeds from the impending auction of shares in the parent company of the Venezuela-owned firm.

Citgo is the sole asset of PDV Holding, which a U.S. district court in Delaware has determined is liable for Venezuela's foreign debts.

Conoco's court filing follows lawsuits in Texas and New York by Venezuelan bond and note holders seeking to bypass the established queue of creditors. Eighteen creditors are attempting to recover up to $21.3 billion from the auction intended to address expropriations and debt defaults by Venezuela. The auction is anticipated to conclude in the coming months.

"This action seeks to obtain writs of attachment against the shares of Citgo Holding in favor of every additional judgment creditor in the order of priority previously established by the court," Conoco stated in its recent motion.

A Conoco spokesperson refrained from making any comments.

In 2019, Citgo severed ties with its ultimate parent, the Caracas-based state company PDVSA, but they still have U.S. subsidiaries, including Citgo Holding and PDV Holding.

A conditional bid of up to $7.3 billion, selected by a court officer last month, would only cover a small portion of the claims if approved by the judge.

Conoco holds three separate arbitration claims recognized by Delaware to receive compensation from the auction’s proceeds. One claim, amounting to $1.33 billion, ranks third in the order of priority.

Recently, Conoco has also taken steps to claim payments due to Venezuela from an offshore natural gas project involving PDVSA, Shell (LON:SHEL), and the National Gas Company of Trinidad and Tobago. Bloomberg reported earlier this month that Conoco was granted a license by the U.S. Treasury Department to pursue these payments, although neither Conoco nor the Treasury Department have confirmed this authorization.

Conoco emphasized in its motion, "The risk that the … defendants might attempt to obtain writs of attachment against the Citgo Holding shares on the basis of an alter ego theory is real."

These parties have initiated actions to establish that PDV Holding is the alter ego of PDVSA or the Republic in an effort to undermine the court's property distribution.