Investor Presentation 1 December, 2019 PEMEXs Main Issues 1 2 3 - - PowerPoint PPT Presentation

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Investor Presentation 1 December, 2019 PEMEXs Main Issues 1 2 3 - - PowerPoint PPT Presentation

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Investor Presentation 1 December, 2019 PEMEXs Main Issues 1 2 3 4 5 Crude Oil High Debt Crude Oil Fiscal Burden Production Fuel Theft Maturity Processing Decline Profile The strategy developed by the new administration is

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Investor Presentation

December, 2019

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The strategy developed by the new administration is focused on addressing this issues Fiscal Burden Crude Oil Production Decline Fuel Theft Crude Oil Processing High Debt Maturity Profile 1 2 3 4 5

PEMEX’s Main Issues

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Fiscal Burden 1

PEMEX’s Main Issues

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  • Gradual scheme that allows

federal public finances a transition process to adjust the federal revenues and does not impact the budget equilibrium of the Federal Government

4

This reduction will yield estimated savings around MXN 47 billion in 2020 and MXN 83 billion in 2021

Fiscal Year Rate Variation vs previous year 2019 65.00% Current Rate 2020 58.00% 7.00% 2021 54.00% 4.00%

Relief to the Company’s Fiscal Burden

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Fiscal Burden Crude Oil Production Decline 2

PEMEX’s Main Issues

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PEMEX has Managed to Stabilize and Increase Crude Oil Production

1 PEMEX crude oil production and condensates produced in fields. Does not include partners. During 3Q19, the crude oil and condensates series was adjusted to include the proportional part of Ek-Balam’s production that is assigned to the State. Thus, the series was adjusted since 1Q19

1,500 1,550 1,600 1,650 1,700 1,750 1,800 1,850 1,900 1,950 2,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Abr May Jun Jul Ago Sep

2018 2019

Jan Feb Mar Apr May Jun Jul Ago Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Ago Sep

  • Prom. 1,928 1,894 1,858 1,879 1,860 1,839 1,833 1,804 1,812 1,753 1,702 1,713 1,626 1,706 1,694 1,678 1,666 1,676 1,680 1,690 1,713

Daily Crude Oil Production1 Thousand barrels per day (Mbd)

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PEMEX Recorded a 1.2% Production Increase in 3Q19

1 PEMEX crude oil production and condensates produced in fields. Does not include partners. During 3Q19, the crude oil and condensates series was adjusted to include the proportional part of Ek-Balam’s production that is assigned to the State. Thus, the series was adjusted since 1Q19

  • Average figures for 3Q19 show

the beginning of the increase in production

  • After 14 years, an increase in

production is achieved. In 3Q19, production increased by 1.2%, as compared to 2Q19

  • The strategy of the new

Business Plan is yielding positive results and PEMEX is

  • n the right path
  • 1.8%
  • 2.4%
  • 5.3%
  • 2.9%
  • 1.8%
  • 2.4%
  • 5.3%
  • 2.9%

1,893 1,859 1,816 1,723 1,674 1,673 1,694 1T18 2T18 3T18 4T18 1T19 2T19 3T19

  • 1.8%
  • 2.3%
  • 5.1%
  • 2.8%
  • 0.1%

1.2%

Total Crude Oil Production, 2018-20191 Thousand barrels per day (Mbd)

Production Variation

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Authorization for Development of New Fields has been Shortened from 3 Years to Less Than 3 Months on Average

Discovery Start of development

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2019

Ayatsil Tsimín Ixachi Manik Mulach Cibix Valeriana Chocol Hok Suuk Teekit Cahua Octli Uchbal Pokche Koban Jaatsul Cheek Tetl Esah Xikin Tlacame Xux

The development of 20 new fields is already in execution

2018

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Vertical and horizontal integration of consortiums based on the nature of the project: activities with different providers were integrated

+

An estimated

26%

Fees and cost reduction from new contracts

Procurement strategy innovation Transparency and honesty Cost reductions

MXN 24 billion of savings

Infrastructure

Platforms Pipelines Electro mechanics works

+ +

Drilling Services Logistics Crew EMS

Drilling

+ + +

Significant Cost Reductions in New Exploration and Production Service Contracts

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New Developments will Allow to Increase Production by Year-end

Note: Estimated figures

30 20 10 50 40 Oct-19 Nov-19 Dec-19 Thousand barrels per day (Mbd)

Xikin-22 Cibix-1 Cibix-1001 Valeriana-1 Xikin-32 Quesqui-1DL Ixachi-1101 Ixachi-2 Ixachi-24 Ixachi-20 Ixachi-2001 Quesqui-1 Quejekbal-1 Mulach-10 Yaxche-100 Tetl-1001 Cheek-1 Tlacame-3 Manik-4 Xikin-45 Hok-44

70 60 80 90 100 Total Wells Development 11 Exploration 10

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1,792 1,682 1,866 2,069 2,321 2,528 2,697 2,832 2,975 2,989 2,891 2,759 2,802 21 28 14 19 41 65 118 165 177 190 220 239 223 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Pemex Partners

1,880 2,088 2,362 2,593 2,816 2,997 3,152 3,179 3,112 2,997 3,025 1,813 1,710

Crude Oil Production (Mbd)

Business Plan Operational Projections 2018-2030

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12 1 Considers budgetary investment and private investment complement 2 Considers a reduction in the rate of the Profit-Sharing Duty to reach 58% in 2020 and 54% in 2021

5.2 5.8 9.9 11.9 12.4 12.2 11.5 9.9 8.4 10.0 11.9 2.3 4.1 3.3 1.9 1.8 0.7 1.9 1.9 0.7 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Own revenues Fiscal burden reduction Federal Government support CSIEES

This graph shows investment according to IFRS (USD billion)

2

Business Plan CAPEX financing1 2020-2030 IFRS

11.5 13.7 13.7 12.6 12.4 12.2 11.5 9.9 8.4 10.0 11.9

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Fuel Theft 3

PEMEX’s Main Issues

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Results of the Strategy to Combat Fuel Theft

56 81 74 23 18 9 8 4 5 5 5 5 4 5 5 Average 2018 Nov Dec 01- 20 Dec 21- 31 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Fuel theft has decreased by 93% as compared to the average for 2018 Volume of fuel theft (Mbd)1

1 Source: Comisión Nacional de Seguridad, Informe Seguridad http://www.informeseguridad.cns.gob.mx/

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The Strategy to Combat Fuel Theft has a Positive Effect in COGS

Non-Operating Losses - Fuel Theft MXN billion 10.7 1.0 3Q18 3Q19 27.6 3.7 Jan-Sep 2018 Jan-Sep 2019

  • In 3Q19, non-operating losses

decreased by 91% as compared to 3Q18

  • Positive effect recorded MXN 9.6

during the quarter

  • In

Jan-Sep, accumulated savings amount to MXN 23.8 billion

Note: These figures were calculated based on the price at the PEMEX pump and do not include Value Added Tax (VAT) and the Special Tax on Production and Services (IEPS).

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Crude Oil Processing Debt Maturity Profile 4

PEMEX’s Main Issues

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Crude Oil Processing has been Under 40% for the Last Quarters

36% 33% 40% 47% 42% 40% 39% 41% 37% 30% 31% 30% 31% 37% 35% 35% 35% 39% 40% 40% 40% 594 544 652 767 685 662 646 670 604 485 508 492 507 601 572 570 570 645 657 659 654 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

  • 100

200 300 400 500 600 700 800 900 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19

Crude Oil Processing Capacity of Primary Distillation

Mbd

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With Scheduled Maintenance, Crude Oil Processing Increased by 10%

Crude Oil Processing, 2018-2019 Thousand barrels per day (Mdb)

  • Crude
  • il

processing in the National Refining System increased by 10%, as compared to 2Q19

  • During 3Q19, crude oil

processing recorded an increase

  • f 62 Mbd as compared to 2Q19,

and 152 Mbd, as compared to the last quarter of 2018 597 705 640 505 559 595 657 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19

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National Gasoline and Diesel Production is Increasing

Gasoline Production Thousand barrels per day (Mbd)

  • Higher crude oil processing

has allowed gasoline and diesel production to increase during the last quarters

  • The latter has had a positive

impact

  • n

the company's income statement.

Diesel Production Thousand barrels per day (Mbd)

189 235 209 161 180 196 202 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 114 144 120 90 119 141 143 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19

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Increased Gasoline and Diesel Production Reduces Imports

  • Purchases

for resale decreased by 31%, as compared to 3Q18 Purchases for Resale MXN billion 160.2 111.3 3Q18 3Q19

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612 590 788 1,021 1,137 1,150 1,166 1,166 1,166 1,166 1,166 1,166 1,166

27 320 320 320 320 320 320 320 320 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Crude oil processing at refineries (Mbd)

Dos Bocas Current NRS

1,163 1,470 1,485 1,486 1,486 1,486 1,486 1,486 1,486

207 201 316 382 444 596 614 618 618 618 618 618 618 117 143 197 251 291 402 445 438 438 438 438 438 438 185 144 164 233 232 239 169 169 169 169 169 169 169 119 123 133 155 197 253 265 272 272 272 272 272 272

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Petroleum products production (Mbd)

Other Fuel Oil Diesel Gasolines

1,163 1,490 1,493 1,497 1,497 1,497 1,497 1,497 1,497 629 610 811 1,021 +198 +201

Business Plan Operational Projections 2018-2030

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High Debt Maturity Profile 5

PEMEX’s Main Issues

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Funding and Liability Management Strategy

As part of PEMEX’s financing program authorized for 2019, and in line with the strategy to pay and refinance outstanding debt, the company announced a comprehensive funding and liability management strategy in the international debt capital markets. The

  • bjective was to manage of near-term maturities and improve its maturity profile. The

strategy considered the Government capitalization

  • f

an amount equivalent to USD 5,000 million. Three major components were considered during the designing process of the strategy:

New issue Repurchase of existing debt Exchange of existing debt

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Funding and Liability Management Strategy

The structure was designed by PEMEX for the efficient use of Government support and to improve the company’s financial position, minimizing market financing risk.

DEBT REDUCTION LIQUIDITY

IMPROVE AMORTIZATI ON PROFILE PEMEX used the capitalization provided by the Federal Government to purchase notes due

between 2020–2023. This represented a reduction in

  • utstanding debt

balance of USD 5,005.8 million A new issue in 3 tranches: 7, 10 and 30 years for the refinancing of short- term debt (Revolving Credit Facilities). Exchange offer to provide additional support to maturities in the short, intermediate and long part of the curve, in order to improve the company’s amortization profile.

Improvement of PEMEX’s financial position Decrease of refinancing risk Revolving Credit Facilities availability

  • f 97%
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New Issue

USD 38,000 MM USD 7,500 MM

Demand New Issue Over-subscription of 5.1 times the total issued amount

New Issue Summary Terms Total issued amount USD 7,500 MM Demand USD 38,000 MM Tranche 7 years 10 years 30 years Size USD 1,250 MM USD 3,250 MM USD 3,000 MM Coupon 6.49% 6.84% 7.69%

The new issue achieved several important milestones, including:

  • The largest issuance by any Mexican issuer in history.
  • Largest orderbook for a PEMEX new issue in history: at its peak, demand reached

USD 38 billion, which represents an over-subscription of 5.1 times the total issued amount.

  • The company managed an important reduction in the new issue Initial Price

Thoughts.

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Repurchase and Exchange of Debt

Repurchase

The strong investor participation allowed PEMEX to cancel debt up to an amount of USD 5,006 million with maturities between 2020 and 2023, a slightly larger amount than the previously established: Maturity Debt reduction1 2020 734.3 2021 2,781.6 2022 711.1 2023 778.8 Total 5,005.8

Exchange

To provide additional support to the amortization profile, PEMEX exchanged 3.7 billion dollars of bonds with maturities between 2022 and 2025, and 3.9 billion dollars of bonds with maturities between 2041 y 2046: Maturity Debt reduction1 2022 1,991.4 2023 1,069.0 2024 467.4 2025 209.0 2041 1,439.5 2044 730.5 2045 1,439.5 2046 277.2 Total 7,623.5

1 Million dollars

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Results from the Transaction

Note: Maturity profile is presented in billion of dollars.

2.4 6.7 6.3 5.8 6.5 6.1 3.8 9.1 9.6 4.2 3.4 4.6 27.9 2.5

2.0

0.7 2.8 2.7 1.8 0.5 0.2 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 → Debt Bank refinancing Debt repurchased from liability management exercise

  • One key result from the transaction was the

improvement on the amortization profile, lowering the average amortization to USD 6,000 million for the next years. The new administration has managed to refinance close to USD 28 billion of debt Most ambitious liability management exercise undertaken by a LatAm corporate in recent history

Before the exercise

9.4 9.1 8.5 8.3

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Investor Relations (+52 55) 9126-2940 ri@pemex.com www.pemex.com/en/investors