Pemex posts historic 3Q loss despite output bump

OREANDA-NEWS. November 02, 2015. Mexico's state-run Pemex reported a \\$10bn loss in its third quarter results, the worst in the company's recent history.

The 167.6bn peso loss came despite a rebound in production compared with the previous quarter.

"The results of the company continue to reflect the impact caused by the current price environment and foreign exchange rate," said Pemex's chief financial officer Rodolfo Campos in a conference call yesterday, mentioning an adverse environment from both supply and demand perspectives.

Pemex reported average third quarter crude production of 2.266mn b/d, up 1.8pc from second quarter results.

Heavy crude made up for 52.5pc of the mix, up from 51.4pc a year ago, light accounted for 37pc and extra light 12.5pc.

The increase in crude production was attributed to a full recovery at the Abkatun platform, in the Campeche basin, where a deadly April fire knocked out 10,000 b/d.

The Esah and Xikin fields, two recent discoveries in the shallow waters of the Gulf of Mexico, and significant developments on the deepwater Maximino field, have also helped increase output levels with combined initial production of 21,361 b/d of oil and condensates and 15.7mn ft3/d of gas.

Still, year-on-year crude production fell by 5.5pc, cementing a decade-long downward trend.

In its monthly output data released yesterday, Pemex said it produced an average of 2.263mn b/d in January-September, short of its 2.29mn b/d target for the year.

Natural gas output was also down, reflecting adjustments to this year's fiscal budget and natural declines, Pemex upstream manager Gustavo Hernandez Garc?a said.

Gas production reached an average of 5.501bn ft3/d (154mn m3/d), down 5.3pc compared to the same time last year.

Crude exports were down 7.3pc from the previous month of August at 1.169mn b/d, but up almost 1pc from a year ago. The Americas remain Mexico's biggest market with 47pc of all exports, followed by Europe (27pc) and Far East and other regions (25pc).

The company?s net loss shot up by 178pc in a year, from 59.7bn pesos in the third quarter of 2014 to 167.6bn pesos last quarter. Including debt, the firm's total liabilities amounted to 3.241 trillion pesos, or nearly \\$200bn.

Reiterating previous interpretations, Pemex blamed the company's tax burden, which as of 30 September amount to nearly 100bn pesos.

The company said a long anticipated agreement with the powerful oil workers union should be presented in coming days. The agreement is part of a wider effort to diminish the firm?s soaring pension liabilities.

Looking ahead, Pemex is still in the process of migrating 22 existing service contracts to production-sharing contracts. The process has fallen behind schedule but Mexico's oil regulator CNH has already approved the migration of two contracts: Misi?n, a natural gas field located in northern Mexico, and the Magallanes-Tucn-Pajonal mature fields, in the eastern state of Tabasco.