Pemex to Announce New Debt Reduction Plan, CFO Newman Says

Updated on
  • State-owned producer’s debt was $180 billion at end of quarter
  • Company to present new business plan later this year

Petroleos Mexicanos will unveil a plan to reduce its swelling debt levels in the coming days, Chief Financial Officer Juan Pablo Newman said.

"It is a very important operation that falls within the framework of strengthening the financial structure of the company," Newman said during an interview at Pemex’s offices in Mexico City. "It was done with the objective to consolidate one of the company’s most important curves, which is the curve in dollars."

Newman said the state-owned oil company, which had $180 billion in total debt including pension liabilities at the end of the second quarter, is working on a plan with three components -- debt refinancing, prefunding and swaps. He said he couldn’t provide more details of the operation, including the size, as the transaction is still open.

Pemex has relied on government capital injections and asset sales to stem the accumulation of further debt this year. On Tuesday, it completed a $1.14 billion sale of its stake in pipeline operator Gasoductos de Chihuahua to Sempra Energy’s Mexico unit, known as Ienova. The money acquired in the transaction will be invested into several areas, including crude exploration and production, Newman said.

The company will also present a new business plan to improve its finances, possibly via additional asset sales, and to increase oil production, which is on pace to fall for a 12th straight year, he said. Pemex, which has about $90 billion in assets at book value, will present the plan to "give certainty to the markets, investors and companies" to assist them in "where they can allocate their investments," Newman said.

"Of $90 billion in assets that Pemex has, we are doing a rigorous analysis about what are the assets" that could potentially be sold, he said. "We are currently in the process of further analysis."

(Updates to add CFO quote in sixth paragraph. An earlier version of the story corrected the headline to change "restructuring" to "reduction".)
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