investor presentation april 2019 - pemex · due to market volatility, the difference between the...

2019 D.R. Petróleos Mexicanos. Todos los derechos reservados.

April 2019

INVESTOR PRESENTATIONSTRATEGIC ADVANCES

2019 D.R. Petróleos Mexicanos. Todos los derechos reservados.2019 D.R. Petróleos Mexicanos. Todos los derechos reservados.

Forward-Looking Statement & CautionaryNote

VariationsIf no further specification is included, comparisons are made against the same realized period of the last year.RoundingNumbers may not total due to rounding.Financial InformationExcluding budgetary and volumetric information, the financial information included in this report and the annexes hereto is based on unaudited consolidated financial statements prepared in accordance with International FinancialReporting Standards as issued by the International Accounting Standards Board (“IFRS”), which PEMEX has adopted effective January 1, 2012. Information from prior periods has been retrospectively adjusted in certain accounts to makeit comparable with the unaudited consolidated financial information under IFRS. For more information regarding the transition to IFRS, see Note 23 to the consolidated financial statements included in PetróleosMexicanos’ 2012 Form 20-F filed with the Securities and Exchange Commission (SEC) and its Annual Report filed with the Comisión Nacional Bancaria y de Valores (CNBV). EBITDA is a non-IFRS measure. We show a reconciliation of EBITDA to net income in Table32 of the annexes to PEMEX’s Results Report as of March 31, 2018. Budgetary information is based on standards from Mexican governmental accounting; therefore, it does not include information from the subsidiary companies oraffiliates of Petróleos Mexicanos. It is important to mention, that our current financing agreements do not include financial covenants or events of default that would be triggered as a result of our having negative equity.MethodologyWe might change the methodology of the information disclosed in order to enhance its quality and usefulness, and/or to comply with international standards and best practices.Foreign Exchange ConversionsConvenience translations into U.S. dollars of amounts in Mexican pesos have been made at the exchange rate at close for the corresponding period, unless otherwise noted. Due to market volatility, the difference between the averageexchange rate, the exchange rate at close and the spot exchange rate, or any other exchange rate used could be material. Such translations should not be construed as a representation that the Mexican peso amounts have been orcould be converted into U.S. dollars at the foregoing or any other rate. It is important to note that we maintain our consolidated financial statements and accounting records in pesos. As of December 30, 2018, the exchange rate ofMXN 19.6829= USD 1.00 is used.Fiscal RegimeBeginning January 1, 2015, Petróleos Mexicanos’ fiscal regime is governed by the Ley de Ingresos sobre Hidrocarburos (Hydrocarbons Revenue Law). From January 1, 2006 and to December 31, 2014, PEP was subject to a fiscal regimegoverned by the Federal Duties Law, while the tax regimes of the other Subsidiary Entities were governed by the Federal Revenue Law.On April 18, 2016, a decree was published in the Official Gazette of the Federation that allows assignment operators to choose between two schemes to calculate the cap on permitted deductions applicable to the Profit-Sharing Duty: (i)the scheme established within the Hydrocarbons Revenue Law, based on a percentage of the value of extracted hydrocarbons; or (ii) the scheme proposed by the SHCP, calculated upon established fixed fees, USD 6.1 for shallow waterfields and USD 8.3 for onshore fields.The Special Tax on Production and Services (IEPS) applicable to automotive gasoline and diesel is established in the Production and Services Special Tax Law “Ley del Impuesto Especial sobre Producción y Servicios”. As an intermediarybetween the Ministry of Finance and Public Credit (SHCP) and the final consumer, PEMEX retains the amount of the IEPS and transfers it to the Mexican Government. In 2016, the SHCP published a decree trough which it modified thecalculation of the IEPS, based on the past five months of international reference price quotes for gasoline and diesel.As of January 1 2016, and until December 31, 2017, the SHCP will establish monthly fixed maximum prices of gasoline and diesel based on the following: maximum prices will be referenced to prices in the U.S. Gulf Coast, plus a margin thatincludes retails, freight, transportation, quality adjustment and management costs, plus the applicable IEPS to automotive fuel, plus other concepts (IEPS tax on fossil fuel, established quotas on the IEPS Law and value added tax).PEMEX’s “producer price” is calculated in reference to that of an efficient refinery operating in the Gulf of Mexico. Until December 31, 2017, the Mexican Government is authorized to continue issuing pricing decrees to regulate themaximum prices for the retail sale of gasoline and diesel fuel, taking into account transportation costs between regions, inflation and the volatility of international fuel prices, among other factors. Beginning in 2018, the prices of gasolineand diesel fuel will be freely determined by market conditions. However the Federal Commission for Economic Competition, based on the existence of effective competitive conditions, has the authority to declare that prices of gasolineand diesel fuel are to be freely determined by market conditions before 2018.Hydrocarbon ReservesIn accordance with the Hydrocarbons Law, published in the Official Gazette on August 11, 2014, the National Hydrocarbons Commission (CNH) will establish and will manage the National Hydrocarbons Information Center, comprised by asystem to obtain, safeguard, manage, use, analyze, keep updated and publish information and statistics related; which includes estimations, valuation studies and certifications. On August 13, 2015, the CNH published the Guidelines thatrule the valuation and certification of Mexico’s reserves and the related contingency resources.As of January 1, 2010, the Securities and Exchange Commission (SEC) changed its rules to permit oil and gas companies, in their filings with the SEC, to disclose not only proved reserves, but also probable reserves and possible reserves.Nevertheless, any description of probable or possible reserves included herein may not meet the recoverability thresholds established by the SEC in its definitions. Investors are urged to consider closely the disclosure in our Form 20-F andour Annual Report to the CNBV and SEC, available at http://www.pemex.com/.Forward-looking StatementsThis report contains forward-looking statements. We may also make written or oral forward-looking statements in our periodic reports to the CNBV and the SEC, in our annual reports, in our offering circulars and prospectuses, in pressreleases and other written materials and in oral statements made by our officers, directors or employees to third parties. We may include forward-looking statements that address, among other things, our:

Accordingly, you should not place undue reliance on these forward-looking statements. In any event, these statements speak only as of their dates, and we undertake no obligation to update or revise any of them, whether as a result ofnew information, future events or otherwise. These risks and uncertainties are more fully detailed in our most recent Annual Report filed with the CNBV and available through the Mexican Stock Exchange (http://www.bmv.com.mx/) andour most recent Form 20-F filing filed with the SEC (http://www.sec.gov/). These factors could cause actual results to differ materially from those contained in any forward-looking statement.This presentation contains words such as “believe”, “expect”, “anticipate” and similar expressions that identify prospective statements, which reflect PEMEX’s points of view regarding future events and their financial performance. Actualresults could materially differ from those projected in such prospective statements as a result of diverse factors that can be out of PEMEX’s control.

• exploration and production activities, including drilling;• activities relating to import, export, refining, petrochemicals and transportation, storage and distribution of

petroleum, natural gas and oil products;• activities relating to our lines of business, including the generation of electricity;• projected and targeted capital expenditures and other costs, commitments and revenues;• liquidity and sources of funding, including our ability to continue operating as a going concern;• strategic alliances with other companies; and• the monetization of certain of our assets.• Actual results could differ materially from those projected in such forward-looking statements as a result of various

factors that may be beyond our control. These factors include, but are not limited to:• changes in international crude oil and natural gas prices;

• effects on us from competition, including on our ability to hire and retain skilled personnel;• limitations on our access to sources of financing on competitive terms;• our ability to find, acquire or gain access to additional reserves and to develop the reserves that we

obtain successfully;• uncertainties inherent in making estimates of oil and gas reserves, including recently discovered oil and

gas reserves;• technical difficulties;• significant developments in the global economy;• significant economic or political developments in Mexico;• developments affecting the energy sector; and• changes in our legal regime or regulatory environment, including tax and environmental regulations.

1


Content

2

Cost Reductions

1

Increase in Investment2

Recovery in Crude Oil Production

3

Responsible Debt Management4


During 1Q 2019, production levels began to stabilize

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

1,800

1,900

2,000

1-Ja

n4

-Jan

7-Ja

n10

-Jan

13-J

an16

-Jan

19-J

an22

-Jan

25-J

an28

-Jan

31-J

an3-

Feb

6-F

eb9-

Feb

12-F

eb15

-Feb

18-F

eb21

-Feb

24-F

eb27

-Feb

2-M

ar5-

Mar

8-M

ar11

-Mar

14-M

ar17

-Mar

20-M

ar23

-Mar

26-M

ar29

-Mar

Crude Oil Production Jan-Mar 2019Mbd

Daily Production

Estimated Production

1.7 million barrels per

day

Shutdown due to adverse weather conditions (high inventories)

3

Average Jan 2019:1,626 Mbd

Average Feb 2019:1,704 Mbd


Development of 20 new fields will boost production in 20191

41 Figures estimated as of March 18, 2019

3 3

8

4 43

2 2

43

4 45

21

20

0

5

10

15

20

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Onshore Offshore

Off

sho

reO

nsh

ore

Kutz

Sihil

Perdiz Acagual

Cafeto

Saramako

Chuhuk

Ektal

Homol

Lobina

Carpa

Guaricho

Shishito

Malva

Citam

May

Sinan

Costero

Ixtal

Manik

Bolontiku

Tiumut

Kab

Yaxche

Nelash Rabasa

Teotleco

Tajón

Crtaer

Xanab

Cupache

Madrefil

Terra

Ché

Alux

Yum

Tumut

Brillante

Pareto

Tokal

Kuil

Tsimin

Gasifero

Bedel

Kambesah

Onel

Anhélido

Eltreinta

Sini

Xux

Ayocote

Ayatsil Xikin

Esah

Cheek

Cahua

Uchbal

Manik

Jaatsul

Suuk

Teekit

Koban

Hok

Mulach

Tlacame

Tetl

Pokche

Octli

Ixachi

Chocol

Cibix

Valeriana


Increased drilling will sustain production in 2019 and beyond

5

55143

454

24

19

52

79

162

506

0

100

200

300

400

500

600

2017 2018 2019E

Drilling Activity(Wells)

Development Exploration

Onshore

72

44

116

Wells

Development of 20 new fields1

Offshore

E: Estimated1 Over their production outlook


Investment in significant infrastructure works for the development of 20 new fields

6

• Construction of 13 production platforms

• Installation of 14 pipelines, with total length of 175 km

• Eight interconnections to existing platforms

Shallow waters: 16 fields

• Construction of three drilling platforms

• Extension of nine drilling platforms• Installation of 13 pipelines, with total

length of 88 km• Installation of a separation battery

and enhancement of an existing battery

Onshore: 4 fields


1.833.3

2.346.5

0.35.7

0.36.9

0.11.0

0.050.9

2.240.0

2.754.3

2018 2019

USD billionMXN billion

From Jan-Feb 2019, budgetary investment expenditure increased by 36 percent

7

1 Preliminary figure as of March 4, 20192 Includes Drilling and Services3 Includes: Logistics, Ethylene, Fertilizers and CorporateSource: PEMEX

Exploration and Production2

Industrial Transformation

Other3

+36%

1


In Jan-Feb 2019, efficiencies in procurement contracts yielded substantial savings

8

ConceptSavings from new awarded contracts1

MXN million USD million

Infrastructure 2,379 119

Offshore wells 6,066 303

Onshore wells 7,162 358

Total 15,607 780

1 Estimated figures as of March 18, 2019Note: Convenience translation has been made at MXN 20 per USD 1.00 exchange rate

Competitive and transparent processes will allow for more infrastructure works with the same

budget


PEMEX did not issue debt during 1Q 2019 in line with a coordinated strategy with the Federal Government

9

Debt issued in bonds marketsJanuary-March

USD million

2,230

4,651

8,742

5,260 4,532

5,828

0

2013 2014 2015 2016 2017 2018 2019

In addition, USD 2,344 million

(MXN 45,945 million) were amortized in the

first quarter of 2019


Advances in anti fuel theft strategy

11

1 In February, 50% of deviated fuel took place on the Tula – Salamanca pipelineSource: Informe Seguridad http://www.informeseguridad.cns.gob.mx/

56

81

74

2318

9 8

14 139

6 7 95 4

7 9 85

13 149 7

10 85

9 10 8 7 7 5 48

-10

0

10

20

30

40

50

60

70

80

90

2018

No

v-20

18

Dic

01-

20

Dic

21-

31

En

e

Feb

Mar

1-M

ar

2-M

ar

3-M

ar

4-M

ar

5-M

ar

6-M

ar

7-M

ar

8-M

ar

9-M

ar

10-M

ar

11-M

ar

12-M

ar

13-M

ar

14-M

ar

15-M

ar

16-M

ar

17-M

ar

18-M

ar

19-M

ar

20-M

ar

21-M

ar

22-M

ar

23-M

ar

24-M

ar

25-M

ar

26-M

ar

27-M

ar

Volume of deviated fuelMbd

21/12/2018 Interventionin Control Center

11

Fuels deviation in February averaged 9 Mbd

The maximum level was recorded on December 4th

(126 Mbd)


From November 2018 to March 2019, fuel theft volume decreased by 84 percent

12 12

55.9

81.074.2

13.0

2018 Nov. 2018 From Dec. 1 to 20,2018

From Dec. 21,2018

to Mar. 27, 2019

Deviation due to Illicit Fuel MarketMbd

In 2019, PEMEX estimates additional revenues from the anti fuel theft strategy of approximately MXN 32 billion (USD 1.6 billion)1

1 80% of estimated illicit fuels market in 2018. Exchange rate MXN 20 per USD 1.00.

investor presentation april 2019 - pemex · due to market volatility, the difference between the...

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