Excess natural gas is burnt, or flared, from Mexican state-owned Pemex’s Tula oil refinery, in Tula de Allende, north of Mexico City, Mexico June 22, 2020. REUTERS/Henry Romero/File Photo
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MEXICO CITY, July 28 (Reuters) – Mexican national oil company Pemex reported on Thursday its quarterly net profit soared more than ninefold to $6.5 billion, helped by surging prices that have bolstered the energy industry worldwide, as well as a significant reduction in its tax bill.
Revenue for the company, formally known as Petroleos Mexicanos, soared nearly 89% to 655.2 billion pesos during the April-to-June period.
Meanwhile, debt during the three-month period ending in June held steady at $108.1 billion, but still placed the firm as one of the most indebted oil companies in the world.
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In a call with analysts, Pemex Chief Executive Officer Octavio Romero hailed the surging profit as a turning point for the company which in the past has more often been mired in red ink.
“I want to stress that Pemex has the support of the federal government,” he said, adding that major credit rating agency Moody’s should now review its so-called junk assessment of the company’s debt.
But Pemex was also benefiting from a global surge in crude prices that experts warned might not last long-term.
“In the context of high oil prices and elevated refining margins, Pemex is reporting positive results that it should analyze with caution,” said Arturo Carranza, energy project manager at Akza Advisors. “The company was unable to increase oil production or improve its cash flow. Its financial debt is also overwhelming.”
Prices for Mexican crude oil during the quarter spiked more than 60% to average $105.34 per barrel, compared with the same period last year.
Pemex executives highlighted that the company’s largest tax payment to the government was slashed from 54% in 2021 to 40% this year.
President Andres Manuel Lopez Obrador has pumped billions of dollars in financial support for the company to fulfill his pledge of increasing domestic production of motor fuels by refining more of Pemex’s crude oil production at home during his six-year term, which ends in 2024.
The company noted in its second-quarter report, however, that it did not receive any help from the government to cover debt payments during the period, and that it alone will be responsible for servicing them during the rest of this year.
Crude and condensate production for the quarter ticked up about 1% from the year-ago period to reach 1.756 million barrels per day (bpd).
Pemex, meanwhile, reduced its outstanding debt to service providers and other contractors by about 45% to total 203.5 billion pesos, compared with the first quarter.
($1 = 20.1353 pesos at end-June)
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Reporting by Adriana Barrera and Ana Isabel Martinez in Mexico City
Additional reporting by Noe Torres in Mexico City
Writing by Valentine Hilaire
Editing by David Alire Garcia, Christian Plumb and Matthew Lewis
Our Standards: The Thomson Reuters Trust Principles.
