Petróleos Mexicanos' (Pemex) Board of Directors unanimously voted to sell its 7.86% stake of Spanish oil company Repsol, the state-owned firm announced 4 June.
Pemex expects to net US$900 million as a result of its decision, selling the shares for $27.36, up from the 2011 purchase price of $27.16. Citibank and Deutsche Bank are managing the transaction, which is expected to close 5 June.
Its exit was due to low stock returns, Pemex said, while also expressing concerns over “differences with its corporate governance practices,” saying that its investment did not include the “mutual benefits Pemex expected” from the “industrial alliance.” The national oil company also noted that both Pemex and Mexico were absent from Repsol’s March business plan, showing the latter company's “lack of interest in the foundations on which that alliance was formed.”
Following Mexico’s historic energy reform, the divestment would free up funds for projects and investments with higher domestic economic value, Pemex said. Under the reform, Pemex will be able to partner with companies for the first time since 1938. The current monopoly as it stands now will effectively end, allowing Pemex to pursue foreign investments, partnerships, and technology previously unavailable to the national.
Pemex and Repsol have held a somewhat acrimonious relationship at times. In an August 2011 attempt to increase the two companies’ presence and influence on Repsol’s board, Pemex sided with fellow shareholder Sacyr-Villahermosa over Repsol, causing a bitter boardroom feud. Pemex and Sacyr later ended its boardroom pact, and, in January 2012, Pemex formed a “strategic industrial alliance” with Repsol. Cooperation in upstream and LNG operations were promised, and Pemex pledged to maintain stake between 5-10%. However, either could opt-out through certain actions or conditions after the passage of one year.
Photo of Pemex wellhead by Sarah Parker Musarra
Read more coverage of the Mexican energy reform: