*

Investment firm tops rival offers by CVR Energy ( CVI ), Gold

Reserve ( GDRZF )

*

Bid combining cash, credit is subject to court case

resolutions

*

Elliott's interest in Citgo follows good results from

stakes in

Marathon Petroleum ( MPC ), Phillips 66

(Adds quote from Amber CEO in paragraph 5)

By Marianna Parraga and Gary McWilliams

HOUSTON, Sept 27 (Reuters) - An affiliate of Elliott

Investment Management on Friday was named the presumptive winner

in a U.S. court auction of shares in a parent of oil refiner

Citgo Petroleum with a bid that puts an up to $7.286 billion

enterprise value on Venezuela-owned Citgo, according to a court

filing.

A U.S. district court in Delaware is auctioning shares in

Citgo parent PDV Holding to repay up to $21.3 billion in claims

against Venezuela and state-oil firm PDVSA for expropriations

and debt defaults. A second and final bidding round closed

earlier this year, leading to negotiations on terms.

The offer includes a combination of cash and credit, people

familiar with the matter said. It is subject to the resolution

of claims by holders of defaulted Venezuela bonds pursuing the

same assets, the court said.

U.S. court officer Robert Pincus said he chose Elliott unit

Amber Energy as the successful bidder, but added that "the buyer

may elect to terminate the proposed purchase agreement" if a

proposed motion to block bondholder's parallel lawsuits fails.

"We will prioritize operational excellence to lay a

foundation for stability, strength, and long-term success," said

Amber Energy CEO Gregory Goff, who joined Exxon Mobil's ( XOM )

board three years ago after retiring as Marathon Petroleum's ( MPC )

vice chairman in 2019.

Elliott declined to comment.

The investment firm's pursuit of the seventh-largest U.S.

oil refiner follows billions of dollars in gains from its stakes

in refiners Marathon Petroleum ( MPC ) and Phillips 66.

Citgo last year earned $2 billion, its second-best annual

performance. In the first six months of this year, it posted a

profit of $385 million and ended the period with a liquidity of

$3.8 billion.

Elliott submitted offers in the two bidding rounds,

competing with rival bids from U.S. oil refiner CVR Energy ( CVI )

and miner Gold Reserve ( GDRZF ). Gold Reserve ( GDRZF ) last week

quit the bidding, citing delays and uncertainty in the process.

The $7.286 billion valuation of Citgo is almost identical to

the highest offer received in the first bidding round, which

Citgo's lawyers called disappointing. The refining company was

valued at between $11 billion and $13 billion as part of the

court process.

The offer will cover only a portion of the 26 claims

approved by the court, excluding any provisions for bondholders.

Among those that could cash proceeds if the Elliott

affiliate's offer is confirmed are Crystallex, Tidewater

, ConocoPhillips ( COP ), O-I Glass ( OI ), Huntington

Ingalls, ACL Investments, Red Tree Investments and

Rusoro Mining ( RMLFF ).

TERMS CHALLENGED

The conditional nature of Elliott's bid is stirring

opposition from Venezuelan parties in the case because the judge

initially said the offer selected would have to be binding and

final.

"This action does not represent the end of the road or the

definitive closure of the process," said Citgo's supervisory

board in a release. "Even though we are facing a complex

scenario, we must clearly say PDVSA still holds ownership over

its U.S. subsidiaries and has legal means to protect its

interests."

Even though the court established a priority ranking, some

bondholders including a group led by Gramercy Distressed

Opportunity Fund have been pursuing their claims in separate

court actions, threatening to derail the sales process that has

been delayed five times.

Earlier on Friday, Pincus notified the judge he had ended

talks with holders of PDVSA's 2020 bonds without a resolution.

The bonds are collateralized with Citgo equity, so the dispute

can affect the proceeds available to creditors in the case.

Pincus did not reply to a request for comment. Thomas

Laryea, an attorney representing the Venezuela Creditor

Committee that includes holders of the 2020 bonds, declined to

comment.

Venezuela's oil minister Delcy Rodriguez this week said the

auction represents a "blatant theft" of Venezuela's assets, and

recommended Russia and other nations not to hold assets in the

United States or Europe.

Judge Stark plans to discuss next week a proposal to block

the bondholders from resorting to other courts and trying to

"jump the line" set by Delaware's creditors list. The court has

scheduled a Nov. 19 hearing to approve a sale.

Even if Stark approves the motion, the Gramercy-led group

can challenge his decision in other courts.

The bondholders have good chances of escalating their cases,

said Jose Ignacio Hernandez, a lawyer from consultancy Aurora

Macro Strategies who has closely followed the court case.

"Resolving those disputes will add at least three more

months to the sales process, making unlikely to have a closure

by mid-November as proposed," he said.