Pemex, First Reserve Said to Near $500 Million Asset Deal

  • State-owned producer will lease back, operate facilities
  • Pemex said to have finalized similar deal with KKR last week

Petroleos Mexicanos and private-equity firm First Reserve Corp. are finalizing terms on a sale and leaseback agreement intended to provide the beleaguered state-owned oil producer with much needed capital, according to two people with knowledge of the discussions.

Pemex and First Reserve are set to sign an agreement valued at more than $500 million as soon as this week, according to one person familiar. As part of the agreement, First Reserve will buy midstream assets from Pemex and then lease them back to the Mexican producer, which will continue to operate the sites, according to the people, who asked not to be identified because they were not authorized to speak publicly.

The person also said Pemex has closed its similar $1.2 billion sale-leaseback deal with KKR & Co. and that the funds entered Pemex’s accounts as of last week. Reuters had reported Thursday that the KKR deal was close but not yet finalized. The KKR deal was also mainly for midstream assets, as well as a non-drilling oil platform in Tabasco, the source said, declining to name other specific facilities included in either agreement.

The two deals come as Pemex looks to raise immediate capital to pare debt during a difficult period. Pemex has recorded 14 straight quarterly losses, seen oil production decline for 11 straight years and had $93 billion in debt excluding pension liabilities as of the first quarter.

The company has said for several months it plans to sell assets and form joint ventures with private partners to generate cash and boost declining crude production. Pemex Chief Executive Officer Jose Antonio Gonzalez Anaya said in an April 19 interview at Bloomberg’s New York office that the company was looking at possible deals with KKR and First Reserve, saying at the time the potential sale and leaseback agreement with First Reserve would be worth "a bit more" than $500 million.

A spokesman for Pemex declined to comment on the status of the reported agreements. Greenwich, Connecticut-based First Reserve, which announced a $1 billion agreement with Pemex in April to mutually invest in Mexico energy infrastructure, did not return phone calls or messages seeking comment. New York-based KKR also did not immediately respond to a request for comment.

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