Investor Presentation December 2017
Content 1 A Snapshot of PEMEX Upstream Midstream & Downstream Overall Financial Performance Business Outlook 1
O&G: The Industry Moving the World • According to the IEA, by 2040, crude oil demand is expected to grow 6% up to 103 MMbd, while natural gas consumption increases by 50% Btoe World energy 10.0 9.4 consumption 2014 9.0 100% = 9.4 Btoe 1 8.0 7.0 21% 6.0 5.0 12% 4.0 55% 3.0 12% 2.0 1.0 0.0 O&G 2 Coal O&G Coal Biofuels and Other Fuels 2014 Biofuels and waste waste Total 2 Other Consumption Industry Transport Other uses Non-energy use 1 Btoe: billion tons of oil equivalent 2 Includes geothermal, solar, wind, heat and electricity trade. 2 Source : Key world energy statistics & World Energy Outlook 2016, International Energy Agency,
PEMEX: The Most Important Company in Mexico 8 th Crude oil producer 8 th Drilling company 5 th Producer of petrochemicals in Mexico Main producer of oil, gas and refined products in Mexico 1 st Producer of phosphates in LATAM 9 Gas Processing Complexes 14 th Refining company worldwide Holder of 95% of the country's 74 Storage and distribution terminals 1P reserves Close to 1,500 tank trucks Key player in hydrocarbons logistics infrastructure 16 Ships with transportation capacity of 4,618 Mb More than 40,000 km of pipelines 15 th Logistics company in the world by assets 258 Operating platforms 9,000 Wells Largest Tax Contributor 98 th largest company 2 MXN 1.6 billion annual revenues 1 7 th Trading company in the world 1 Last five years average. 3 2 Source: Fortune 500 ranking.
Distribution of PEMEX’s Reserves 1 PEMEX holds 95% of Mexico’s hydrocarbon reserves MMMboe (billion barrels of oil equivalent) Prospective Reserves Resources 2 Basin Oil and Gas 1P 2P 3P Non Gas Conv. (90%) (50%) (10%) Conv. Southeastern 7.2 11.1 14.5 11.6 Burgos Sabinas Tampico 1.0 3.4 6.0 3.3 Misantla Deep Sea Tampico- Exploration Burgos 0.2 0.3 0.4 1.5 Misantla Yucatan Gulf of Platform Mexico Veracruz 0.1 0.2 0.2 0.6 Sabinas 0.0 0.0 0.0 0.4 Veracruz Deepwater 0.1 0.2 1.1 6.0 Southeastern Total PEMEX 8.6 15.1 22.1 18.2 5.2 Development and Exploration Exploitation Projects Projects 1 As of January 1, 2017. Numbers may not total due to rounding. 2 Prospective resources assigned to PEMEX in Round Zero Note : As of January 1, 2017. 1P includes discoveries, developments, revisions and delineations.3P replacement rate only considers new 4 discoveries. Reflects reserve replacements conducted by PEMEX.
2017 Achievements • Trion farm-out with BHP Billiton • Consortium formed by PEMEX, Chevron and Inpex was awarded Block 3 North in deep waters • PEMEX was awarded two blocks in shallow waters through consortia with DEA and Ecopetrol • Cárdenas-Mora & Ogarrio are PEMEX’s first two onshore farm-outs with Cheiron and DEA • Migration without a partner of the fields Ek and Balam in shallow waters • Improvement in fiscal regime for fields that were non-profitable after taxes • Joint venture with Air Liquide for the supply of hydrogen to our Tula refinery • The first Open Season offered capacity was 5 awarded to Tesoro
Key Highlights as of September 2017 • Average production platform in line with the annual target of 1,944 Mbd • Uninterrupted fuel supply throughout the country despite hurricanes and earthquakes • Accumulated net result increased by 107.2% • Accumulated operating income totaled MXN 174 billion (Jan – Sep 2017) • Administrative, distribution, transportation and sales expenditures remained stable • Implementation of crude oil hedging program to protect PEMEX’s budget against falls in oil prices • Divestiture of stake in Los Ramones II Norte gas pipeline 6
Content A Snapshot of PEMEX 2 Upstream Midstream & Downstream Overall Financial Performance Business Outlook 7
Upstream: Current Status and Challenges • PEMEX continues to be a main player in the O&G industry • The challenge has been replacing Cantarell -a giant field that produced 2 million barrels of crude oil per day- to stabilize and eventually increase production Crude Oil Production MXN bn Mbd 3,500 350 3,000 300 -44% 2,500 250 2,000 200 +173% 1,500 150 1,000 100 500 50 - 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q17 2Q17 3Q17 1 Other assets Ku-Maloob-Zaap Cantarell E&P Investment 1 Includes non-capitalized maintenance. 8 Source : PEMEX 2017
Industry Cost Leader • Exploitation strategies focused on shallow waters have allowed PEMEX to maintain very competitive production costs, as compared to most of its peers. • Lower production costs provide greater flexibility, especially under lower crude oil price scenarios. Production Costs a,b 9.4 (USD / boe) 7.8 2.7 2.3 7.9 8.2 6.8 6.7 6.1 5.2 5.5 2010 2011 2012 2013 2014 2015 2016 Production cost before taxes Taxes and Duties 2016 Benchmarking: Production Costs 1 (USD / boe) 16.27 Petrobras 13.15 Chevron-Texaco Eni S.P.A. 12.55 12.00 Connoco Phillips 10.92 Royal Dutch / Shell 9.89 Exxon Mobil 8.46 BP PEMEX 7.78 6.14 Total S.A. a) Figures in nominal values. 5.00 Statoil b) Source: 20-F Form (2016, 2014 1. Source: Annual Reports 9 & 2012). and SEC Reports 2016.
Upstream: New Production Frontiers • Underinvestment and limited access to know-how has restricted intensive exploitation of new complex frontiers Deepwater Infrastructure 1 Shale Potential 2 1 Source: National Geographic 2 Source: CNH with information from North Dakota Department of Mineral Resources, Oklahoma Geological Survey, Texas Railroad 10 Commission, Bureau of Ocean Energy Management, Oil & Gas Journal
Upstream: Business Plan • With profitability as its ultimate goal, the Business Plan contemplates increased production and investment through different business schemes such as JVs and farm-outs to maintain and gradually increase the production platform • Aggressive farm-out program • Development of fields that are profitable for the country and which, • Concentrates on assignments that are Business under similar fiscal conditions than Improved profitable after taxes Plan privates, are profitable for PEMEX Scenario Scenario after taxes • Incremental income from farm-out production is shared between PEMEX and the Federal Government Crude Oil Production 1 Mbd 316 267 257 2,500 195 Improved 2,000 (Business 2,601 2,577 2,548 Plan) 1,500 2,533 2,522 2,429 2,267 2,154 1,944 2,141 1,951 1,982 2,017 1,000 PEMEX production 500 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 11 Includes PEMEX’s production -estimations sent to the Ministry of Finance on September 2017- and others -as considered in the Business Plan 1 11 11 11 published in November 2016.
Upstream: Farm-outs at a glance 7 clusters Farm-Out Trion Cárdenas-Mora Ogarrio Nobilis-Maximino Ayín-Batsil 7 clusters DEA Deutsche BHP Billiton Cheiron Holdings Winner Erdoel AG Will be part of a new bidding process (Australia) Limited (Egypt) (Germany) Initial payment 570 125 190 To be defined To be defined To be defined Additional royalty value 4% 13% 13% To be defined To be defined To be defined Cash tie-break payment 624 41.5 213.9 To be defined To be defined To be defined (MMUSD) 3P Reserves 485 93 54 502 359 392 (MMboe) Type of Hydrocarbon Light crude oil Light crude oil Light crude oil Light crude oil Heavy oil Medium Light oil Type of Field Deep waters Onshore Onshore Deep waters Shallow waters Onshore License & License & Type of Contract License Production-sharing To be defined To be defined Payment-In-Kind Payment-In-Kind 12 12
Upstream: Recent Developments (Trion & Block 3) Trion Perdido Fold Belt – Block 3 PEMEX’s Assignments Trión Farm-Out Round 1.4 Deep Waters Great White Oil and Gas Field 3D Seismic 28 Km 179 Km 1 Maximino Matamoros Block 3 North Exploratus 3 1 2 4 Trion Blocks awarded in Round 1.4 • BHP Billiton will invest up to USD 1.9 billion • Joint Venture with Chevron and Inpex before PEMEX makes additional • The contract considers 3,374 work units, equivalent contributions to USD 3.4 million • Joint operating agreement was signed on • No wells were committed for this contract March 3, 2017 • Contract was signed on February 28, 2017 • PEMEX expects to invest USD 600 million by the time initial production is achieved 13
Upstream: Recent Developments (Cárdenas-Mora & Ogarrio) Round 1.2 Round 1.3 Farmouts Cárdenas- Mora and Ogarrio Exploration blocks Mora Ogarrio Cárdenas Cárdenas-Mora Ogarrio • Cheiron Holdings offered a cash tie-break of • Deutsche Erdoel AG (DEA) offered a cash tie-break USD 41.5 million of USD 213.9 million. Of this amount, PEMEX will • Daily average production: 13.7 thousand receive USD 183 million • Daily average production: 15.6 Mboed barrels of oil equivalent per day (Mboed) • USD 166.5 million of PEMEX’s previous • PEMEX’s previous investments: USD 373 million investments were recognized • 3P Reserves: 53.97 MMboe • 3P Reserves: 93.19 million barrels of oil • Total expected investment: USD 95.2 million equivalent (MMboe) • Total expected investment: USD 127.3 million 14
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