Pemex cut its second-quarter loss by 68% compared to the same period last year and made “gradual advances” in all other areas, according to a company report.

The company said its April to June losses were 52.79 billion pesos (US $2.8 billion).

In the second quarter of 2018, Pemex recorded a net loss of 163.2 billion pesos. Losses for 2019 now total 88.5 billion pesos.

Pemex said the main reason for the second-quarter loss was a decline of US $1.80 in the average price paid for a barrel of Mexican oil for export.

The heavily indebted oil company’s sales fell 14% in the second quarter to 376.6 billion pesos and earnings before interest, tax, depreciation and amortization declined 27% to 110 billion pesos.

But the company is optimistic.

“The trend is clear . . . Pemex is moving in the right direction,” finance director Alberto Velázquez told a conference call with analysts.

The state oil company was particularly buoyant about oil production figures even though they declined 10.2% compared to the second quarter of last year.

Crude production averaged 1.66 million barrels per day (bpd) compared to 1.85 million bpd a year ago.

However, Pemex highlighted that crude production was also 1.66 million bpd in the first quarter of the year and thus the output decline was halted.

That meant that the first goal of the new business plan presented last week had been met, the company said.

Pemex also said it is making progress in bringing 22 new fields on stream, stating that it expected crude production to increase by 70,000 bpd towards the end of the year.

Another positive for the beleaguered company was that crude processing increased to 595,000 bpd in the second quarter from 560,000 bpd in the previous three-month period.

Tax cuts and large injections of capital were announced last week as part of the new plan for Pemex, which has debt in excess of US $100 billion.

But analysts were skeptical about how effective the plan will be because it doesn’t propose resuming private-public partnerships that could help Pemex share its financial risk.

Fitch Ratings downgraded the company to junk status in June and Citigroup analysts said after the plan presentation that a downgrade for Pemex from another ratings agency is only “a matter of time.”

Source: El Financiero (sp), Financial Times (en)