Slumping revenues pushed Mexico's Petroleos Mexicanos to a net loss of 87.4 bln pesos ($4.43 billion) in the third quarter, but the struggling state oil firm said on Monday it had cut back its hefty debt load, bucking the trend of recent years.
Pemex, as the company is generally known, held financial debts of $106 billion at the end of 2018, and it has been under intense pressure from international credit rating agencies to get its finances onto a more sustainable path.
Fitch in June became the first major credit rating agency to downgrade Pemex's bonds to so-called junk status. If Moody's or S&P follows suit with a junk designation, it would trigger forced-selling of Pemex bonds worth billions of dollars.
However, in a filing to the stock exchange with its latest operating results, the company said since the start of the year it had reduced financial debt by 6.1% to $99.6 billion.
Pemex's Chief Financial Officer Alberto Velazquez said that market operations in September to refinance more than $20 billion in liabilities had been central to achieving this.
"For the first time in over a decade, the company's net debt was reduced," he told a conference call. "That operation has lowered Pemex's refinancing risks in international markets and strengthened the company's short and medium-term finances."
Still, the figures showed substantial challenges remained.
Pemex's revenues fell 20.2% to 350.5 billion pesos compared with the third quarter of last year. Pemex's quarterly loss was the fourth in succession, and its biggest since the final quarter of 2018, when the company lost 125.5 billion pesos.
Lower prices for the Mexican mix of crude and a drop in export volumes ate into sales, while the company also absorbed foreign exchange related losses of more than 35 billion pesos during the quarter, Pemex said in its report.
Since taking office in December last year, President Andres Manuel Lopez Obrador has pledged to revive the state oil company, which has been struggling to cope with its crushing debts and years of declining oil production.
Rating agencies say fresh downgrades would have a knock-on effect on Mexico's sovereign creditworthiness.
Energy sector analysts are skeptical about Lopez Obrador's nationalist instincts on how to revive the oil and gas sector.
Many have expressed alarm about his decision to cancel joint ventures for Pemex with private companies known as farm-outs, part of his retreat from a change in the law by his predecessor that opened the industry up to more private capital.
Still, pressure on the company's bonds has eased since the government announced plans last month to cut Pemex's debt, with yields on its 10-year issue maturing January 2021 down by 110 basis points since Sept. 11.
Pemex reported a net profit of 26.8 billion pesos during the third quarter of 2018, an unusual result which the company said was aided by positive foreign exchange effects.
($1 = 19.7205 pesos at end of September)
(Reporting by Adriana Barrera and Ana Isabel Martinez; editing by Jonathan Oatis and Marguerita Choy)