Mexico’s state oil company, Pemex, posted its second quarterly net profit in a row in the first three months of this year, something finance director Juan Pablo Newman said had not happened for almost six years.
Pemex’s first-quarter net profit was 88bn pesos, compared with a loss of 62bn in the same quarter last year, and a profit of 73bn in the fourth quarter 2016, he told a call with analysts.
Improved oil prices and the recent appreciation of the peso currency had provided a fillip and an austerity drive at the bloated former monopoly, plus tight cost control, yielded a 14 per cent fall in operating expenses.
The improvement came after Moody’s Investors Service last week reiterated the credit rating for what Mr Newman called “Mexico’s most iconic company”, after threatening a downgrade.
With its finances on a more even keel, boosting production is Pemex’s top priority. Crude output in the first quarter was 2.018m barrels per day, in line with expectations – but that was still a 9.5 per cent fall from the level of 2.23m barrels produced in the first quarter last year. Production averaged 2.154m bpd in 2016 overall.
The company said on Wednesday that it was stepping up its drive for partners to share the financial burden of boosting its declining production.
The former monopoly, which can team up with private sector companies under a landmark 2013 reform that opened a sector closed to private investment for nearly 80 years, is evaluating 52 areas for possible partnerships like the so-called farm-out of the Trion block in the deep waters of the Gulf of Mexico agreed with BHP Billiton, the Anglo-Australian resources firm.
“We are analysing more fields … we are preparing a set of 52 entitlements [fields which Pemex was allowed to keep under the 2013 energy reform] to go into farm-outs,” Luis Ramos, deputy director of exploration and production portfolio management, told a conference call with analysts.
Under the Trion farm-out, awarded last year and signed in March, BHP Billiton will hold a 60 per cent share and be the block’s operator – an arrangement that enables Pemex to share the financial burden of deep-water production. For a shallow-water specialist like Pemex, that also reduces the financial risk as it learns the ropes of deepwater development.
To guarantee transparency, Pemex is not allowed by law to pick its farm-out partners directly; blocks are tendered in the same way that other fields which no longer belong to Pemex are offered to private investors at auction.
Three more farmouts – the Ogarrio and Cárdenas-Mora onshore fields and the shallow-water Ayin Batsil block – are due for auction on October 4. Pemex has approved a farm-out for a second deep-water area, the Nobilis-Maximinus block, but no date for that has yet been set.
Exactly how many of the 52 potential farm-outs being considered will be offered would depend on tax terms and how much capitalPemex has available for investment, Mr Ramos said. Most of the areas are in southern Mexico, he added.
In partnership with US major Chevron and Inpex of Japan, Pemex last year won one of 10 deep-water blocks offered at auction and the company is evaluating whether to bid in an upcoming tender of sh