Pemex Reports Deeper Loss in Third Quarter

By Noe Torres and Adriana Barrera
MEXICO CITY (Reuters) – Mexican state-owned oil company Pemex reported a deeper $8.2 billion third-quarter net loss on Tuesday, primarily affected by a weaker exchange rate, despite receiving support from the new government.

In a filing with the Mexican stock exchange, Pemex announced a loss of around $4.5 billion in Q3 2023, largely due to a 13% depreciation of the peso over the past year, according to LSEG data.

Pemex typically operates in U.S. dollars, like most oil companies, but incurs most local expenses in pesos. Revenue for Mexico's largest company during the July to September period reached 426 billion pesos, marking an 8% year-over-year decrease, primarily attributed to reduced crude oil export sales.

In recent years, Pemex has aimed to reduce crude oil exports while focusing on refining. However, it has struggled to decrease foreign motor fuel purchases in line with government goals, with gasoline and diesel imports consistently surpassing its own production levels.

During the third quarter, Pemex processed 962,000 barrels per day of crude, up nearly 25% from the previous year. The refining unit’s performance yielded 278,000 bpd of gasoline and 186,000 bpd of diesel.

Pemex reported total financial debt of $97.3 billion for the three-month period, down nearly $9 billion from the end of 2023.

Crude and Condensate Output Decline

President Claudia Sheinbaum, taking office earlier this month, has promised continued government support for the heavily indebted Pemex, similar to her predecessor. Pemex received 145 billion pesos in assistance from the government during Q3.

Some close to Sheinbaum suggest more openness to partnerships with private oil companies to enhance production, considering Pemex's huge debt load. The president aims to target sustainable oil output of 1.8 million bpd.

Pemex reported a combined crude and condensate production of 1.76 million bpd in Q3, down approximately 6% from the same period last year. The company has seen a steady decline from a peak of 3.4 million bpd two decades ago, hitting recent lows of under 1.5 million bpd.

Earlier this month, Pemex faced lawsuits from a toxic hydrogen sulfide release at its Deer Park, Texas refinery, resulting in two contractor fatalities and multiple injuries, which could incur significant costs.

Executives mentioned ongoing investigations into the incident and played down its impact on the refinery’s operations during an analyst call following the quarterly report.

Pemex also revised its second-quarter loss upwards by about 7%, increasing from 255.9 billion pesos to 273.3 billion pesos for April to June. This adjustment added more than $950 million to losses based on the quarter's exchange rate.

> ($1 = 19.6921 Mexican pesos at end-September)