It has been a week defined by motion for PEMEX. Investors fear the NOC’s plans to turn around its fate will not be enough even as the government contributes US$5 billion in capital and the king of the Mexican oil companies launched a tender offer to prepay a chunk of their US$14,7 billion in bonds. Meanwhile, crude oil prices are dropping again after last week’s rise, due to questions relating to Iran, China and the US.
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Investors have mixed reactions to PEMEX’s bond plan.
Even though PEMEX managed to secure US$5 billion dollars of capital as a government contribution, prospects still look dire: Fitch, Moody’s and S&P argue that this makes little difference. PEMEX is trying to turn the tide around by launching a tender offer to prepay as much asa third of their US$14.7 billion in bonds. They will also tender 15 public-private partnership contracts in November, which they hope will allow them to reach the estimated amount of production outlined in the 2020 economic package.
After a continuous rise culminating this week with news surrounding OPEC possibly cutting back their production, the state of Iran was suddenly boosted due to Trump’s firing of John Bolton who was the architect of the strong anti-Iran stance the US held. Moreover, the shaky relationship the US holds with China dropped the prices even further.
The private sector prepares to make big moves while PEMEX continues to struggle
Petrobal sets out to produce 20,000 barrels a day in 2020.
In a joint-venture with Fieldwood, Petrobal will invest US$700 million in the hopes of achieving this production amount. Currently, the private industry produces 30,000 barrels a day, so these predictions suggest a massive uptake in production for the Mexican private sector.
Everything the light touches is Talos’ offshore kingdom. Even though Talos decided to return half of the area where the Zama well is located, it still retains its ability to explore 232 square kilometers, with a whopping potential of between 400 and 800 million of BOE. It will also explore identified targets such as Xlapak and Pok-A-Tok, each with estimated resources in the range 75-150 MMBOE.
Cairn Energy prepares to start exploratory drilling this month focusing on Block 9 offshore.