Mexico's Pemex Swings Back to Profit, Despite Lower Production

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Written by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--Petróleos Mexicanos (Pemex) (Mexico City, Mexico), Mexico's state-owned energy company, registered a net profit of 59.5 billion pesos (about US$3.1 billion) in the second quarter, compared with a net loss of 273.3 billion pesos during the same period last year. The results were attributed to the peso exchange rate, though Pemex produced 153,000 fewer barrels per day (BBL/d) year-over-year.

The positive numbers were the result of a decrease in the costs of sales, a decrease in tax and duties, and the appreciation of the Mexican peso, which led to 134.7 billion-peso (about US$7.1 billion) in exchange gains.

On the upstream front, Pemex recorded an oil output of 1.63 million BBL/d in the second quarter, slightly higher than the previous quarter but 153,000 BBL/d less than during the same period last year.

The drop is the result of delays in the completion of new wells, as well as lower initial production rates from the Xanab oil field.

More importantly, one of the leading reasons behind the continuous drop in Pemex's output over the last few years is the natural decline of some of its largest oil fields, the Maloob and Zaap assets, as well as Tupilco and Quesqui. The latter is one of the company's newest developments and one of the reasons why the company was able to stabilize production for some time.

The Ku-Maloob-Zaap remains the largest producing asset with 33% of the output, followed by Bellota Jujo and the Tabasco Basin with 16% each.

Similarly to oil, Pemex's gas output has dropped from 3.73 million cubic feet per day (MMcfd) in last year's second quarter to 3.59 MMcfd between April and June this year. More than 50% of Pemex's natural gas volumes are attributed to oil production.

In its oil refining business, the company registered the strongest quarterly results since 2016 with an oil processing rate of 987,000 BBL/d in the second quarter, compared with 890,000 BBL/d during the same period last year.

However, this crude processing rate includes the operations of the new 340,000-BBL/d Dos Bocas Olmeca Refinery, which processed 130,000 BBL/d of crude in the second quarter, according to Pemex's institutional database.

Including Olmeca, Pemex has an oil processing capacity in Mexico of almost 2 million BBL/d.

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