Pemex Keeps 2009 Capex Goal, Cuts Production Target

MEXICO CITY (Dow Jones Newswires), Jul. 30, 2009

Petroleos Mexicanos plans to stick to its ambitious $20 billion investment target for this year to help stabilize falling oil production, officials at the state-run oil company said Thursday.

Pemex exploration chief Carlos Morales said the company revised its production target to 2.65 million barrels a day, from recent estimates of 2.7 million barrels a day.

The number still assumes rising output during the second half, which would reverse a five-year trend. Oil production averaged 2.63 million barrels a day in the first half, and has been below 2.65 million barrels a day since March.

Pemex is throwing money at the production problem.

"We're trying to keep Capex guidance...close to the $20 billion mark for 2009 and 2010," said Chief Financial Officer Esteban Levin in a conference call.

He said Pemex has already raised about $7 billion in financing this year to fund investments, and the company may start raising cash for the 2010 budget.

"We may go out to the market if we see opportunities...for pre-funding for 2010," said Levin.

The boost in spending hasn't yet stabilized production, which is down by more than a fifth since peaking in 2004. The main problem is Cantarell, the largest Mexican oil field ever discovered, where output is down 37% on year and 5% on month to 658,700 barrels a day in June.

Morales said Pemex continued to shut in oil wells at Cantarell during the second quarter owing to high natural-gas content. Pemex has said it will install additional equipment to process and reinject natural gas at Cantarell to avoid shutting in wells.  

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