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TRANSCRIPT
Investor Presentation
December 2017
Content
A Snapshot of PEMEX
Upstream
Midstream & Downstream
Overall Financial Performance
Business Outlook
1
1
O&G: The Industry Moving the World• According to the IEA, by 2040, crude oil demand is expected to grow 6% up to 103
MMbd, while natural gas consumption increases by 50%
21 Btoe: billion tons of oil equivalent
2 Includes geothermal, solar, wind, heat and electricity trade.
Source : Key world energy statistics & World Energy Outlook 2016, International Energy Agency,
55%
12%
12%
21%
O&G
Coal
Biofuels and waste
Other
World energy
consumption 2014
100% = 9.4 Btoe1
2
9.4
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
O&G Coal Biofuels andwaste
Other Fuels 2014Total
Consumption
Btoe
Industry Transport Other uses Non-energy use
2
PEMEX: The Most Important Company in Mexico
3
8th Crude oil producer
98th largest company2
7th Trading company in the world
Main producer of oil, gas and
refined products in Mexico
14th Refining company worldwide
Holder of 95% of the country's
1P reserves
Key player in hydrocarbons
logistics infrastructure
More than 40,000 km of pipelines
15th Logistics company in the world
by assets
Largest Tax Contributor
MXN 1.6 billion annual revenues1
8th Drilling company
5th Producer of petrochemicals in
Mexico
1st Producer of phosphates in LATAM
9 Gas Processing Complexes
74 Storage and distribution terminals
Close to 1,500 tank trucks
16 Ships with transportation capacity
of 4,618 Mb
1 Last five years average.
2 Source: Fortune 500 ranking.
258 Operating platforms
9,000 Wells
Distribution of PEMEX’s Reserves1
4
Basin
ReservesProspective
Resources2
1P
(90%)
2P
(50%)
3P
(10%)Conv.
Non
Conv.
Southeastern 7.2 11.1 14.5 11.6
Tampico
Misantla1.0 3.4 6.0 3.3
Burgos 0.2 0.3 0.4 1.5
Veracruz 0.1 0.2 0.2 0.6
Sabinas 0.0 0.0 0.0 0.4
Deepwater 0.1 0.2 1.1 6.0
Total PEMEX 8.6 15.1 22.1 18.2 5.2
MMMboe (billion barrels of oil equivalent)
Exploration
Projects
Development and
Exploitation
Projects
Oil and Gas
Gas
Veracruz
Tampico-
Misantla
BurgosSabinas
Gulf of Mexico
Deep Sea
Exploration
Yucatan
Platform
Southeastern
PEMEX holds 95% of Mexico’s hydrocarbon reserves
1 As of January 1, 2017. Numbers may not total due to rounding.
2 Prospective resources assigned to PEMEX in Round Zero
Note : As of January 1, 2017. 1P includes discoveries, developments, revisions and delineations.3P replacement rate only considers new
discoveries. Reflects reserve replacements conducted by PEMEX.
2017 Achievements
5
• Trion farm-out with BHP Billiton
• Consortium formed by PEMEX, Chevron and
Inpex was awarded Block 3 North in deep waters
• Joint venture with Air Liquide for the supply of
hydrogen to our Tula refinery
• Migration without a partner of the fields Ek and
Balam in shallow waters
• PEMEX was awarded two blocks in shallow
waters through consortia with DEA and Ecopetrol
• The first Open Season offered capacity was
awarded to Tesoro
• Improvement in fiscal regime for fields that were
non-profitable after taxes
• Cárdenas-Mora & Ogarrio are PEMEX’s first two
onshore farm-outs with Cheiron and DEA
Key Highlights as of September 2017
6
• Average production platform in line with the
annual target of 1,944 Mbd
• Accumulated net result increased by 107.2%
• Divestiture of stake in Los Ramones II Norte
gas pipeline
• Administrative, distribution, transportation and
sales expenditures remained stable
• Accumulated operating income totaled
MXN 174 billion (Jan – Sep 2017)
• Uninterrupted fuel supply throughout the
country despite hurricanes and earthquakes
• Implementation of crude oil hedging program
to protect PEMEX’s budget against falls in oil
prices
Content
A Snapshot of PEMEX
Upstream
Midstream & Downstream
Overall Financial Performance
Business Outlook
7
2
Upstream: Current Status and Challenges
88
0
50
100
150
200
250
300
350
-
500
1,000
1,500
2,000
2,500
3,000
3,500
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
1Q
17
2Q
17
3Q
17
MXN bnMbd
Other assets Ku-Maloob-Zaap Cantarell E&P Investment
Crude Oil Production
• PEMEX continues to be a main player in the O&G industry
• The challenge has been replacing Cantarell -a giant field that produced 2 million barrels of
crude oil per day- to stabilize and eventually increase production
1
-44%
+173%
1 Includes non-capitalized maintenance.
Source : PEMEX 2017
Industry Cost Leader
5.2 6.1 6.8 7.9 8.2 6.7 5.5
2.72.3
2010 2011 2012 2013 2014 2015 2016Production cost before taxes Taxes and Duties
Production Costsa,b
(USD / boe)
2016 Benchmarking: Production Costs1
(USD / boe)
5.00
6.14
7.78
8.46
9.89
10.92
12.00
12.55
13.15
16.27
Statoil
Total S.A.
PEMEX
BP
Exxon Mobil
Royal Dutch / Shell
Connoco Phillips
Eni S.P.A.
Chevron-Texaco
Petrobras
9.47.8
• Exploitation strategies focused on shallow waters have allowed PEMEX to maintain very
competitive production costs, as compared to most of its peers.
• Lower production costs provide greater flexibility, especially under lower crude oil price scenarios.
a) Figures in nominal values.
b) Source: 20-F Form (2016, 2014
& 2012).
1. Source: Annual Reports
and SEC Reports 2016.99
Upstream: New Production Frontiers
10
Deepwater Infrastructure1 Shale Potential2
1 Source: National Geographic
2 Source: CNH with information from North Dakota Department of Mineral Resources, Oklahoma Geological Survey, Texas Railroad
Commission, Bureau of Ocean Energy Management, Oil & Gas Journal
• Underinvestment and limited access to know-how has restricted intensive exploitation of
new complex frontiers
Upstream: Business Plan
• Concentrates on assignments that are profitable after taxes
Business Plan
Scenario
11
• Aggressive farm-out program
• Development of fields that are profitable for the country and which, under similar fiscal conditions than privates, are profitable for PEMEX after taxes
• Incremental income from farm-out production is shared between PEMEX and the Federal Government
Improved Scenario
11
• With profitability as its ultimate goal, the Business Plan contemplates increased production
and investment through different business schemes such as JVs and farm-outs to
maintain and gradually increase the production platform
2,6
01
2,5
77
2,5
33
2,5
48
2,5
22
2,4
29
2,2
67
2,1
54
1,9
44
1,9
51
1,9
82
2,0
17
2,1
41
19
5
25
7
26
7
31
6
0
500
1,000
1,500
2,000
2,500
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
202
1
Crude Oil Production1
Mbd
Improved(BusinessPlan)
PEMEXproduction
11111 Includes PEMEX’s production -estimations sent to the Ministry of Finance on September 2017- and others -as considered in the Business Plan
published in November 2016.
Upstream: Farm-outs at a glance
Farm-Out Trion Cárdenas-Mora Ogarrio Nobilis-Maximino Ayín-Batsil 7 clusters
WinnerBHP Billiton
(Australia)
Cheiron Holdings
Limited (Egypt)
DEA Deutsche
Erdoel AG
(Germany)
Will be part of a new bidding process
Initial payment 570 125 190 To be defined To be defined To be defined
Additional royalty value 4% 13% 13% To be defined To be defined To be defined
Cash tie-break payment
(MMUSD)624 41.5 213.9 To be defined To be defined To be defined
3P Reserves
(MMboe)485 93 54 502 359 392
Type of Hydrocarbon Light crude oil Light crude oil Light crude oil Light crude oil Heavy oil Medium Light oil
Type of Field Deep waters Onshore Onshore Deep waters Shallow waters Onshore
Type of Contract LicenseLicense &
Payment-In-Kind
License &
Payment-In-KindProduction-sharing To be defined To be defined
1212
7 clusters
Upstream: Recent Developments (Trion & Block 3)
Trion
Trion Blocks awarded in Round 1.4
Exploratus
Maximino
Great White
Matamoros
179 Km
28
Km
2
1
1
3
4
• BHP Billiton will invest up to USD 1.9 billion
before PEMEX makes additional
contributions
• Joint operating agreement was signed on
March 3, 2017
• PEMEX expects to invest USD 600 million by
the time initial production is achieved
Block 3
North
PEMEX’s Assignments
Trión Farm-Out
Round 1.4 Deep Waters
Oil and Gas Field
3D Seismic
Perdido Fold Belt – Block 3
• Joint Venture with Chevron and Inpex
• The contract considers 3,374 work units, equivalent
to USD 3.4 million
• No wells were committed for this contract
• Contract was signed on February 28, 2017
13
Upstream: Recent Developments (Cárdenas-Mora & Ogarrio)
Cárdenas-Mora
• Cheiron Holdings offered a cash tie-break of
USD 41.5 million
• Daily average production: 13.7 thousand
barrels of oil equivalent per day (Mboed)
• USD 166.5 million of PEMEX’s previous
investments were recognized
• 3P Reserves: 93.19 million barrels of oil
equivalent (MMboe)
• Total expected investment: USD 127.3 million
• Deutsche Erdoel AG (DEA) offered a cash tie-break
of USD 213.9 million. Of this amount, PEMEX will
receive USD 183 million
• Daily average production: 15.6 Mboed
• PEMEX’s previous investments: USD 373 million
• 3P Reserves: 53.97 MMboe
• Total expected investment: USD 95.2 million
14
Ogarrio
Mora
Cárdenas
Round 1.2
Round 1.3
Farmouts Cárdenas-Mora and OgarrioExploration blocks
Ogarrio
Upstream: Upcoming Developments(Additional farm-outs)
Nobilis-Maximino
• 3P Reserves: 502 MMboe
• Type of hydrocarbons: Light crude oil
• Water Depth: 3,000 meters (deep waters)
• Contract type: License
• Will be part of a new bidding process to be
defined in 2018
• 3P Reserves: 359 MMboe
• Type of Hydrocarbons: Heavy crude oil
• Water Depth: 80 - 170 meters (shallow waters)
• Contract type: Production-Sharing
• Will be part of a new bidding process in the first half
of 2018
15
Ayín-Batsil
Oil Fields
Round 1.4
Ayín-Batsil
Farm-out
Exploration
Blocks
Seven Clusters
16
Gulf of Mexico
Cluster Cinco Presidentes
Cluster Bacal-Nelash
Cluster ArtesaCluster Lacamango
Cluster Juspi
Cluster Giraldas-Sunuapa
Oaxaca
Veracruz
Tabasco
Chiapas
Cluster
Bedel-Gasifero
Asset BN-03 Veracruz Asset BS-04 Cinco Presidentes Asset BS-01 Macuspana-MuspacExploration Cluster
Extraction Assignment
Asset
Assignment that doesn’t
belong to the cluster
Cluster
Reserves
(MMboe) Oil TypeArea
(Km2)1P 2P 3P
Juspí 26 37 114 Light 450
Bedel-Gasifero 90 111 119 Medium 1,165
Cinco Presidentes 29 40 41 Light 167
Giraldas-Sunuapa 69 71 71 Light 1,727
Bacal-Nelash 10 12 21 Light 117
Artesa 14 22 23 Light 890
Lacamango 3 3 3 Medium 16
16
PEMEX discovered the largest onshore reservoir in 15 years: Ixachi-1
17
• Result of great exploration efforts and investments over the last 30 years
• Original volume of 1,500 MMboe
• 3P Reserves of approximately 350 MMboe
• Wet gas & condensates reservoir located at 6,000-7,000 meters below sea level
• Closeness to existing infrastructure could benefit the project’s cost structure
• Expected initial production in 2020
1717
Content
A Snapshot of PEMEX
Upstream
Midstream & Downstream
Overall Financial Performance
Business Outlook
18
3
99
90
90
70
60
3
2
France
USA
China
Japan
South Africa
India
Mexico
Iran
Midstream: Investment Opportunities• Further gasoline storage capacity and pipelines are required in Mexico. The U.S. has 27
times more infrastructure to supply fuel and 45 times more storage terminals than Mexico
Gasoline Storage Days by Country1
2016
Pipelines in the United States2 and in Mexico3
2016
19191 Source: Strategy, PwC 2017
2 Source: http://pipeline101.com/where-are-pipelines-located
3 Source: EIA 2017
Infrastructure1
Capacity
6 Refineries in Mexico
and one in U.S.A.1,942 Mbpd2
9 Gas Processing
Centers5,912 MMcfd3
2 Petrochemical
Complexes 1,694 Tpa4
Downstream: Current Status and Challenges
10.1 11.2 12.7
26.331.9
0
10
20
30
40
50
2013 2014 2015 2016 2017*
Non-Scheduled Shutdowns Index%
International reference(goal)
20
1 From Pemex Industrial Transformation
2 Capacity in Mexico is 1,602 Mbd, Deer Park capacity is 340 Mbd.
3 Million cubic feet per day.
4 Tons per year
5
5 Average January – September
6 January – August 2016
Hydrogen Supply63%
Equipment and
Processes20%
Repairment delays
3%
CFE3%
Service supply (steam, water,
electricity)11%
Main causes for non-scheduledshutdowns 20166
49.2
41.9
36.211
-108.9
29.4
-120
-80
-40
0
40
Impact of the Strategic Initiatives on the Financial Balance1 until 2025
(MXN billion in cash flow)
Midstream & Downstream: Business Plan
21
Financial
Balance
2025
(Equivalent to
-96.3 in 2017)
Partnerships
Safe and reliable
operations
Acknowledgment
and efficiency in
transportation
costs
Stolen
ProductResult
Business Plan scenario
PEMEX Industrial Transformation
• Partnerships in operation of auxiliary activities
and revamps of refineries
• Operational discipline and reliability
• Timely attention to risk factors
• Cost efficiency and gradual acknowledgment
of opportunity costs in transportation prices
• Pipeline custody
• Illicit markets
PEMEX Logistics
• Open Season
• Focus on profitable
business lines
• Underinvestment, supply commitment and lack of cost recognition are being and will
continue to be addressed in the upcoming years to reverse the accumulated losses in the
midstream and downstream divisions
1 The financial balance considers the result from subtracting total expenses (including financing costs) from total revenues.
Midstream & Downstream: Upcoming Developments
22
• The Mexican fuels market is moving towards an open, competitive and market-driven price
structure; all the country has liberalized fuel prices since November 30th
It auctioned 20% of its
capacity in Baja California
and Sonora, and awarded
it to Tesoro1
Open Season: Pemex Logistics is offering
its non-used storage and distribution
capacity to third-parties, which will yield
additional revenuesStage 1: March 30, 2017
• Baja California
• Sonora
Stage 2: June 15, 2017
• Chihuahua
• Coahuila
• Nuevo León
• Tamaulipas
• Gómez Palacio, Durango
Stage 3: October 30, 2017
• Baja California Sur
• Durango
• Sinaloa
Liberalized
Stage 4: November 30, 20172
• Center and Eastern Mexican
States
1 At fees 10% above the minimum required
2 Announced by the Mexican Energy Regulatory Commission (CRE) on November 16, 2017
Content
A Snapshot of PEMEX
Upstream
Midstream & Downstream
Overall Financial Performance
Business Outlook
23
4
Financial Performance
-20,000
-10,000
0
10,000
20,000
1Q
12
3Q
12
1Q
13
3Q
13
1Q
14
3Q
14
1Q
15
3Q
15
1Q
16
3Q
16
1Q
17
3Q
17
Operating IncomeUSD million
24
• Operating income as of the third quarter of 2017 averaged USD 3,163 million
• Debt’s maturity profile was extended to 7.5 years.
Average Debt’s Maturity
Years
5.0
5.5
6.0
6.5
7.0
7.5
8.0
Dec-1
1
Ma
r-1
2
Jun
-12
Se
p-1
2
Dec-1
2
Ma
r-1
3
Jun
-13
Se
p-1
3
Dec-1
3
Ma
r-1
4
Jun
-14
Se
p-1
4
Dec-1
4
Ma
r-1
5
Jun
-15
Se
p-1
5
Dec-1
5
Ma
r-1
6
Jun
-16
Se
p-1
6
Dec-1
6
Ma
r-1
7
Jun
-17
Se
p-1
7
7.50
0
20
40
60
80
100
120Net Result and Mexican Crude Oil Mix Price
104 USD/b
43 USD/b
(450)
(370)
(290)
(210)
(130)
(50)
30
110
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
19
PEMEX Recorded a Positive Net Resultfrom January to September 2017
251 January – September average per year.
2 Financial information is reported under IFRS; Audited Quarterly Results, except 1Q17, 2Q17 and 3Q17 (preliminary)
Ne
t R
es
ult
1,
2
MX
N b
illio
n
Average: 63.5 USD/b
Me
xic
an
Cru
de
Oil
Mix
Pri
ce
1
US
D/b
Jan – Sep:
• Accumulated positive net result as of September 30, 2017 for the first time since 2012,
when the price of the Mexican Crude Oil Mix was 2.3 times higher
Net Indebtedness Trend
26
2017 Debt ceiling: MXN 150
billion (≈USD 8 billion)
Financial deficit of the year:
MXN 94 billion (≈USD 5
billion)
• Any additional transaction throughout the year would be aimed to term-out
PEMEX’s maturity profile or substitute bank financing.
Since 2016, financial deficit
has decreased.
Net indebtedness for 2017 is
substantially lower than
previous years, confirming the
trend stated in our Business
Plan
132 147
102 94 89
223
195
240
150 142
0
50
100
150
200
250
2014 2015 2016 2017 2018*
Financial Deficit Available Debt Ceiling
Bill
ion P
esos
1 Debt ceiling for 2018 pending approval
Note: All numbers in billion pesos; exchange rate: 18.6 pesos per dollar
1
PEMEX – 2017 Financing Activities
27
In July, PEMEX carried out a bond transaction with the following characteristics:
• The reopening of two reference bonds due 10 and 30 years, and yield to maturity of
5.75% and 6.90%, respectively. This transaction was approximately three times
oversubscribed.
• Repurchase of bonds totaling USD 1,739 million due 2018 and 2019, to improve our
amortization profile and increase the average debt maturity.
2,840
4,694
8,210
-
1,567
173 8,037
-
2,000
4,000
6,000
8,000
10,000
2017 2018 2019
Liability Management – Repurchase TransactionUSD million, July 2017
Vencimientos Reducción en vencimientos Líneas RevolventesDebt maturity Decrease in debt maturity Revolving credit facilities
28
Diversified Debt Structure
By Currency By Interest Rate By InstrumentBy Currency
Exposure
67%
14%
3%0%
1%
12%
1%
Dollar Euros
UDIS British Pounds
Yens Pesos
Swiss Francs
83%
17%
Fixed Floating
72%
12%
3%
5% 3% 2%
Int. Bonds
Cebures
ECAs
Int. Bank Loans
Domestic Bank Loans
Others
84%
1% 1%
14%
Dollar Yen
UDIS Pesos
• PEMEX’s portfolio strategy has prioritized the development of new sources of financing to
diversify its investor base and currencies
• To reduce external impacts, the company has chosen a hedging strategy that matches its
U.S. dollar-based income structure
Note: As of September 30, 2017. Sums may not total due to rounding.
Credit Rating Agencies recognize PEMEX’s strategic importance for Mexico
29
2017 PEMEX annual rating revisions highlight:
Key energy
supplier
Close linkage to
Mexican
Government &
fiscal relevance
Stable finances
Expectation of
improved
profitability
due to the
Energy Reform
Rating Agency Last Revision Global Scale Outlook National Scale
Fitch August 2017 BBB+ Stable AAA(mex)
S&P August 2017 BBB+ Stable mxAAA
Moody’s April 2017 Baa3 Negative Aa3.mx
R&I April 2017 BBB+ Stable N.A.
HR Ratings September 2017 HR A- (G) Stable HR AAA
Source: PEMEX. Full Rating Reports are available at http://www.pemex.com/en/investors/debt/Paginas/credit-ratings.aspx
Markets respond positively to PEMEX’s strategy
30
PEMEX’s efforts and business strategy have yielded tangible results, as shown in
the spread between PEMEX’s 10Y benchmark and both Mexico’s UMS 10Y and
U.S. Treasury.
Source: Bloomberg
Final Remarks
31
PEMEX has tackled short-term challenges with determination and today has stable finances
• Budget adjustment
• Strengthening of financial balance
• Renewed access to financial markets and active debt management
• Primary surplus in 2017
• Covered financial needs until 2018
• Hedged on crude oil prices to ensure budget stability
31
PEMEX has harnessed the Energy Reform’s historic opportunity with the implementation of
its Business Plan:
• The first farm-out in deep waters is already signed (Trion)
• First two onshore farm-outs (Ogarrio and Cárdenas-Mora)
• Additional deep waters and shallow waters farm-outs Nobilis Maximino and Ayín-Batsil
• Alliances for non-PEMEX´s fields with major oil & gas companies
• Pemex Industrial Transformation first partnerships for hydrogen supply
• Gasoline, diesel and natural gas price liberalization
• Pemex Logistics has successfully completed the first stage of the Open Season
With the Energy Reform in place and stable finances, PEMEX has the historic opportunity
to modernize and remain as Mexico’s flagship company
Content
A Snapshot of PEMEX
Upstream
Midstream & Downstream
Overall Financial Performance
Business Outlook
32
5
-149
-84-64
-1
43
-49 -36
-133-147
-102 -94-89
-200
-150
-100
-50
0
50
100
2012 2014 2016 2018 2020
Bill
ion
Pe
so
s
Business Plan Actual
Financial Outlook: Scenarios with Realistic Premises
33
Financial Balance
(MXN billion)
2017 marks an inflection point:
• Primary Surplus (first time since 2012): MXN 8.4 billion
• Attainable Production Platform: 1.944 MMbd
• Conservative Price Projection: USD 42 per barrel
In 2016 PEMEX exceeded its financial balance and production goals
33331 Source: Bloomberg (October) and PEMEX.
55
58 59 60 61
48
58
68
71 71
42
48.5
40
45
50
55
60
65
70
75
2017 2018 2019 2020 2021
Price of Oil1
(USD per Barrel)
Brent Futures Petrobras PEMEX Budget
