Mexican Pemex, “punished” by the markets, seeks options to pay heavy debt

The indebted Mexican oil company Pemex is analyzing how to face its heavy amortizations, especially concentrated in 2023 and 2024, trying to avoid going out to the capital markets, which according to its general director, have punished the state company despite having improved figures compared to previous efforts.

With a financial debt that closed 2022 at 107.7 billion dollars, according to the state giant itself, Pemex must pay some 8.2 billion dollars this year and another 9 billion in 2024 in bonds and long-term bank loans.

But if other commitments such as revolving credit lines, interest and other liabilities such as factoring and repos are added, the sum rises to 24,000 million dollars this year.

“We are exploring all (the options)”said the company’s general director, Octavio Romero, in an interview Tuesday afternoon at his office in Mexico City, adding that they are working closely with the Ministry of Finance, whose head and an undersecretary are part of the council of administration of the state giant.

The official affirmed that, in principle, they are seeking to refinance the debts with the banks and did not rule out the possibility of offering guarantees with crude oil. “We are working without restrictions (…) we are willing to listen to any situation (option).”

Romero said Pemex would avoid returning to the debt markets after the expensive January issuance. “Yes, yes, we are going to try to achieve the best mechanism, the cheapest one”, stressed.

He also complained bitterly, without giving names, of some risk rating agencies that have “punished” to Pemex despite arguing that it has managed to stop the sustained decline in hydrocarbon production that came from previous years and increase it slightly; lower financial debt and keep proven reserves safe.

In 2020, Fitch Ratings and Moody’s Investors Service became the first two major ratings agencies to strip Pemex of its coveted investment grade status, with the latter pushing it further to speculative grade last year.

Agencies Moody’s, Fitch Ratings and Standard and Poor’s did not immediately respond to Reuters requests for comment on the statements by the oil company chief.

In January Pemex placed 2,000 million dollars in 10-year notes at 10.375% to refinance debt and avoid using the government lifeline again, which has provided some 45,000 million dollars between capital injections and tax benefits in the last four years. where it has had negative working capital.

ANOTHER PRODUCTION PROMISE

Pemexwhich had a meager profit of 1,187 million dollars last year despite the oil boom that boosted its income by 60% and gave record profits to other companies in the sector in the world, also hopes that it will not have to ask for help from the Government of the President Andrés Manuel López Obrador, who has promised “save her” at all costs.

On the other hand, the 64-year-old agronomist is confident that Pemex will achieve a production of crude oil and condensates of 2.0 million barrels per day (bpd) by the end of 2023 or the beginning of 2024, despite the fact that on several occasions the goals They have not been reached and the Government itself has adjusted them from a ceiling of 2.6 million bpd when its management began.

When López Obrador came to power in December 2018, Pemex was producing 1.8 million bpd after dipping from 2.6 million bpd in 2012 when his predecessor, Enrique Peña, took over the country. In 2019 it fell further, to an average of 1.68 million bpd, from where it rose slightly to an average of 1.69 million bpd in 2022, according to figures from the state.

The official believes that the objective will be reached with the 37 fields that have been developed since 2019, which have contributed some 507,000 bpd and have helped to partially offset the decline of other mature fields.

“We are already at a point where we are reaching or are going to reach the completion of the development of these fields (…) the increase that we have already had, which is already more marked, is due to the fact that we already have a large part of The infrastructure is complete, we already have a good number of wells, we already have a plan for when we are going to drill”said.

“I am optimistic about this year and the next, and by this I mean that we are anticipating an increase in production that we are going to find (…) at the end of this year, at the beginning of next, which will allow comfortable to satisfy the demand for crude oil and fuels of our country”said.

After years of massive losses, Pemex – which saw profits before 2022 in 2012 and 2006 – could have blue figures in 2023, Romero predicted, which would be achieved with an export price of Mexican crude at around 70 dollars per barrel ( dpb) despite debt issues. Experts say the company needs prices closer to 90 dpb for this.

Source: Reuters