ConocoPhillips on Tuesday said Venezuela assumed control of its operations in the country after it was unable to reach an agreement with the government over the nationalization of two multibillion-dollar oil projects. The company also said it expects to take an impairment of about $4.5 billion in the second quarter for its entire interest in its oil projects there.It said negotiations are continuing between ConocoPhillips and Venezuelan authorities over compensation for the company's stake in the projects. Still, the company said it has preserved all its legal rights, including international arbitration.
Earlier this year, Conoco said the "historical cost-based carrying value" of its total investment in Venezuela was about $2.6 billion. It also said it would need to write down about $1.9 billion for goodwill if the assets were expropriated. However, at that time, the company said it believed the fair market value of its Venezuelan operations was substantially more than the expected $4.5 billion impairment.