Pemex Cuts 9 Month Net Losses 12.6% to US$1.3bn

Mexico's state oil company Pemex cut its January-September net losses by 12.6% from the same period of 2003 to 14.6bn pesos (US$1.3bn) this year, the company said in a statement Wednesday.

Costs and operating expenses increased 20% to 225.9bn pesos, transportation and distribution expenses increased 9% to 12.2bn pesos and administrative expenses increased 4% to 27.4bn pesos.

Total sales increased 15% to 554.6bn pesos year-on-year, while domestic sales increased 8% to 322.9bn pesos. Taxes increased 16% to 339.7bn pesos, the statement said.

Crude exports over the nine-month period increased 1% year on year to average 1.838 million barrels a day (mb/d). Approximately 87% of all exports were Maya heavy crude and 78% of the country's crude exports went to the US.

The average export basket price increased US$3.81/b over the period to average US$30.22/b through September. The average price for natural gas was US$5.67/mBTU.

The company's total export sales for the nine-month period were 231.7bn pesos. Crude sales registered a 27% increase, refined product sales increased 25% and petrochemical export sales rose 73%.

Pemex's total assets stood at 960.3bn pesos at end-September, while total liabilities grew 23% to 936.6bn pesos.

The company's Ebitda increased 22% to 378.8bn pesos, while its equity decreased 75% to 71.5bn pesos. Pemex attributes this reduction to the strains of accumulated net losses, CFO Juan José Suárez said in a conference call Thursday.


Crude production increased 1% to 3.395mb/d, natural gas output rose 2% to 4.56 billion cubic feet a day (bcf/d) and natural gas liquids production increased 7% to 444mb/d. Pemex's production of dry gas increased 4% year-on-year to 3.127bcf/d.

Pemex drilled 74 exploratory wells, up 25% year-on-year, while the number of development wells increased 31% to 453.

Regarding the company's plans for deep-water exploration, Suárez explained that Pemex is revising its plans but that Perdido Canyon would be the first deep-water prospect. The newly appointed CEO, Luis Ramírez, - who was previously the company's upstream director - is likely to address that and other issues shortly, he added.

The second tender round for multiple service contracts (MSCs), which include the Pandura-Anáhuac, Ricos, Pirineo and Monclova blocks, was launched on July 29. Pemex is planning to announce the winner of the Pandura-Anáhuac block on November 9, while the company will receive proposals for the remaining three blocks in January 2005, Suárez said.


Heavy crude processing increased 6% over the January to September period, representing 41% of the total crude processed. The company attributes this increase to improved processing capacities in the Madero, Cadereyta, Tula and Salamanca refineries.


The company is currently carrying out studies related to the construction of a 30mb/d liquefied petroleum gas (LGP) pipeline that would transport fuel from the Burgos gas-processing center to Monterrey, the statement said.

The number of service stations increased 13% to 6,755 through end-September compared to the same lapse in 2003.


The September 15 approval to merge the company's petrochemical subsidiaries should be completed in 2005 and is "expected to create significant savings" company-wide, Suárez said.

On September 30, the country's financing and public credit department paid Pemex 12.5bn pesos for oil surpluses through September of this year and the company expects to receive an additional 17bn pesos more by year-end, he said.


Pemex has raised US$7.7bn of the US$7-8bn of financing that it had planed to raise throughout 2004 so this year's financing needs have been completed. Approximately 64% was placed on foreign capital markets, while the company plans to place 56% on foreign capital markets next year. Next year's financing target iis some US$8.5bn.

Next year's capital expenditure is earmarked at US$11.2bn, which will go towards E&P (85%), refinery (10%), gas and petrochemicals (3%), petrochemical (1.7%) and other areas (0.3%). Of that money, approximately 88% will be used under the long-term pidiregas scheme.

At September 30, total consolidated debt stood at 485.3bn, up 25% on the year and net debt was 359.4bn, up 9.1%.


On October 28, the lower house approved the proposed fiscal regime for Pemex, however, it is still pending senate approval. The proposal would tax Pemex between 35.1% and 74.8% on existing oil projects depending on the average price for the Mexican export basket and 25% on new ones, while the rate would be 15% on existing natural gas projects and 10% on new ones.

"We are very confident that it will be approved," Suárez said, adding that this new regime would strengthen and improve the company's finances.

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