Financial Results 3rd Quarter 20073rd Quarter, 2007 de Resul… · Thousand barrels per day-4.7%...

October 29, 2007

Financial Results3rd Quarter 20073rd Quarter, 2007

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Forward-Looking Statementsand Cautionary Note

This report contains forward-looking statements. We may also make written or oral forward-looking statements in our periodic reports to the Mexican National Banking and Securities Commission and the U.S. Securities and Exchange Commission, in our annual report, in ouroffering 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: • drilling and other exploration activities; • import and export activities; • projected and targeted capital expenditures and other costs, commitments and revenues; and liquidity.

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; • limitations on our access to sources of financing on competitive terms; • significant economic or political developments in Mexico; • developments affecting the energy sector; and • changes in our regulatory environment• changes in our regulatory environment.

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 PEMEX’s most recent Form 20-F filing, as amended, with the U.S. Securities and Exchange Commission (www.sec.gov) and the PEMEX prospectus filed with the National Banking and Securities Commission (CNBV) and available through the Mexican Stock Exchange (www.bmv.com.mx). These factors could cause actual results to differ materially from those g g ( ) ycontained in any forward-looking statement.

The U.S. Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this document, such as total reserves, probable reserves and possible reserves, that the SEC's guidelines strictly prohibit us from including in filings with the SEC. Investors are urged to consider

l l th di l i F 20 F d d “Fil N 0 99” il bl f t M i N i l 329 Fl 38

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closely the disclosure in our Form 20-F, as amended, “File No. 0-99”, available from us at www.pemex.com or Marina Nacional 329, Floor 38, Col. Huasteca, Mexico City 11311 or at (52 55) 1944 9700. You can also obtain this Form from the SEC ‘s website, www.sec.gov. Investors are also welcome to review the annual report to the CNBV, available at www.pemex.com.

EBITDA and free cash-flow are non-US GAAP measures.

Content

Third Quarter Operating and Financial Highlights

Upstream

Downstream

International Trade

Financial Results

Other Relevant Topics

Questions and AnswersQuestions and Answers

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Financial Highlights: 3Q07

Billion pesos

Jul – Sep 2006

Jul – Sep 2007 Ch

Jul – Sep 2007

Billion dollars

287 Total Sales

2006 2007 Change 2007

288 -0.1%(0.3) 26.3

EBITDA (1)

Net Income (Loss)

229

30 (44)

(23)

(13)

206 -10.1%

(1.2)

18.8

• Fitch and S&P raised PEMEX’s long term foreign currency credit rating from BBB- to BBB and from BBB to BBB+, respectively.

• In the 3Q07 the net loss was the result of an increase in the foreign exchange loss, a decrease in the IEPS credit, and an increase in the cost of purchased products,

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as a result of external factors such as hurricane Dean and the attacks on PEMEX’s facilities.

(1) Earnings before interests, taxes, depreciation and amortization. Excludes IEPS.Numbers may not total due to rounding.

Operating Highlights: 3Q07

Production Change

Thousand barrels per day

2006 2007Jul - SepJul - Sep

• Crude Oil

• Liquid Hydrocarbons

p y3,698 3,449 (249) -6.7%

3,247 3,055 (192) -5.9%Crude Oil

• Natural Gas Liquids

Million cubic feet per day

451 394 (58) -12.7%

• Natural Gas

Million cubic feet per day

Thousand barrels per day

5,478 6,094 617 11.3%

1,544 1,458 (86) -5.5%

The decrease in prod ction of cr de oil as d e primaril to the decline of

• Refined Products

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• The decrease in production of crude oil was due, primarily, to the decline of Cantarell and the arrival of hurricane Dean. Additionally, the attacks on PEMEX’s facilities affected the production of petroleum products.

Numbers may not total due to rounding.

Content


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International Trade

Financial Results



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Upstream: Crude OilProduction Thousand barrels per day

T t l d il d ti-5 9% • Total crude oil production decreased by 192 thousand barrels per day:

H d li ht d il

-5.9%

1,036 1,028

3,247 3,055

– Heavy and light crude oil production decreased 8.3 and 3.0% respectively, primarily due to the arrival of hurricane D i A t d

2,211 2,028

Dean in August and Cantarell’s natural decline.

– This was partially t d b th 8 9%

32% 34%

Jul - Sep 2006 Jul - Sep 2007

compensated by the 8.9% increase in extra-light crude oil production, due to the completion of wells in the Lit l d T b t

68% 66%

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Light and Extra-lightHeavy

Litoral de Tabasco asset.


Upstream: Natural GasProductionMillion cubic feet per day

XX%11 3%

• Natural gas production increased by 617 MMcfd:

2 347 2,612

XX%

5,478 6,094

11.3%

- An increase of 352 MMcfd in associated gas production, as a result of greater volumes in the offshore

3,130 3,482

2,347 ,

J l S 2006 J l S 200 volumes in the offshore regions.

- A 11.3% increase in non-associated gas production,

43% 43%


due to greater production in the Northern region. 57% 57%

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Non associatedAssociated


Upstream: DrillingWells completedNumber of drilled wells

9.6%

19 15 • The number of exploratory wells was 15, a reduction of 4 compared to 3Q06 primarily

146 160

127 145


compared to 3Q06, primarily, due to lower drilling activity in the Burgos project in the Northern region.

p p

• Development wells totaled 145, representing an increase of 18 wells, due to increased activity in the

13% 9%

increased activity in the Aceite Terciario del Golfo and Ogarrio Magallanes projects.

Exploration

87% 91%

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ExplorationDevelopment


Upstream: Developments

Main developments during the third quarter of 2007• Completion of 4 development wells,

14 major and 9 minor workovers

Cantarell

• 14 major and 9 minor workovers,• pipeline completion to Akal TQ, and• Construction of pipeline from Akal TQ to platform TQ-1.

Programme for the fourth quarter of 2007g q• Drilling of 8 development wells, and• installation of the nitrogen recovery unit (NRU) in Ciudad Pemex;

which will commence operations during the first quarter of 2008.

• Completion of 5 development wells, • 1 major and 21 minor workovers,

Main developments during the third quarter of 2007

Ku-Maloob-Zaap

1 major and 21 minor workovers,• construction of pipeline KMZ-44,• completion of gas lift pipelines KMZ-21 and KMZ-22, and• injection of nitrogen to the Ku field, for pressure maintenance.

10/30External factors, not controlled by PEMEX, could affect the execution of the programmed activities.

Programme for the fourth quarter of 2007• Drilling 9 development wells.

Upstream: Developments

Collaboration

• During the third trimester of 2007, PEMEX subscribed a number of agreements of collaboration with Statoil, Shell, Petrobras, Chevron and Nexen.

Collaboration Agreements • Through these agreements PEMEX seeks to increase its knowledge

in subjects such as deep water technology, reservoir air injection into fields and sustainable development, to name a few.p ,

• During the third quarter of 2007, 16 national and international public tenders were announced for the execution of works and provision of services to facilities of Pemex-Exploration and Production in the Gulf

Public Tenders

services to facilities of Pemex-Exploration and Production in the Gulf of Mexico.

• The total estimated value of these tenders is Ps. 27 billion, and comprehend among others the follo ing orkscomprehend, among others, the following works:

• Overhaul of platforms and processing centers,• overhaul of facilities and complementary works,• provision of catering and hospitality services,

11/30External factors, not controlled by PEMEX, could affect the execution of the programmed activities.

• drilling of exploratory and development wells, and• chartering services.

Content


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Downstream

International Trade

Financial Results



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Downstream: Natural Gas Processing

5 6%

Dry gas productionMillion cubic feet per day

• The decrease in onshore natural gas processing was due to a decrease of 7.5% in the process of sour wet gas.

5 6%5 6%

3,4203,622

-5.6%On-shore natural gas processingMillion cubic feet per day

-5.6%

-4.3%

-5.6%

,

Jul - Sep 2006 Jul - Sep 20071,079 1,136

4,334 4,148

3,255 3,012


Natural gas liquids productionThousand barrels per day

-12.7%

451 39475% 73%

25% 27%

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Jul - Sep 2006 Jul - Sep 2007SweetSour


75% 73%

Downstream: Oil RefiningCrude oil processThousand barrels per day

-4.7%

482 434

1,278 1,217

• Total crude oil processing decreased by 4.7%, primarily due to maintenance and a decrease in crude oil and condensates

783796

J l S 2006 J l S 2007 received.

• During 3Q07 primary distillation capacity utilization rate


38% 36%

decreased from 83.7 to 79.7%.62% 64%

14/30Light Currents


Heavy Currents

Downstream: Petroleum ProductsProduction of petroleum products Thousand barrels per day Change

5 5%1 544 1 458

• During 3Q07

-5.5%

-2.7%-3.7%7 1%326 302

455 443316328

1,544 1,458

production of petroleum products decreased by 86 thousand barrels per

-7.1%-8.8%397

326 302435

Jul - Sep 2006 Jul - Sep 2007day.

• Production of LPG and fuel oil decreased

29% 30%

21% 22%12.3 and 7.1%, respectively.

Gasoline(1)

DieselFuel OilOthers(2)

27%

21% 21%

28%

15/30(1) Includes transfers from La Cangrejera.(2) Includes liquefied petroleum gas from Pemex-Gas and Basic Petrochemical and Pemex-Refining, jet fuel, furfural extract, among others.Numbers may not total due to rounding.

Others( )

Downstream: Variable Refining Margin and Franchises

Variable refining marginDollars per barrel

Number of franchised gas stationsAs of September of

8.52 4.51

-47.1% 4.6%

7,455 7,801

2006 2007Jul - Sep 2006 Jul - Sep 2007

• The decrease in the margin was primarily a result of higher international prices of crude oil.

• As of September 30, 2007, the number of franchised gas stations was 7,801

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Downstream: Petrochemicals ProductionPetrochemicals production Thousand tons

Change

1612,804 2,968 5.8%

32 2%

• During 3Q07, the increase in petrochemicals2 525

302271

122161, 32.2%

-10.4%

6 1% petrochemicals production was primarily driven by:

- an increase in the

2,5252,380


6.1%

11% 9%

4% 5% manufacturing of methane derivatives and byproducts, and

greater production of85%85%

- greater production of ethane derivatives.

Ethylene

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EthyleneAmmoniaOthers

Numbers may not total due to rounding

Content


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Financial Results

Other Relevant Aspects


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International Trade

Crude Oil Exports Volume of:(1)

Thousand barrels per dayExports distribution100% = Mbd

-0.4%1,689

United States of America

1,697 1,689 190261

1,435 1,50081%

Light% 89%

15% 11%


1%10%

8%Rest of America

g

Heavy

Mexican crude mix

Europe

Far East

85% 89%

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average price Dollars per barrel:

(1) At 60º F, does not include processing agreementsNumbers may not total due to rounding

57.1 64.3

International Trade: Other ProductsExports Imports

-5.6% 19.4%

Refined ProductsThousand

186 176 487408

barrels per day

-20.0% -2.5%Petrochemicals Thousand barrels 205 164

14 %

102105

Natural GasMillion cubic feet 34 119 423

494

-14.5%

20/30

per day

Jul - Sep 2006 Jul - Sep 2007 Jul - Sep 2006 Jul - Sep 2007Source: P.M.I.® excepting Natural GasNote: Preliminary figures

Content


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International Trade

Financial Results

Other Relevant Aspects


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Income Statement: Sales• Total sales remained stable; the decrease in exports of petroleum products was partially

compensated by greater sales in the local market.Billion pesos

Sales in Mexico Exports145.3

287.5

-0.1% 0.1% -0.3%

118.1 20.8 6.4

-10.8%2.2% -3.8%

Jul - Sep2006

142.3 127.0 14.2 1.1

0.3% -3.2% -27.4%

145 4145.4287.3

141.9Petro-l

Nat. G

Petro-h

Crude, &

Petro-l

Petro-h

120.7 18.5 6.1

Jul - Sep2007

127.4 13.7 0.8

22/30(1) Includes IEPS.Numbers may not total due to rounding.

Sales In México(1)

Exports leum products

Gas chem. gas & condensates

leum products

chem.2007

Income Statement: Costs and Operating Expenses

• The increase in operating expenses and costs was, primarily, due to higher costs of purchased products and an increase in the reserve for retirement payments.

Billion pesos

127.9287.5

++ += 109.4 5.9 12.7 15.9

o pesos

Jul - Sep 2006

-0.1% 6.6%5.5% 6.7% 22.3%

136.4287 3

+ += 115.4 6.3 14.7 19.4287.3

Cost of S l

Distribution Admin. Cost of the R f

Sales Costs d O

Jul - Sep 2007

23/30Operating Expenses

Sales Reserve for Retirement Payments

and Op. Expenses


Income Statement: Net Income

Billion pesos

• In the 3Q07 the net loss was the result of an increase in the foreign exchange loss, a decrease in the IEPS credit, and an increase in the cost of purchased products, as a result of external factors such as hurricane Dean and the attacks on PEMEX’s facilities.

287.5127.9

159.6 199.3 169.330.0

(39.7)

J l S

Billion pesos

-0.1% 6.6% -5.5% -16.5% 6.3%

Jul - Sep2006

-60.1%

287.3136.4

180 0

(15.6)

150.8 166.5 180.0

- = - = - =

Jul - Sep2007

(13.5)

Costs & CFR(1) & Income Taxes & Sales Operating Net

24/30

Op. Expenses

Other Net Expenses (Revenues)

before Taxes & Duties

Duties

(1) Comprehensive Financing Result. Numbers may not total due to rounding.

Income Income (Loss)

Balance Sheet

Assets

Change

Liabilities & Equity

Change

Billion pesos

Total Assets:

Change Change

Total Liabilities + 1,1858.2% 8.2%1,185 1,282 1,282

538618

404358Current

Debt

Equity:

12.7% -13.0%

504

618

710 766Fixed Reserve for Retirement

8.0% 14.9%

114176

14 65

439

112117

S 06 S 07

OtherOthersEquity:

Retirement Payments

-3.8% 54.5%

25/30

Sep 06 Sep 07Sep 06 Sep 07


Total and Net Debt

Total Debt Change Net Debt

Billion pesos

618 538 -13.0%

-23.8%

507387

Sep 06 Sep 0781

537476

23 7%

-11.4%

88%87%

Sep 06 Sep 07

Long Term• Total debt decreased Ps. 80 billion

81 62

Sep 06 Sep 07

-23.7%

88%13% 12%87%Long Term

Short term

100% 100%

470 million pesos, due to a reduction in short and long term debt.

• Net debt decreased Ps. 120 billion

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460 million pesos.


Content


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International Trade

Financial Results



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Other Relevant Topics (1/2)

• During the third quarter of 2007 letters of intent were signed with BNP Paribas Bank and Carbon Solutions Mexico to reduce more than 189 thousand tons greenhouse gas emissionsSustainable thousand tons greenhouse gas emissions.

• On October 16, 2007, the Ministry of Energy, through the National Energy Savings Commission, presented PEMEX with two recognitions during the 2007 National Renewable Energy Awards.

SustainableDevelopment

Presidential• On September 26, 2007, president Felipe Calderón, through a decree,

announced that any increase in the prices of magna gasoline, diesel,Presidential Decree

announced that any increase in the prices of magna gasoline, diesel,LPG and domestic electricity rates would be frozen during the fourthquarter of 2007.

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Other Relevant Topics (2/2)

• On September 10, 2007, six explosions occurred in Veracruz, affecting the following PEMEX facilities:

– sectioning valve in the Cactus-San Fernando natural gas pipeline

– pigtrap from the gas pipeline Zempoala-Santa Ana,

I id t

– isolating valve in the gas pipeline, Minatitlan-Mexico and in the LPG pipeline, Cactus-Guadalajara,

– isolating valve, LPG pipeline and pipeline in the municipality of La Balastrera, andIncidents La Balastrera, and

– aerial crossing section in the gas pipeline, Minatitlan-Mexico at Algodonera.

No personal injuries or material damages outside PEMEX’ facilitiesNo personal injuries or material damages outside PEMEX facilities were recorded. On September 18, oil and gas supply was resumed to the affected areas.

• On October 23, due to a sudden change in climate conditions at the

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, gCampeche sound, the drilling platform Usumacinta collided against the well Kab-101, causing a leak of oil and gas.

Content


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Financial Results



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