Investor Presentation - PEMEX · 2017. 8. 15. · Mexico Snapshot 0 3 6 9 12 15 18 2010 2011 2012...
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Investor Presentation August 2017
Transcript of Investor Presentation - PEMEX · 2017. 8. 15. · Mexico Snapshot 0 3 6 9 12 15 18 2010 2011 2012...
Investor Presentation
August 2017
Content
A Snapshot of Mexico & PEMEX
Upstream
Midstream & Downstream
Overall Financial Performance
Business Outlook
1
1
Mexico Snapshot
0
3
6
9
12
15
18
2010 2011 2012 2013 2014 2015
GDP per Capita, PPP USD thousand
Brazil
Chile
Colombia
Mexico
Peru
LATAM
0
2
4
6
8
10
12
14
2010 2011 2012 2013 2014 2015
Unemployment% of total labor force
Brazil
Chile
Colombia
Mexico
Peru
LATAM0
2
4
6
8
10
2010 2011 2012 2013 2014 2015
Inflation%
Brazil
Chile
Colombia
Mexico
Peru
LATAM
• Today, Mexico’s fundamentals are stronger, allowing to face external shocks in a better
position
Source : The World Bank Group.2
0
100
200
300
400
500
600
700
2010 2011 2012 2013 2014 2015
Exports of Goods and ServicesUSD Billion
Brazil
Chile
Colombia
México
Peru
LATAM
1,400
1,300
1,200
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%
31 Btoe: billion tonnes 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
4
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
29% Federal Government’s
revenues1
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
5
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
1 As of January 1, 2017. 2P and 3P reserves are still in process of
review by CNH. Numbers may not total due to rounding.
2 Prospective resources assigned to Pemex in Round 0
Oil and Gas
Gas
Veracruz
Tampico-
Misantla
BurgosSabinas
Gulf of Mexico
Deep Sea
Exploration
Yucatan
Platform
Southeastern
3 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.
• As of January 1, 2017, 2P and 3P reserves are still in process of review by CNH.
Environmentally Conscious and Socially Responsible Company
6
• We strive to minimize the impact of our operations to the environment and to maximize the
benefits that a sustainable operation brings
SocialEnvironmental
Water
Residues
Emissions
Communities
Social
investment
Environmental
impact studies
Economic
Sustainable development framework
Biodiversity
conservationHuman Rights
Sustainable
value chain
Project analysis
Sustainable
investment
Key Highlights / First Half-Year Recap
7
Trion block through a farm-out with BHP
Billiton
Consortium formed by PEMEX, Chevron and
Inpex was awarded Block 3 North in deep
waters of the Gulf of Mexico
Joint venture with Air Liquide for the supply of
hydrogen to our Tula refinery
Migration process 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 was awarded to Tesoro
Key Highlights 2Q17
8
Crude oil production remains stable: it
averaged 2,013 Mbd
Gas flaring recorded its best performance in
3 years: 4.1%
Positive net result of 121 billion pesos as of
first half 2017
Crude oil processing remains in line with
1Q17
Third consecutive quarter with positive net
results
Content
A Snapshot of Mexico & PEMEX
Upstream
Midstream & Downstream
Overall Financial Performance
Business Outlook
9
2
Upstream: Current Status and Challenges
1010
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
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 by itself 2 MMbd,
to stabilize and eventually increase production
1 Includes non-capitalized maintenance.
Source: PEMEX 2017
1
-38%
+46%
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
11
9.47.8
• The development of exploitation strategies focused on shallow waters has allowed PEMEX to maintain
very competitive production costs, as compared to most of its peers in the oil and gas industry.
• 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.
Upstream: New Production Frontiers
12
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 reduced access to know-how has limited intensive exploitation of
new complex frontiers to stabilize and increase production
Upstream: Business Plan
• Concentrates on assignments that are profitable after taxes
Business Plan
Scenario
13
• 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
1313
2,6
01
2,5
77
2,5
53
2,5
48
2,5
22
2,4
29
2,2
67
2,1
54
1,9
44
1,8
11
1,7
80
1,8
05
1,8
80
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 Production Mbd
Improved
Business Plan
• 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.
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
14
Upstream: Upcoming Developments
Ayín-Batsil
Ek-Balam
Ogarrio & Cárdenas-Mora
San
Ramón &
Basilio
151 Exploration and Extraction Integrated Service Contracts.
• PEMEX will focus on the development of projects through joint ventures and migrations to
share risks, obtain technology, know-how and improvements within the upstream division
Farm-outs (Round 2)
• Ogarrio, Cárdenas-Mora &
Ayín-Batsil
Board of Directors approves
second deep-water farm-out
• Maximino-Nobilis
Migrations without a partner
• Ek-Balam
May 2, 2017
• Future case-by-case analysis
CSIEE1
• Advanced model contract
• San Ramón and Blasillo to
be signed during the 2H17
TrionMaximino-
Nobilis
Content
A Snapshot of Mexico & PEMEX
Upstream
Midstream & Downstream
Overall Financial Performance
Business Outlook
16
3
99
90
90
70
60
3
2
France
USA
China
Japan
South Africa
India
Mexico
Iran
Midstream: Investment Opportunities
171 Source: Strategy, PwC 2017
2 Source: http://pipeline101.com/where-are-pipelines-located
3 Source: EIA 2017
• 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
Downstream: Current Status and Challenges
18
• The challenge is to reverse the economic and operational losses of close to MXN 100
billion
Achievements
• Hydrogen supply JV with Air Liquide
Future Projects
• Hydrogen supply JVs for Madero and Cadereyta refineries
77.7 76.9 76.971.0 68.6 66.1
61.7
51.645.9 47.7
30
40
50
60
70
80
90
20042006200820102012201420152016 Jan Feb
Equivalent Distillation Capacity Usage%
International reference (1Q) International reference (4Q)
2017
5.7 4.2 3.4
9.212.2 10.7 10.1 11.2 12.7
26.3
31.0 29.9
0
5
10
15
20
25
30
35
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Jan Feb
Non-Scheduled Shutdowns Index%
International reference (goal)
2017
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
19
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
• Concentrates on
profitable business lines
• Underinvestment, supply mandates and 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
2
3
45
20
• The Mexican fuels market is moving towards an open, competitive and market-driven price
structure
• Pemex Logistics is offering its non-used storage and distribution capacity to third-parties,
which will yield additional revenues
PEMEX auctioned
20% of its capacity in
Baja California and
Sonora, at fees 10%
above the minimum
required
1
Content
A Snapshot of Mexico & PEMEX
Upstream
Midstream & Downstream
Overall Financial Performance
Business Outlook
21
4
Positive Trend
-20,000
-10,000
0
10,000
20,000
1Q
12
4Q
12
3Q
13
2Q
14
1Q
15
4Q
15
3Q
16
2Q
17
Operating IncomeUSD million
-12,000
-7,000
-2,000
3,000
1Q
12
4Q
12
3Q
13
2Q
14
1Q
15
4Q
15
3Q
16
2Q
17
Net ResultUSD million
22
• During 2016 operating losses were turned into income, net result was improved by 58%
and the liquidity position was substantially improved. Debt’s maturity profile was extended
to 7.3 years.
Average Debt’s Maturity
Years
5.0
5.5
6.0
6.5
7.0
7.5
8.0
dic
-11
jun-1
2
dic
-12
jun-1
3
dic
-13
jun-1
4
dic
-14
jun-1
5
dic
-15
jun-1
6
dic
-16
jun-1
7
7.22
Net Indebtedness CeilingAnnual Performance and Net Indebtedness Objective for 2017
223195
232
94
56
0
50
100
150
200
250
2014 2015 2016 2017
Net Indebtedness Available Ceiling
Financial Balance
150
2017 Approved
Net Indebtedness
Observed
Jan - July 2017
Financial Markets Activities 260 155
Amortizations 110 69
Net Indebtedness 150 86
23
24
Diversified Debt Structure
By Currency By Interest Rate By InstrumentBy Currency
Exposure
66%
14%
3%0%
2%
13%
1%
Dollar Euros
UDIS British Pounds
Yens Pesos
Swiss Francs
82%
18%
Fixed Floating
71%
12%
4%
5% 4% 2%
Int. Bonds
Cebures
ECAs
Int. Bank Loans
Domestic Bank Loans
Others
83%
1%1%
15%
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 March 31, 2017. Sums may not total due to rounding.
PEMEX’s Credit Ratings
25
On June 28th, Fitch Ratings confirmed
PEMEX´s credit ratings as follows:
• BBB+ long-term global scale; and
• AAA(mex) long-term, national scale rating
On July 18th, Standard and Poor’s confirmed
our credit ratings as follows:
• BBB+ long-term, global scale; and
• mxAAA national scale, local currency.
Additionally, it changed our outlook to stable
from negative, in line with the modification of
the sovereign’s outlook.
Investment Considerations
26
Today
Financial
Balance
2020-2021
Strategic company in Mexico and worldwide
Production goals met
Net result improved by
MXN 266bn in 1H17
Energy Reform: historic
opportunity
Business Plan focus:
Profitability
2016: Stable finances
2017: Inflection point
& attractive investment
opportunities
• The joint efforts have finally begun to bear fruit and to reflect in the results of the year.
PEMEX has now stable finances, with positive trends, however, there is still room for
improvement.
• As a result of the implementation of a Business Plan focused on profitability, the
administration has very clear what will be the next steps taken to achieve financial
equilibrium. PEMEX reiterates its commitment to prioritize profitability and sustainability.
Content
A Snapshot of Mexico & PEMEX
Upstream
Midstream & Downstream
Overall Financial Performance
Business Outlook
27
5
Financial Outlook: Conservative Assumptions
5.2%
5.4%
5.5%5.6%
5.6%
5.2%
5.4%
5.6%
5.8%
2017 2018 2019 2020 2021
PEMEX’s Funding Cost
1. Primary surplus: MXN 8.4 billion
2. Reachable production goal: 1.9 MMbd
3. Conservative price projection: 42 USD/b28
2017
1. Source: Bloomberg (October) & PEMEX
• 2017 marks an inflection point in recent trends
Does not consider additional revenues from divestments
Maintain cost reduction discipline implemented in 2016. Increase in productivity is
documented individually
Additional cash flow from the execution of JVs will be used to improved the
company’s cash position
5558 59 60 61
42
54 5557 56
48
56
6871 71
40
50
60
70
80
2017 2018 2019 2020 2021
Crude Oil Price1
USD per barrel
BRENT futures
PEMEX
PETROBRAS
Financial Outlook: Business Plan 2016-2021
29
-32
-58-40 -49
-36
-133
-147
-102-94-84
-64
-1
43
-35
3
92
145
-200
-150
-100
-50
0
50
100
150
2009 2011 2013 2015 2017 2019 2021
Financial BalanceMXN billion
Business Plan Improved
63
2
66
5 78
3
78
7
84
1
1,1
43
1,4
93
1,9
55
2,0
24
2,0
65
2,1
39
2,1
51
2,1
17
2,0
24
2,0
15
2,0
21
1,9
37
1,7
99
500
700
900
1,100
1,300
1,500
1,700
1,900
2,100
2,300
2009 2011 2013 2015 2017 2019 2021
Consolidated DebtMXN billion
Business Plan Improved
2929
• The improvement of PEMEX’s financials is not a zero-sum game. The initiatives in the
Business Plan allow the company to improve its future cash flow, while the Federal
Government’s earnings increase
