Strategic Assets – August 2026

On the morning of April 12, 1938, a line began to form outside the Palacio de Bellas Artes, the marble opera house in the heart of Mexico City.

The people in that line had not come for a performance. They had come to give things away. Women handed over jewelry. Farmers who had no jewelry brought chickens. All of it piled up inside the opera house as donations to the national treasury.

Three weeks earlier, on the evening of March 18, President Lázaro Cárdenas had gone on the radio and announced that Mexico was seizing the assets of seventeen foreign oil companies operating in the country.

The two largest were Mexican Eagle, which belonged to Royal Dutch Shell, the Anglo-Dutch giant run from London and The Hague, and pumped more than 60% of Mexico’s oil, and Huasteca, owned by Standard Oil of New Jersey in New York.

The trigger was a labor dispute: Mexico’s Supreme Court had ordered the companies to raise wages, the companies refused, and Cárdenas ended the standoff by taking every well, pipeline, and refinery they owned.

The country erupted in celebration. Cárdenas had cast the foreign companies as arrogant occupiers hauling Mexico’s wealth out of the ground and shipping it abroad, and to ordinary Mexicans the seizure was not an economic policy but a declaration of independence. Crowds packed the capital’s main square to cheer it.

Mexican law required that the companies be paid for their property. That is what the people at the opera house were donating toward. They believed, sincerely and proudly, that their wedding rings and chickens were buying Mexico back from the foreigners.

The companies put the value of what they had lost at $400 to $500 million. The American firms fought for four years and settled in 1942 for roughly $30 million with interest. Shell held out until 1947 and got about $130 million, paid out in installments that ran until 1962. The companies considered themselves robbed.

But Mexico would pay a much larger bill.

In the early 1920s, Mexico had been the second largest oil producer on earth, an export machine on the Gulf coast built with foreign money and foreign drillers. After the seizure, the companies and their governments boycotted Mexican crude, and the capital that had built the industry left and did not come back. Cut off from foreign money, technology, and expertise, Mexican oil spent decades as a shadow of what it had been.

The money did not disappear, of course. It went where the rules held, and nowhere in the region held them better than Venezuela, which had been welcoming foreign drillers since the 1920s and by 1928 had already become the largest producer outside the United States. For most of a century, Venezuela was the oil giant of Latin America.

Then Venezuela ran the same experiment. Beginning in the early 2000s, Hugo Chávez purged the state oil company and seized foreign-operated projects. Venezuela sits on roughly 300 billion barrels of proven reserves, the largest endowment on the planet, and it barely matters. Production was about 3 million barrels per day when Chávez took office in 1999. Over the two decades that followed, under Chávez and then Nicolás Maduro, it collapsed to under half a million at the low point.

There is, however, one country in Latin America where that story has never played out.

In 1905, the Colombian government signed a concession contract with a man named Roberto de Mares to explore for oil along the Magdalena River. The terms were on the table from day one: the operator carried all the risk of exploration, kept the production and the profits for the life of the contract, less a royalty paid to the state, and at the end of that term, decades in the future, the wells and facilities would revert to the state.

The concession passed to the Tropical Oil Company, which in 1918 drilled into the Infantas structure in the jungle near Barrancabermeja and confirmed one of the great oil discoveries of the era. Tropical Oil produced under those terms for more than three decades and kept every barrel and every dollar the contract promised.

When the end date arrived in 1951, the handover happened on schedule and on the contract’s terms, with the assets passing to a newly created state company, Ecopetrol.

Contracts honored, foreign companies kept exploring, kept drilling, and kept operating in Colombia. That first field is still producing today, more than a century after discovery.

But markets have never given Colombia much credit for that record. It gets priced like its neighborhood, and to be fair, for the past few years the market has had its reasons. The outgoing government of Gustavo Petro banned fracking and did not sign a single new oil exploration contract in four years. Capital fled the country’s oil sector just as it once fled Mexico, and valuations went with it.

That is now changing. In June, Colombians elected Abelardo de la Espriella, who campaigned on rebuilding the hydrocarbon industry and awarding new exploration contracts. And the shift comes in the middle of a war that has effectively closed the Strait of Hormuz and sent oil as high as $120.

That price is set globally, so producers everywhere collect it, but a barrel loaded on Colombia’s Caribbean coast collects it without ever sailing near the mines and missiles that created it.

Which is why a profitable oil producer in a country that has never nationalized a producing oil field, with barrels that load an ocean away from the war, is worth a very close look right now.

That is what we want to show you this month.