Embed Size (px)
Citation preview
PEMEX Investor Day London - October 29, 2014
Boosting Financial Opportunities: Advantages Brought Forward by the Energy Reform
Mario Beauregard
CFO
Forward-Looking Statement and Cautionary Note Variations
If no further specification is included, comparisons are made against the same period of the last year.
Rounding
Numbers may not total due to rounding.
Financial Information
Excluding budgetary and volumetric information, the financial information included in this presentation hereto is based on unaudited consolidated financial statements prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”),
which PEMEX has adopted effective January 1, 2012. Information from prior periods has been retrospectively adjusted in certain accounts to make it comparable with the unaudited consolidated financial information under IFRS. For more information regarding the transition to IFRS, see Note 23 to the
consolidated financial statements included in Petróleos Mexicanos’ 2012 Form 20-F filed with the Securities and Exchange Commission (SEC) and its Annual Report filed with the Comisión Nacional Bancaria y de Valores (CNBV). EBITDA is a non-IFRS measure. We show a reconciliation of EBITDA to net
income on Table 33 of the annexes of the Financial Results of PEMEX as of September 30, 2014. Budgetary information is based on standards from Mexican governmental accounting; therefore, it does not include information from the subsidiary companies of Petróleos Mexicanos.
Foreign Exchange Conversions
Convenience translations into U.S. dollars of amounts in Mexican pesos have been made at the established exchange rate, as of September 30, 2014, of MXN 13.4541= USD 1.00. Such translations should not be construed as a representation that the peso amounts have been or could be converted into U.S.
dollars at the foregoing or any other rate.
Fiscal Regime
Since January 1, 2006, PEMEX has been subject to a new fiscal regime. Pemex-Exploration and Production’s (PEP) tax regime is governed by the Federal Duties Law, while the tax regimes of the other Subsidiary Entities continue to be governed by Mexico’s Income Tax Law. The most important duty paid by
PEP is the Ordinary Hydrocarbons Duty (OHD), the tax base of which is a quasi operating profit. In addition to the payment of the OHD, PEP is required to pay other duties.
Under PEMEX’s current fiscal regime, the Special Tax on Production and Services (IEPS) applicable to gasoline and diesel is regulated under the Federal Income Law. PEMEX is an intermediary between the Secretary of Finance and Public Credit (SHCP) and the final consumer; PEMEX retains the amount of
IEPS and transfers it to the Federal Government. The IEPS rate is calculated as the difference between the retail or “final price,” and the “producer price.” The final prices of gasoline and diesel are established by the SHCP. PEMEX’s producer price is calculated in reference to that of an efficient refinery
operating in the Gulf of Mexico. Since 2006, if the “final price” is lower than the “producer price”, the SHCP credits to PEMEX the difference among them. The IEPS credit amount is accrued, whereas the information generally presented by the SHCP is cash-flow.
Hydrocarbon Reserves
As of January 1, 2010, the Securities and Exchange Commission (SEC) changed its rules to permit oil and gas companies, in their filings with the SEC, to disclose not only proved reserves, but also probable reserves and possible reserves. Nevertheless, any description of probable or possible reserves
included herein may not meet the recoverability thresholds established by the SEC in its definitions. Investors are urged to consider closely the disclosure in our Form 20-F and our Annual Report to the CNBV and SEC, available at http://www.pemex.com/.
Forward-looking Statements
This report contains forward-looking statements. We may also make written or oral forward-looking statements in our periodic reports to the CNBV and the SEC, in our annual reports, in our offering circulars and prospectuses, in press releases and other written materials and in oral statements made by our
officers, directors or employees to third parties. We may include forward-looking statements that address, among other things, our:
• exploration and production activities, including drilling;
• activities relating to import, export, refining, petrochemicals and transportation of petroleum, natural gas and oil products;
• projected and targeted capital expenditures and other costs, commitments and revenues, and
• liquidity and sources of funding.
Actual results could differ materially from those projected in such forward-looking statements as a result of various factors that may be beyond our control. These factors include, but are not limited to:
• changes in international crude oil and natural gas prices;
• effects on us from competition, including on our ability to hire and retain skilled personnel;
• limitations on our access to sources of financing on competitive terms;
• our ability to find, acquire or gain access to additional reserves and to develop the reserves that we obtain rights to exploit;
• uncertainties inherent in making estimates of oil and gas reserves, including recently discovered oil and gas reserves;
• technical difficulties;
• significant developments in the global economy;
• significant economic or political developments in Mexico, including developments relating to the implementation of the Energy Reform Decree (as described in our most recent Form 20-F and Annual Report);
• developments affecting the energy sector; and
• changes in our legal regime or regulatory environment, including tax and environmental regulations.
PEMEX
PEMEX is Mexico’s national oil and gas company and was created in 1938. It is the primary producer of Mexico’s oil and gas resources. The operating subsidiary entities are Pemex - Exploration and Production, Pemex - Refining, Pemex - Gas and Basic Petrochemicals and Pemex – Petrochemicals. The main
subsidiary company is PMI Comercio Internacional, S.A. de C.V., Pemex’s international trading arm.
1
Content
The Mexican Energy Reform
Financial Implications of the Energy Reform for PEMEX
Looking Ahead: A Promising Future
2
The Implications of the Energy Reform for…
…the Mexican economy
…the industry …PEMEX
3
Mexico´s Energy Reform to Fuel Growth and Productivity
1. Source: World Bank- World Development Indicators.
2. Source: INEGI.
9.98%
6.43%
5.15%
4.33%
3.60%
2.97%
2.77%
2.51%
2.36%
2.00%
0.71%
China
India
Chile
Argentina
Colombia
Brazil
Mexico
United States
Canada
Spain
Italy
GDP Annual Average Growth (1991-2013) Percent
4
-10
-5
0
5
10
15
1960 1970 1980 1990 2000 2010
1982-2013
Average: 2.3
1960-1981
Average: 6.9
100
150
200
250
1950 1960 1970 1980 1990 2000 2010
GDP Annual Growth Average in Mexico1 (1950-2012)
Total Productivity of Factors in México2
(Index, 1950=100)
11 Structural Reforms in 20 Months
1. Energy
2. Economic Competition
3. Telecommunications and Broadcasting
4. Tax
5. Financial
6. Labor
7. Education
8. Political-Electoral
9. Transparency
10. New Appeal Law
11. New National Criminal Procedures Code
All Reforms have been approved
by the Mexican Congress
The legislative process is over
Now its time for implementation by
the Executive
The 11 Reforms
5
Constitutional Reform (December 20, 2013)
The Milestones of the Energy Reform
6 1 SENER.
2 CNH.
3 PEMEX will be able to work on assignments and contracts during these 24 months.
Up to 24 months 12/21/2015
PEMEX3 as a State
Productive Enterprise
• The Ministry of Energy1 prioritized PEMEX’s request for exploratory
blocks and producing fields, and defined their dimensions. March 21 – August 13
2014
Round Zero &
Resolution
Secondary
Legislation
August 11
2014
• Approval of 9 new laws and amendment of 12 existing laws.
• Detailed distribution of responsibilities.
• Structure and process for awarding contracts.
Potential collaboration
agreements
(farm-outs, JVs)
August 13 2014
• PEMEX defined areas susceptible to collaboration agreements (JVs,
farm-outs, etc.).
Round One • The Ministry of Energy and the National Hydrocarbons Commission2
previewed the blocks that will comprise Round One.
October 2014
August 13 2014
• On October 7th, the new Board of Directors was formed.
• On October 14th, the following committees were established: Audit, Human Resources and
Compensation, Strategy and Investments, and lastly, Acquisitions, Leasing, Works and Services.
Updating an Outdated Energy Model
7
ANSIPA3
Regulatory entities
Operating companies
CENAGAS5
Operating entities
A clear distribution of roles: owner, regulator,
operating entities and operating companies
The Ministry of Energy dictates the energy policy
and coordinates the regulatory entities through the
Coordinating Council of the Energy Sector
The Ministry of Finance defines fiscal regime,
economic terms of contracts and manages resources
from exploration and production through the Mexican
Petroleum Fund for Stabilization and Development
1. Comisión Nacional de Hidrocarburos.
2. Comisión Reguladora de Energía.
3. Agencia Nacional de Seguridad Industrial y de Protección al Medio Ambiente del Sector Hidrocarburos.
4. Centro Nacional de Control de Energía.
5. Centro Nacional de Control de Gas Natural.
6. Comisión Federal de Electricidad.
4 1 2
Other
participants
6
Constitutional
Reform
Secondary
Legislation
Quick Take on the New Energy Sector in Mexico
Industrial Transformation
(Downstream &
Petrochemical)
Refining Natural gas
Transportation, storage and
distribution
CENAGAS1 Permits
(SENER)
Permits
(SENER)
Exploration and
Production
Assignments
Contracts
1. Production-sharing
2. Profit-sharing
3. Licenses
4. Services
+ Third Parties
Third Parties
Migration
• Possibility of direct assignment to PEMEX
• State participation (≥20%)
• Comply with international treaties
Transboundary
Hydrocarbon
Reservoirs
Regula
ted b
y t
he M
inis
try
of E
nerg
y a
nd
the C
NH
Regula
ted b
y t
he M
inis
try
of
Energ
y a
nd
the C
RE
PEMEX to
continue
commercialization
for the next
3 years and then
open to private
participation
Permits
(CRE2)
1 Centro Nacional de Control del Gas Natural (National Center for Natural Gas Control).
2 Regulation and permits for transportation, storage and distribution not related to pipelines, and for LPG retail will be granted by the Ministry of Energy (SENER) until December 31, 2015. 8
The End of the Monopoly and the Beginning of a New Era
9
Monopoly
Strong controls and
limitations on:
• Budget
• Strategy
• Management
Open market
Operational management
Financial aspects
Corporate governance
Value creation
Content
The Mexican Energy Reform
Financial Implications of the Energy Reform for PEMEX
Looking Ahead: A Promising Future
10
Monopoly
Strong controls and
limitations on:
• Budget
• Strategy
• Management
Open market
Operational management
Financial aspects
Corporate governance
Compensation scheme
Procurement
Budgetary autonomy
Financing activities
Pension scheme
Fiscal regime
11
Financial Implications of the Energy Reform for PEMEX
Financial functions
En
erg
y R
efo
rm
Advantages of the New Compensation and Procurement Regimes
12
Benefits of Centralization
• Unified processes, policies, and procedures
• Significant economies of scale
• Transparency and efficiencies
• A shorter procurement cycle
New Procurement Office
Convenience of the new
compensation regime
• Competitive vs. industry’s wages
• Result-oriented
• Retain and attract human capital
• Maintain overall wage expenses
Strategy
Procurement
Suppliers
The Fiscal Regime
Assignments
(Round Zero)
Contracts
(Round 1)
Signing
Bonus
• Contractual Fee for the
Exploratory Phase
• Royalties
• Compensation considering
Operating Income or
Contractual Value of the
Hydrocarbons
Licenses
Production-
Sharing or
Profit-Sharing
Contracts
Income
Tax
Hydrocarbons Revenue Law Income Tax Law
Industrial
Transformation
Exploration and
Production
Migration
Duties Oil Fund
SHCP
13
1. Simple
2. Resembles typical
contract tax scheme
3. Gradual reduction of fiscal burden
• Increasing cost recognition
• Decreasing profit sharing duty
2015 2016 2017 2018 2019 onward
70.00% 68.75% 67.50% 66.25% 65.00%
Efficient Allocation of PEMEX Budget and Debt Ceiling
CAPEX &
OPEX
Federal Budget Coordination
14
Before After
CAPEX
OPEX
Efficient budget allocation
for value creation
Debt ceiling autonomy
Expense Budget
15
Investment
Operation
15% 15% 14% 13% 11% 10% 10% 7%
27% 23% 21% 22º% 24% 23% 23% 24%
58% 62%
65% 65% 65% 67%
67% 69%
291.25 324.96
389.24 410.62 412.10
465.89 495.32
521.68
2007 2008 2009 2010 2011 2012 2013 2014
Other operating expenses Personnel Services and Pension Investment
2015 Expense
Budget
Investment
Operation
366
68%
174
32%
Billion MXN Exercised Budgeted
540
CAPEX Financing
16 * Estimated
Source: PEMEX Financial Statements
$5.14 $5.32 $1.59 $3.41 $4.75
$10.67
$19.29 $21.73 $19.10 $23.98 $25.51 $27.38
26.66% 24.49%
8.35% 14.20% 18.62%
38.95%
2009 2010 2011 2012 2013 2014*
Net Indebtedness (USD billion)
Net Indebtedness CAPEX Net Indebtedness as a % of CAPEX
• The investment budget of PEMEX has gradually increased
• The use of internal resources remains the main source of funding
• PEMEX is seeking new alternatives to optimize the use of capital
Total debt as of September 2014 is USD $74.0 billion
which represents 0.61x sales and 1.08x EBITDA
A Diversified & Well-Distributed Debt Structure
By Currency1 By Interest Rate1 By Instrument1 By Currency Exposure1
64%
9%
4%
1%
1% 20% 1%
Dollar EurosUDIS British PoundsYens PesosSwiss Francs
4.3 5.5
6.3 5.1 5.7 6.2
5.2 5.5 3.5 2.9
6.0
1.3 2.1 0.3 0.3
13.1
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 ---
Term Structure – Consolidated Debt2
Debt as of September 30, 2014, USD MMM
74%
26%
Fixed Floating
60% 20%
7%
10% 1% 2%
Int. Bonds Cebures
ECAs Int. Bank Loans
Domestic Bank Loans Others
76.2%
22.7%
1.1% 0.0%
Dollars Pesos UDI Euros
17 1 As of September 30, 2014. Sums may not total due to rounding.
2 Does not include accrual interest
Opportunities in Financing Instruments
18
31%
10% 50%
9%
Fund Raising in the Oil and Gas1
USD billion
Bonds Project finance
Bank loans Equity
1 Source: ThomsonONE
1. Gained financial flexibility
2. Interesting opportunities in the industry
that PEMEX is currently exploring
PEMEX Financing Program 2015
100% = USD 18.5 billion
85%
2% 13%
Bonds (national, international markets, ECA´s)
Project finance
Bank Loans
• International markets: 34.7%
• National markets: 42.2%
• ECAs: 8.1%
Expected Sources and Uses of Funds 20151
Price: 82.0 USD/b
Exchange rate: MXN 13.00/USD
Crude oil production: 2,400 Mbd
0.9 16.2
18.5
35.5 28.2
3.5 3.9
Initial Cash Resourcesfrom
Operations
Financing Total TotalInvestment(CAPEX)
DebtPayments
Final Cash
Sources
USD billion
Uses
USD billion
19
Net Indebtedness: USD 15.0 billion
• Internal: USD 8.5 billion
• External: USD 6.5 billion
1.Preliminary budget.
Potential Savings from a New Pension Scheme
20 1 According to 2013 Financial Statements
1,119.2
102
195.2
375.2
445.5
924.0
Pension Medical service Accruedobligations
Accrued obligations1
Thousand million pesos,
December 31st, 2013
Current
pensions
W/O rights
W/ rights 9,513 employees
Present
generation
477.2
Reform
objective
The Government offered to capitalize
PEMEX for a proportional amount of
the Pension Liability reduction that
results from the modifications of the
collective bargaining agreement.
Favorable modification of the Collective
Bargaining Agreement contemplate
• Gradual adjustment of pension
parameters for existing employees
• Adoption of a portable individual
account regime for new employees
Corporate Governance and Structure
10 members
Strengthen Corporate Governance
SENER SHCP
New Corporate Structure
Un
ifie
d C
orp
ora
te
Serv
ices
Finance
Procurement
Other
1 Do not have to be active public servants 21
State
Representatives1 Independent Members
• Flexible legal
framework governed
by the principles of
private law.
• A special regime for:
acquisition and
procurement,
compensation,
budget, debt,
subsidiaries and
affiliates.
Board Committees
Audit Human Resources
and Compensation
Strategy and
Investments
Acquisitions,
Leasing, Works
and Services
Upstream Downstream
Drilling Cogeneration Logistics
Human Resources
Content
The Mexican Energy Reform
Financial Implications of the Energy Reform for PEMEX
Looking Ahead: A Promising Future
22
Mexico: Sound Economic Policies
1. IMF Fiscal Monitor. October 2014
2. Moody´s.
49.0%
54.2%
65.6%
72.5%
93.1%
101.1%
105.1%
111.7%
128.7%
136.4%
245.5%
Mexico
Argentina
Brasil
Germany
United Kingdom
Spain
United States
Ireland
Portugal
Italy
Japan
Expected General Government Gross Debt1 (% of GDP)
Mexico: A well established Investment Grade2
23
1. Mexico’s economy is strong and stable
2. Moderate debt policy
3. Improved credit rating
PEMEX: An Attractive Partner
1. Source: Annual Reports and SEC Reports 2013.
45.27
25.09
12.86 10.91 10.33 5.95 4.16
PEMEX Statoil Chevron Petrobras Exxon Shell BP
Operating Margin Percent
Key Advantages
• Substantial reserve base:
• 2P: 20.6 MMMboe
• Prospective Resources:23.4 MMMboe.
• Key infrastructure to build upon Mexico´s growing energetic
requirements.
• Thorough knowledge of Mexico´s Energy market.
• Unmatched geological conditions to capitalize on the new oil North
American O&G Energy Block.
a) Data in real terms after adjustment for the effect of inflation.
b) Source: 20-F Form 2013.
6.44 5.09 5.38 6.12 6.84
7.91
2008 2009 2010 2011 2012 2013
Production Costsa,b
USD / boe
Production Costs1
USD / boe
7.91
8.51
9.24
11.48
12.19
12.35
13.16
14.35
17.1
17.22
PEMEX
Statoil
Total
Exxon
Eni
Conoco
BP
Shell
Chevron
PetrobrasCredit Ratings
Fitch Moodys S&P
BBB+ A3 BBB+
2013
24
Key Takeaways
A new, more flexible legal framework
The possibility to associate with third parties, diversify and share risk
An enhanced corporate governance and a new corporate structure
A new fiscal regime
Budgetary and debt ceiling autonomy
A competitive, result-oriented compensation scheme
A new pension scheme
More efficient and transparent procurement procedures
The implications of the Mexican Energy Reform for PEMEX
25
