- To date, Pemex has achieved the refinancing of 5 billion dollars of its debt maturities for this year
- Pemex guarantees liquidity and the availability of revolving credit lines for 7.85 billion dollars
- Pemex’s coverage will protect the company during 2020 when the price per barrel of Mexican Blend falls below 49 dollars
Petróleos Mexicanos reports that, as a result of the responsible and prudent management of its debt, it has reduced cash flow exposure risk, as its revolving credit lines in dollars are 100 per cent available. The total amount the company can immediately access through these credit lines adds up to 7.85 billion dollars. The company also keeps revolving credit lines in national currency for 20 billion pesos.
This availability of immediate cash flow helps to guarantee and strengthen Pemex’s financial position in preparing for stressful scenarios in the international markets.
On the other hand, to date, Petróleos Mexicanos has managed to refinance 5 billion dollars, which is over 70 per cent of its financing program for 2020. The debt amortization payments for the month of March are covered and the amount of amortizations payable during the second quarter (April to June) only adds up to 875 million dollars. This amount does not represent a payment risk (even in an event of stress, this figure only represents 11.1% of the amount available in the revolving credit lines). We reaffirm that the company is not in a position to default on any of its payments on financial liabilities.
Petróleos Mexicanos also guarantees payments to suppliers and contractors. Should the need arise, Petróleos Mexicanos can use a credit line with an availability of up to 539 million dollars from the productive chains program, which is working through Nacional Financiera and is supported by nine financial institutions.
The company also reports that, as a direct consequence of the drop in international oil prices, Petróleos Mexicanos received the first payment of the 2020 oil insurance coverage. This first payment covers the period between February 1 and 29, as the average price per barrel of Mexican Blend fell below 49 dollars.
It is worth noting that the oil insurance paid for by Pemex covers the protection of part of the company’s cash flow, through contracting Asian put-spread type options with monthly maturity rates, for the period between December 16, 2019 and December 15, 2020. The insurance covers a protection that activates whenever the monthly average oil price per barrel dips below 49 dollars per barrel and does not depend on the insurance coverage contracted by the Federal Government.
The insurance was contracted by means of a bidding process between financial institutions, in order to guarantee the best possible conditions for Pemex. This process was carried out jointly with the company’s Internal Audit department.
Therefore, this protection activated in February, when the international markets first saw the drop in oil prices because of Coronavirus. And on March 6, 2020, Pemex received the first monthly payment from the insurance.
This coverage program grants a greater reliability to Pemex’s income despite the volatility of hydrocarbon prices, which greatly contributes to the company’s efforts to comply with its operating and investment commitments.
Petróleos Mexicanos has executed its protocol to mitigate financial risks in the present climate of uncertainty and volatile financial markets, and it will closely monitor the evolution of international oil prices. In an exercise of transparency and responsibility towards our investors, we will also report periodically on the company’s financial performance.