Pemex posts profit after peso rally eased fuel import costs

Petroleos Mexicanos posted its first quarterly profit in two years after the appreciation of the peso helped reduce fuel import costs and oil prices rebounded from the worst rout in a generation.

The Mexican state oil giant said third-quarter net income, its first since the same quarter of 2018, was 1.4 billion pesos ($66 million), compared with a 44 billion-peso loss in the second quarter, it said Wednesday.

Mexican President Andres Manuel Lopez Obrador has promised to revitalize Pemex and the country’s flagging energy sector by boosting investment in production at onshore and shallow waters and building a new refinery in his home state of Tabasco. The profit at Pemex, as the company is also known, is a win for the populist who has sought to dial back on the opening of Mexico’s energy industry to international competition.

Pemex bonds maturing in 2027 rose as much as 0.4% after the earnings release, paring losses to just 1.2% on the day.

Pemex expects a big turnaround in oil output without providing a clear strategy to reverse long-term declines. Chief Executive Officer Octavio Romero estimated in mid-October that crude production will average about 1.71 million barrels a day this year, and reach 2.24 million barrels a day by 2024, when the government’s six year-term ends.

For the third quarter, Pemex reported that production of crude and condensates fell to 1.658 million barrels a day, from 1.673 million in the previous quarter.

Pemex’s financial debt rose to $110.3 billion, from $107.2 billion at the end of the previous quarter.