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Moody’s Puts Mexico’s Pemex on Review for Downgrade

MEXICO CITY— Moody’s Investors Service MCO -0.53 % on Tuesday placed Mexican national oil company Petróleos Mexicanos on review for a possible downgrade in its credit rating, citing falling earnings at the company because of lower crude oil prices and a likely increase in financing needs. The review was prompted by the company’s weak cash generation and financial profile so far in 2015. “Cash generation has weakened due to lower oil prices and will result in large borrowing needs in the near future,” Moody’s said in a release. Pemex is rated A3 by Moody’s, which is the same as Mexico’s sovereign rating. The Mexican government’s outlook is stable. Fitch Ratings and Standard & Poor’s rate Pemex triple-B-plus, the equivalent of one notch below Moody’s. The state company, which pays much of its earnings to the federal government in royalties and taxes, has been steadily increasing investment budgets over the […]

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Mexico Cuts Growth Forecast on Oil, U.S. Industrial Output

Mexico cut its growth forecast for this year, a week after a similar move by the central bank, citing declines in oil output and U.S. industrial production. Gross domestic product will expand 2 percent to 2.8 percent this year, down from a May forecast of 2.2 percent to 3.2 percent, Deputy Finance Minister Fernando Aportela said at a news conference Thursday in Mexico City. The economy grew 2.2 percent in the second quarter from a year earlier, the national statistics institute said Thursday. While that beat the 2.1 percent median forecast of 24 economists surveyed by Bloomberg, it’s down from 2.6 percent in the previous quarter and at the low end of the full-year range the government projected three months ago. “There are several factors that have limited growth,” Aportela told reporters at a Mexico City event on Thursday. “One of them is what we saw in the U.S., […]

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Mexico Hedges 2016 Oil Exports at $49 a Barrel

MEXICO CITY—Mexico hedged oil exports for 2016 at an average price of $49 a barrel, down 36% from the hedge for this year as oil prices tumble and domestic production declines. The hedging contracts covered 212 million barrels of crude oil, the Finance Ministry said late Wednesday. It cost the government about $1.1 billion, the highest sum since 2010. The 2016 oil hedge is well below the $76.40 a barrel at which the government hedged for this year. The Mexican crude-oil benchmark is trading near $38, some 60% lower than a year ago. Mexico, the world’s ninth-largest oil producer, uses the hedge to protect its public finances from unexpected oil shocks. The government buys options to guarantee a minimum price for its crude. But the oil hedge will provide only limited relief for a government accustomed in recent years to oil prices near $100 a barrel. About 18% of […]

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Exclusive: U.S. approves landmark crude oil export swaps with Mexico

Oil pump jacks are seen next to a strawberry field in Oxnard, California February 24, 2015. The Obama administration will allow limited sales of U.S. crude to Mexico for the first time, a senior administration official told Reuters, marking another milestone in loosening a contentious ban on exporting domestic oil. The Commerce Department is "acting favorably on a number of applications" to export U.S. crude in exchange for imported Mexican oil, the official said. Such oil swaps are one of several possible exemptions allowed in the four-decade-old law that otherwise bans most overseas shipments. The approvals come eight months after Mexico formally sought permission for a swap, a historic step for a nation where oil self-sufficiency has long been a source of pride. The shipments, likely to be lighter, high-quality shale oil, will help Mexico’s aging refineries produce more premium fuels. U.S. refiners will continue to get Mexican heavy […]

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Pemex Cuts Back on Rigs as Oil Price Languishes

By Laurence Iliff MEXICO CITY–National oil company Petróleos Mexicanos is cutting back on drilling rigs to bring its costs more in line with languishing oil prices, much to the dismay of some rig leasers who didn’t anticipate Mexico’s sole petroleum producer would move so quickly and aggressively. Pemex is also renegotiating rates on rigs that it wants to keep under contract as the oil company slashes $4 billion from this year’s investment budget and prepares for more austerity next year, officials at the oil firm said. "The idea here was not to strangle or squeeze our suppliers, it is to get through a very hard time which we hope at some point is going to even out," said Pemex’s chief procurement officer Arturo Henríquez Autrey. He estimates the firm’s rig leases have fallen to 41 from 61, with shallow-water jack-up rigs cut the most. Pemex is spending about $1.8 […]

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U.S. Natural Gas Exports to Mexico Taking Off

Just as Space X rockets may be taking off from the beaches at Boca Chica near Brownsville, natural gas exports to Mexico look to also sky rocket in the coming years. Due to changes in Mexican law in 2013 opening the electricity market to private investment, billions of dollars in contracts have been let to build power plants, electrical distribution facilities and natural gas pipelines. In turn U.S. pipeline companies and gas producers have moved to capture the lion’s share of that market. Given the fact that Texas and Gulf Coast producers have been rapidly losing their old Northeast and Midwest markets to Marcellus producers this has proven to be a timely and vital new market. The Energy Information Agency (EIA) estimates that natural gas exports to Mexico were 3% of production in April 2015 and are expected to grow to 5% by 2030. While not nearly as important […]

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Mexico Said to Start Annual Oil-Hedging Program as Prices Drop

Mexico started its annual program to lock in oil sales for the coming year as a shield against a further drop in prices, three people with direct knowledge said. Morgan Stanley, Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc. are among the banks involved, said the people, who asked not to be identified because the process is private. Mexico’s hedging program is probably the largest undertaken by a national government, the chief economist for the country’s Finance Ministry said in 2012. The Latin American country has started buying the puts, which gives it the right to sell oil at a predetermined price, earlier than the usual period of late August to late September, the people said. They declined to provide further details, including the price level. Mexico’s hedging program has often roiled energy markets since its introduction in 1990-91. Spokesmen for Morgan Stanley, Citigroup, JPMorgan and […]

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Mexico delays auction of deepwater oil assets

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Pemex Reports 11th Straight Loss as Accidents Cripple Output

Petroleos Mexicanos posted its 11th consecutive quarterly loss as a series of accidents combined with a collapse in oil prices to batter the state-run producer’s earnings. The company’s net loss widened to 84.6 billion pesos ($5.2 billion) in the second quarter from 53 billion pesos a year earlier, Pemex, as the Mexico City-based producer in known, said in a statement Thursday. Sales slid 24 percent to 308.9 billion pesos as output fell to the lowest level in 24 years. Pemex’s earnings were crimped after U.S. benchmark oil prices fell an average 44 percent from 2014 and production slid following three offshore accidents in as many months. Production averaged 2.23 million barrels a day in the quarter, a 9.8 percent decrease from a year earlier, and has declined for 10 straight years since reaching 3.3 million in 2004. “We continue to face the effects of the accident at Abkatun along […]

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Norwegian company surveying offshore Mexican reserves

Norwegian energy company Dolphin Geophysical starts survey of Mexican waters as the nation works to overhaul its oil sector. Map courtesy of Dolphin Geophysical OSLO, Norway, July 28 (UPI) — A Norwegian energy company said it was surveying Mexican waters for the reserve potential in anticipation of a "new era" in the nation’s oil sector. Dolphin Geophysical said Tuesday it started a seismic survey campaign off the western Mexican coast, saying the campaign coordinates with the nation’s recent sector reforms. "Dolphin is very pleased to begin the acquisition of its first survey of this new era in Mexican petroleum exploration," Andy Phipps, regional president for the company, said in a statement. The Mexican government recently auctioned off rights to an estimated 2,600 square miles with reserve estimates of around 686 million barrels of oil equivalent, most of which exists as light crude oil. The auction drew interest from mid-sized […]

Posted On : Published By : Tom Whipple