PEMEX Responds to Moody’sBy Pedro Alcalá | Mon, 08/02/2021 - 18:01
PEMEX announced its latest market results last week, considered by the NOC as good news that could act as a counter argument to the criticisms made by Moody’s in its recent credit rating downgrade.
The NOC reported that its total losses during the first semester of 2021 were reduced by 96.2 percent when compared to the same period last year, from US$30.530 billion to US$1.157 billion. Its total earnings also increased 42.8 percent when comparing these two periods, currently totaling US$33.470 billion. PEMEX director Octavio Romero Oropeza highlighted the positive nature of these results. National sales increased 34 percent, while earnings from exports increased 54.4 percent. PEMEX’s EBITDA levels reached US$5.677 billion during the first semester of 2021, which represented an increase of 121.6 percent over the same period last year. Average crude oil production remains at 1.73MMb/d, while total debt levels increased 0.9 percent. PEMEX also reduced its average cost per barrel produced by 20.7 percent, from US$14.06 to US$11.15.
Romero Oropeza went on the defensive in regards to Moody’s for its credit downgrade of PEMEX, referring to it as “an act lacking in professionalism and ethics; in summary, even shameful.” He also claimed that the rating agency’s methodologies present contradictions. These ideas were expanded upon in an official response published on the NOC’s twitter account. In it, PEMEX expresses a total disagreement with Moody’s choice, claiming that they did not receive the technical analysis support documentation and the projection and calculation support documentation that the agency had promised to deliver, even though PEMEX did submit all relevant documentation to Moody’s as requested. The response also claims that PEMEX delivered all the documents to Moody’s which prove that the NOC’s debt payments and all the risks they represent would be absorbed by the Mexican government, which would counteract the high risk that these payments represented according to Moody’s analysis.
Elsewhere in the industry, there were a diversity of reactions to Moody’s actions. AMEXHI announced in their twitter account that representatives from Moody’s were present in their latest meeting. Industry analyst and Mexico Business Director for Dolphin Drilling Fernando Cruz commented on social media that Moody’s downgrade did not come as a surprise for him, and listed a number of measures that could be taken to improve the NOC’s rating. These measures included ceding operational control over Zama, further reducing PEMEX’s tax burden, the “emission of a long-term bond using federal government backup to relieve some pressure on the supply chain”, and the building of more associations with the private sector.