Petroleos Mexicanos (PEMEX) H1 2024 earnings summary

Executive summary

• Operational and financial transformation since 2018, with stabilized and growing production, increased reserves, and improved finances, including debt reduction and major refinery investments, supported by significant government capital injections.

• Domestic market share for fuels increased, with 23 consecutive months of growth in Pemex-branded service stations and expansion in gasoline, diesel, and jet fuel.

• Hydrocarbon production strategy focused on rapid development of new fields, now contributing over a third of total output, though overall production declined due to natural field decline and operational delays.

• Crude oil processing increased 7.3% year-over-year to 886 Mbd, driven by improved refinery performance and new capacity.

• Financial debt decreased to $99.4 billion at quarter-end, supported by government contributions and a focus on debt reduction.

Financial highlights

• Positive operating income of MXN 42 billion for H1 2024, but net loss of MXN 251–255.9 billion due to financial costs, exchange losses, and taxes.

• EBITDA margin for Q2 2024 was 14%, with H1 2024 average at 18%, below the industry average.

• Domestic sales accounted for 76% of total revenue in H1 2024, up from 66% in 2023, while export sales fell 16%.

• CapEx for 2024 estimated at MXN 220 billion, with 49–53.9% spent by June, mostly on upstream activities.

• Foreign exchange loss of MXN 126–159.7 billion in Q2 2024, mainly due to peso depreciation.

Outlook and guidance

• No plans to access capital markets in 2024; focus on net debt reduction, meeting maturities with internal resources, and zero net indebtedness.

• Olmeca Refinery ramp-up expected to reach optimal processing by end of Q3 2024, supporting higher national refining capacity.

• Ongoing development of the Lakach gas field, with production expected to start in December 2026.

• Continued investment in new field development, refinery rehabilitation, and ESG initiatives, including climate risk management.

• Crude oil and crack spread hedging strategies in place to mitigate price volatility.