By Avi Salzman

State control of oil companies is almost never a good thing for investors. Shares of Saudi Arabian Oil Co., known as Aramco, and Brazil's Petrobras have trailed their peers for years. The more that publicly traded oil companies look like an arm of the government, the more investors should worry.

For U.S. investors, now is a good time to worry. President Donald Trump is calling on American oil companies to take the lead in rebuilding Venezuela's oil industry after the surprise ouster of Nicolás Maduro on Jan. 3. The U.S., which now sets the rules in Venezuela, will have a big hand in what those investments look like.

Oil producers may jump at the opportunity to return to Venezuela and its estimated 300 billion barrels worth of oil reserves. But if they end up risking their own capital to achieve Trump's goals, it could be a mess for investors.

The bill to rebuild Venezuela's infrastructure would invariably run into the tens of billions of dollars. And Trump's foray into Venezuela comes at the worst possible time for new investment -- the global oil market is already oversupplied and expected to get even more swamped in the months ahead. Trump has made it clear that he wants oil prices to fall to $50 per barrel, about $8 below current prices. That's poor timing for large new investments.

Oil companies have ingratiated themselves to investors since the pandemic by doing the exact opposite: ruling out expensive investments in new drilling in favor of spending that money on bigger dividends.

Assuming the U.S. relinquishes control of Venezuela to an elected government that sets stable rules, companies may well find a way to profit there over the long term. But for now, the situation looks fraught with too many legal and logistical questions.

For those interested in investing in oil's new geopolitical map, SLB looks like a more reasonable bet than the producers. It can make money in South America and elsewhere without taking on heavy political risks, adding new debt, or putting its dividend at risk.

SLB, formerly Schlumberger, is the largest oil-services company in the world. The stock has struggled over the past few years and now trades at a relatively modest 14.5 times its expected 2026 earnings. Most of SLB's operations, and nearly 80% of its revenue, are outside North America. The company's geographical diversification was a problem a couple of years ago because the fastest-growing part of the oil market was the Permian Basin of Texas and New Mexico.

Now SLB's international focus looks like an advantage. Growth in the Permian has slowed and may peak soon. Companies are investing much more heavily elsewhere, including in the Middle East and the Gulf of Mexico. SLB is a key player in some of the fastest-growing areas, and it still has a presence in Venezuela. If big companies do look to come back, they'll want to work with a services company that knows the area.

SLB stock rose 9% on Monday. And unlike some other oil stocks, it held those gains throughout the week.

"It remains to be seen exactly who will be the party that brings capital into the country and develops these resources," said David Byrns, a portfolio manager at American Century Investments who focuses on energy. "But regardless of who that party is, they need a service provider. To me, it makes a company like SLB look much more interesting.... They can be the ultimate winner here, regardless of who's the first producer to deploy capital into the country."

Citigroup analyst Scott Gruber thinks that SLB's rise on Monday may overstate the company's potential gains in Venezuela. Even if the country gets back to its former operating activity -- 70 to 80 oil-drilling rigs, up from two today -- the financial benefits to the service companies might not be worth as much as the stock gain implied. That said, Gruber recommends investors buy SLB for other attributes, including its exposure to growing oil production in the Middle East. His price target is $53, versus SLB's recent price of $44.43.

Write to Avi Salzman at avi.salzman@barrons.com

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January 09, 2026 02:30 ET (07:30 GMT)

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