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“Antonio M. Amor” Refinery
Salamanca, Gto. Mex.
February 18, 2019
Petróleos MexicanosInvestor Presentation
Forward-Looking Statement & Cautionary Note
1
Variations
If no further specification is included, comparisons are made against the same realized 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 report and the annexes 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 in Table 32 of the annexes to PEMEX’s Results
Report as of March 31, 2018. Budgetary information is based on standards from Mexican governmental accounting; therefore, it does not include information from the subsidiary companies or affiliates of Petróleos Mexicanos. It is important to
mention, that our current financing agreements do not include financial covenants or events of default that would be triggered as a result of our having negative equity.
Methodology
We might change the methodology of the information disclosed in order to enhance its quality and usefulness, and/or to comply with international standards and best practices.
Foreign Exchange Conversions
Convenience translations into U.S. dollars of amounts in Mexican pesos have been made at the exchange rate at close for the corresponding period, unless otherwise noted. Due to market volatility, the difference between the average exchange rate,
the exchange rate at close and the spot exchange rate, or any other exchange rate used could be material. Such translations should not be construed as a representation that the Mexican peso amounts have been or could be converted into U.S.
dollars at the foregoing or any other rate. It is important to note that we maintain our consolidated financial statements and accounting records in pesos. As of September 30, 2018, the exchange rate of MXN 18.8120 = USD 1.00 is used.
Fiscal Regime
Beginning January 1, 2015, Petróleos Mexicanos’ fiscal regime is governed by the Ley de Ingresos sobre Hidrocarburos (Hydrocarbons Revenue Law). From January 1, 2006 and to December 31, 2014, PEP was subject to a fiscal regime governed
by the Federal Duties Law, while the tax regimes of the other Subsidiary Entities were governed by the Federal Revenue Law.
On April 18, 2016, a decree was published in the Official Gazette of the Federation that allows assignment operators to choose between two schemes to calculate the cap on permitted deductions applicable to the Profit-Sharing Duty: (i) the scheme
established within the Hydrocarbons Revenue Law, based on a percentage of the value of extracted hydrocarbons; or (ii) the scheme proposed by the SHCP, calculated upon established fixed fees, USD 6.1 for shallow water fields and USD 8.3 for
onshore fields.
The Special Tax on Production and Services (IEPS) applicable to automotive gasoline and diesel is established in the Production and Services Special Tax Law “Ley del Impuesto Especial sobre Producción y Servicios”. As an intermediary between
the Ministry of Finance and Public Credit (SHCP) and the final consumer, PEMEX retains the amount of the IEPS and transfers it to the Mexican Government. In 2016, the SHCP published a decree trough which it modified the calculation of the IEPS,
based on the past five months of international reference price quotes for gasoline and diesel.
As of January 1 2016, and until December 31, 2017, the SHCP will establish monthly fixed maximum prices of gasoline and diesel based on the following: maximum prices will be referenced to prices in the U.S. Gulf Coast, plus a margin that includes
retails, freight, transportation, quality adjustment and management costs, plus the applicable IEPS to automotive fuel, plus other concepts (IEPS tax on fossil fuel, established quotas on the IEPS Law and value added tax).
PEMEX’s “producer price” is calculated in reference to that of an efficient refinery operating in the Gulf of Mexico. Until December 31, 2017, the Mexican Government is authorized to continue issuing pricing decrees to regulate the maximum prices for
the retail sale of gasoline and diesel fuel, taking into account transportation costs between regions, inflation and the volatility of international fuel prices, among other factors. Beginning in 2018, the prices of gasoline and diesel fuel will be freely
determined by market conditions. However the Federal Commission for Economic Competition, based on the existence of effective competitive conditions, has the authority to declare that prices of gasoline and diesel fuel are to be freely determined
by market conditions before 2018.
Hydrocarbon Reserves
In accordance with the Hydrocarbons Law, published in the Official Gazette on August 11, 2014, the National Hydrocarbons Commission (CNH) will establish and will manage the National Hydrocarbons Information Center, comprised by a system to
obtain, safeguard, manage, use, analyze, keep updated and publish information and statistics related; which includes estimations, valuation studies and certifications. On August 13, 2015, the CNH published the Guidelines that rule the valuation and
certification of Mexico’s reserves and the related contingency resources.
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:
Accordingly, you should not place undue reliance on these forward-looking statements. In any event, these statements speak only as of their dates, and we undertake no obligation to update or revise any of them, whether as a result of new
information, future events or otherwise. These risks and uncertainties are more fully detailed in our most recent Annual Report filed with the CNBV and available through the Mexican Stock Exchange (http://www.bmv.com.mx/) and our most recent
Form 20-F filing filed with the SEC (http://www.sec.gov/). These factors could cause actual results to differ materially from those contained in any forward-looking statement.
This presentation contains words such as “believe”, “expect”, “anticipate” and similar expressions that identify prospective statements, which reflect PEMEX’s points of view regarding future events and their financial performance. Actual results could
materially differ from those projected in such prospective statements as a result of diverse factors that can be out of PEMEX’s control.
• exploration and production activities, including drilling;
• activities relating to import, export, refining, petrochemicals and transportation, storage and distribution of petroleum,
natural gas and oil products;
• activities relating to our lines of business, including the generation of electricity;
• projected and targeted capital expenditures and other costs, commitments and revenues;
• liquidity and sources of funding, including our ability to continue operating as a going concern;
• strategic alliances with other companies; and
• the monetization of certain of our assets.
• 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
successfully;
• 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;
• developments affecting the energy sector; and
• changes in our legal regime or regulatory environment, including tax and environmental regulations.
Disclaimer
2
The ongoing and expected measures of the Mexican Government
supporting PEMEX’s financial condition mentioned in this presentation
are the ones informed by the Ministry of Finance and Public Credit as of
the date of this report.
Any additional support mechanism will be properly disclosed through the
appropriate channels.
Content
1 Business and Financial Strategy
3 Midstream
4 Downstream
2 Upstream
5 Corporate Governance
3
The Federal Government’s interests are
aligned with those of PEMEX
The primary goal is to halt the decline in production and boost
energy security
PEMEX
Opex
• Incentivized Contracts
(CSIEE1)
• Lean cost structure
Capex
• Optimized resource
allocation
Corporate Governance
• Compliance
• Increased transparency
Dedicated Resources
• Army
• Navy
• Financial intelligence
Targeted Policy
• Stronger legislative
framework
• Enforced judicial
processes
• Involvement of local
governments
Federal Government
Profitability
and value
creation
Increased
revenues of
MXN 60 billion
41. Integrated Exploration and Extraction Services Agreements
The Federal Government has informed1 the
following financial support measures for PEMEX
Federal Government SupportAmount
MXN Billion USD Billion
Capitalization2 25 1.3
Cash-out of Pension Liability promissory
notes3 35 1.8
Additional Fiscal Relief 2019-2024 (cumulative MXN 15 bn each year)
15 0.75
Subtotal 75 3.85
Expected additional revenues from recovery
of fuel theft (≈80% of MXN 40 billion)32 1.6
Total 107 5.45
1
2
+
3
5
1 As of February 18, 2019
2 Included in the Federal Budget 2019, approved by Mexican Congress on 24 December, 2018
3 See Annex 1 for further details
Note: Exchange rate MXN 20.00 per USD 1.00
Source: SHCP and PEMEX
226
581 3 1
PEMEX 2019 InvestmentMXN Billion
E&P (78%)Industrial Transformation (20%)Logistics (0.4%)Drilling & Services (0.9%)Other (0.3%)
Due to the tax relief, there are more
resources for CAPEX
And the business continues to be centered on E&P
6
1 Additional Federal Government Support measure announced on 15 February, 2019
2 Budgetary allocation approved by Mexican Congress on 24 December, 2018
Source: SHCP; Federal Expenditure Budget (Presupuesto de Egresos de la Federación) for each year
Budgetary Capital Expenditures
USD Billion
MXN Billion
11.1205
13.7273
14.4288
2018 2019
Tax relief1
Budgetary
Capital
Expenditure
20192
+41%
Federal Government support measures will also
target reducing PEMEX’s financing needs in 2019
Congress Approved Net
Indebtedness
USD billion (MXN billion)
Budgeted Net Indebtedness1
USD billion (MXN billion)
New debt 12.22 (244.4) 9.35 (187.0)
Debt maturities 6.58 (131.6) 6.58 (131.6)
Net Indebtedness 5.64 (112.8) 2.77 (55.4)
15.2 11.3 11.2
3.7 3.0 0
5
10
15
2014 2015 2016 2017 2018E 2019E
Net Indebtedness USD billion
Financing needs
7
For 2019, PEMEX’s goal is to reduce net indebtedness to zero
1 Before the announcement of additional government support the objective for 2019 was to limit net indebtedness to the USD 2.77 billion financial
deficit (MXN 55.4 billion)
E = Estimated
4.6 6.6 9.6 9.3 8.7 8.5 6.6
4.2 9.0 7.5
4.3 3.6 0.3 0.1 0.0
23.7
2.3 1.8
1.0 0.5
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 →Debt Amortization Liability Management USD Liability Management EUR
Financial Debt Maturity Profile1
Outstanding debt as of November 30, 2018: USD 104.1 billion2
USD billion
LM 2016
USD
LM 2017
USD
LM 2018
USD
LM 2018
EURTotal
2018 0.7 1.6 2.3
2019 0.7 0.1 1.0 0.5 2.3
2020 1.0 1.0
USD billion
USD 5.6
billion
Liability Management transactions aim to decrease
PEMEX’s debt maturity profile
1 Revolving credit facilities not included
2 Estimated 8
In 2019, PEMEX will refinance USD 6.6 billion
Content
1 Business and Financial Strategy
3 Midstream
4 Downstream
2 Upstream
5 Corporate Governance
9
The primary goal for E&P is
to stabilize production
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Crude Oil Production Thousand barrels per day (Mbd)
Historical to 2018 BaseCompletions of wells WorkoverIncrease in the recovering factor of mature fields Decrease of the rate declineExploration
10
By 2024, crude oil production is expected to reach 2,400 Mbd
3,256 3,076 2,792 2,601 2,577 2,553 2,548 2,522 2,429 2,267 2,154 1,950 1,823 1,773 2,018 2,089 2,192 2,317 2,480
New E&P strategy is focused on shallow waters and onshore
fields where PEMEX has expertise and infrastructure
Manik
Cheek
Esah
Jaatsul
Koban
HokTeekit
Suuk
Xikin
Uchbal
Tetl
Pokche
Mulach
Tlacame
Cahua
Octli
Ixachi
ValerianaCibix
Chocol4 onshore
fields
~ 850 ~ 1,900 ~ 2,976
Reserves,
MMboe1
1P 2P 3P
11
Better allocation of resources will yield lower costs and
shorter production times
16 offshore
fields
1 Million barrels of oil equivalent
Source: Pemex Exploración y Producción
From December 2018, authorization of new fields development
has been shortened from 3 years to 1.5 months on average
Discovery
Start of
development
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Dec
2018
Jan-May
2019
Ayatsil
Tsimín
Ixachi
ManikMulach
CibixValeriana
ChocolHok
Suuk
TeekitCahua
Octli
UchbalPokcheKoban
JaatsulCheek
TetlEsahXikin
TlacameXux
12
This has had a positive impact on operational processes
PEMEX will begin development of 20 new fields in 2019
Incentivized Service Contracts (CSIEE)1 use staggered rates
according to reserve probability to incentivize exploitation
Production Profile for Calculating Fees
Mbd
F2
F3
F4
F1
Time frame, years
Proved
producing
reserves (1P)
Exploration
(prospective
resources)
Proved non
developed and
probable
reserves (2P)
Possible
reserves (3P)
The greater the risk, the higher the fee paid to third parties
F1 F2F3
F4
USD/barrel
13
Shared risks with third parties promotes optimization of exploitation
and increased production
1 Contracts for Integral Exploration and Exploitation Services (CSIEE)
2 F: Fee
Content
1 Business and Financial Strategy
3 Midstream
4 Downstream
2 Upstream
5 Corporate Governance
14
In 2018, PEMEX lost ≈ MXN 40 billion
to fuel theft1
30.8
50.1
66.3
40.0
26.3
66.3
0
10
20
30
40
50
60
70
2016 2017 2018 2019E
MXN billion
1 Includes gasolines, diesel and jet fuel
2 Compound Annual Growth Rate
E: Estimated
Source: PEMEX
First hand
sales
Sales to final
consumer
15
On a conservative basis, in 2019, PEMEX expects to recover 80% of
the MXN 40 billion, which will have a direct positive impact on EBITDA
The maximum level of fuel theft was recorded
on December 4th at 126 Mbd
56
81
74
43
312828
192024
29
17
95
1614
202118
1513
2017
21
14
2118
23
12
2024
28
17
38
17181916
33
20
5 63
128
108
62
86
1113
58
0
10
20
30
40
50
60
70
80
90
201
8N
ov
De
c 0
1-2
021-D
ec
22-D
ec
23-D
ec
24-D
ec
25-D
ec
26-D
ec
27-D
ec
28-D
ec
29-D
ec
30-D
ec
31-D
ec
01-J
an
02-J
an
03-J
an
04-J
an
05-J
an
06-J
an
07-J
an
08-J
an
09-J
an
10-J
an
11-J
an
12-J
an
13-J
an
14-J
an
15-J
an
16-J
an
17-J
an
18-J
an
19-J
an
20-J
an
21-J
an
22-J
an
23-J
an
24-J
an
25-J
an
26-J
an
27-J
an
28-J
an
29-J
an
30-J
an
31-J
an
01-F
eb
02-F
eb
03-F
eb
04-F
eb
05-F
eb
06-F
eb
07-F
eb
08-F
eb
09-F
eb
10-F
eb
Volume of Fuel TheftMbd
21/12/2018
Intervention in
Control Center
Source: http://www.informeseguridad.cns.gob.mx/ 16
In January, recorded fuel theft was 17.6 Mbd on average
Content
1 Business and Financial Strategy
3 Midstream
4 Downstream
2 Upstream
5 Corporate Governance
17
482 399 311 216
582 534456
396
1,065933
767612
2015 2016 2017 2018
Light Crude Oil
Heavy Crude Oil
370 310 246 198
322259
194 149
693569
441347
2015 2016 2017 2018E
Gasoline
Diesel & Jet Fuel
Crude Oil Processing
Mbd
Production of Petroleum Products
Mbd
The Refining Capacity Utilization Rate fell to
40% in 2018
E = Estimated 18
By end of 2019, the goal is to reach approximately 60% by increasing
maintenance in order to stabilize operations
In order to satisfy domestic demand, PEMEX imports
around 70% of total supply of gasolines and diesel
24% 21%
75%71%
1% 7%
2017-4Q 2018-4QE
Production
PEMEX Imports
Other importers
1,217 1,168 Demand
Pemex TRI is the only fuels producer in Mexico.
Mbd = Thousand barrels per day (Spanish acronym)
E = Estimated 19
Despite high import ratio, PEMEX has 92% market share in
gasolines and diesel
Gasoline and diesel
Mbd
Content
1 Business and Financial Strategy
3 Midstream
4 Downstream
2 Upstream
5 Corporate Governance
20
Proposed changes to the Law of Petróleos Mexicanos1
seeks to expedite the business decision-making process
21
Our Board of Directors will still be responsible for the operational
and financial strategy:
• Business Plan • Investments • Prices • Divestitures
❑ Our General Director will participate permanently in the meetings of
the Board of Directors without voting rights.
❑ All Board members will be subject to the provisions of the General
Law of the National Anti-Corruption System.
❑ Management will set and execute the business strategy in an integral
manner in accordance with the objectives of the National Energy
Policy
1 Any bill to modify the current the Law of Petróleos Mexicanos has to be approved by the Chamber of Deputies and the Chamber of Senators and
subsequently has to be enacted by the President of Mexico and published in the Official Gazette of the Federation.
• In addition to the MXN 25 billion capitalization, PEMEX will receive approximately
MXN 35 billion in Government support through the cash-out of the pension liability
promissory notes.
• The direct capital infusion will reduce PEMEX’s funding needs and provide extra
liquidity to support the CAPEX program.
• The first cash infusion was received on January 25th.
Month Payment DateCapital Injection
(MXN billion)Status
January 25/01/2019 9.4 Paid
February 20/02/2019 5.9 Pending
March 20/03/2019 6.2 Pending
April 17/04/2019 6.5 Pending
May 20/05/2019 6.8 Pending
Total 35.0*
* Total amount is MXN 34,887,250,549.40
Annex 1: Pension Liability promissory notes
cash-out
23
