Mexico’s Pemex Slashes Losses 94% as Debt Hits 11-Year Low
Three Key Takeaways From Pemex Full-Year 2025 Results
Pemex reduced its full-year net loss by 94.2% to MXN 45.2 billion ($2.6B) from MXN 780.4 billion ($45.4B) in 2024, reaching near-breakeven in the fourth quarter with a loss of just MXN 147 million ($8.5M) — a fraction of the MXN 350.5 billion deficit in 4Q24 — as a lighter tax regime, lower asset impairments, and peso appreciation compressed costs across the board.
Total financial debt fell 13% to $85.2 billion — its lowest level in 11 years — after coordinated bond buybacks and refinancing with Mexico’s Finance Ministry, prompting upgrades from Fitch (to BB+, up three notches) and Moody’s (to B1, up two notches) and enabling Pemex’s first local debt issuance in six years, which was 2.5 times oversubscribed.
The national refining system processed 1.136 million barrels per day of crude in 4Q25, a 44.4% increase year-on-year, driven by the ramp-up of the Olmeca (Dos Bocas) refinery — which produced 211,000 barrels per day in December, more than four times its output a year earlier — though hydrocarbon production fell 7% annually to 1.635 million barrels per day, its weakest in 35 years.
What Happened at Pemex in Q4 2025
What Happened
Petróleos Mexicanos (Pemex) closed 2025 with a dramatically smaller hole in its books. The state oil company reported a full-year net loss of MXN 45.2 billion ($2.6B), down 94.2% from the MXN 780.4 billion ($45.4B) deficit posted in 2024 — a year in which the cancellation of MXN 156.5 billion ($9.1B) in deferred tax assets following Pemex’s conversion from a productive state enterprise to a public company had inflated losses.
The fourth quarter was where the improvement crystallized most sharply: Pemex lost just MXN 147 million ($8.5M) between October and December, compared with MXN 350.5 billion ($20.4B) in the same period of 2024. Management characterized the result as “practically breakeven” and cited cost discipline, lower impairments, and favorable foreign exchange as the primary drivers.
Revenue fell 8.6% to MXN 1.528 trillion ($88.8B) for the year, pressured by a 22.3% drop in export sales as the Mexican blend averaged $61.75 per barrel — down from $70.23 in 2024 — and export volumes plunged 28% to 581,000 barrels per day. The results were filed with the Mexican Stock Exchange (BMV) on Friday, February 27.
Key Drivers Behind Pemex 2025 Financial Performance
Key Drivers
Fiscal Reform and Cost Reduction
The new Derecho Petrolero para el Bienestar (Depebi), which consolidated several prior extraction and exploration duties into a single 30% hydrocarbon levy and eliminated the corporate income tax for Pemex, was the single largest factor in the loss reduction. Total taxes and duties fell 32.8% to MXN 195.2 billion ($11.3B), and the elimination of old extraction rights alone generated a favorable impact of MXN 47.5 billion ($2.8B).
Cost of sales declined 16.3% to MXN 1.488 trillion ($86.5B), reflecting lower imported product purchases — down MXN 96.9 billion ($5.6B) on reduced import volumes — a MXN 63.8 billion ($3.7B) reduction in fixed asset impairments, and a MXN 34 billion ($2.0B) favorable inventory valuation effect. In the fourth quarter alone, costs dropped 31%, contributing to the near-breakeven result.
Refining Surge and Olmeca Ramp-Up
The refining story was arguably the most operationally significant. In 4Q25, the National Refining System processed 1.136 million barrels per day of crude and produced 1.177 million barrels per day of refined products — increases of 44.4% and 41.5% respectively.
This marks six consecutive months above one million barrels per day of output since June 2025. Full-year gasoline production rose 22.7% and diesel output climbed 26.5%, advancing Mexico’s goal of reducing fuel imports.
The Olmeca refinery at Dos Bocas, Tabasco — Pemex’s $16.8 billion flagship project — was the primary catalyst. It produced 211,000 barrels per day in December 2025, reaching roughly 62% of its 340,000-barrel capacity and accounting for nearly 18% of total national refined product output.
Debt Reduction and Market Access
Pemex’s coordinated strategy with the Finance Ministry (SHCP) and Energy Ministry (SENER) included P-Cap operations totaling $11.3 billion, a bond tender offer of up to $9.9 billion, and $2.0 billion in early bond redemptions. Together, these moves smoothed amortization schedules through 2028 and pushed total debt down to $85.2 billion — 13% lower than 2024 and 19% below the 2018 peak.
Supplier debt also shrank 14% to MXN 434.5 billion ($25.3B) after Pemex paid MXN 582 billion ($33.8B) to contractors during the year. Both Fitch (BB+) and Moody’s (B1) upgraded Pemex during 2025, both with stable outlooks.
Pemex 2025 Financial Detail
Financial Detail
Revenue and EBITDA
Fourth-quarter revenue came in at MXN 362.4 billion ($21.1B), a 15.9% decline driven almost entirely by lower crude export receipts. For the full year, the MXN 1.528 trillion ($88.8B) top line was partially defended by a 1.1% increase in domestic sales, as higher prices for gasoline, diesel, jet fuel, LPG, and natural gas offset the collapse in export volumes.
EBITDA turned positive at MXN 59.9 billion ($3.5B) for the full year. The fourth quarter delivered operating income of MXN 20.3 billion ($1.2B), compared to an operating loss in the year-ago period.
Pemex described the result as reflecting greater cost discipline and a return to operating profitability at the quarterly level.
Production and Exploration
Hydrocarbon liquid production averaged 1.648 million barrels per day in 4Q25, a decline of 1.3% from the prior-year quarter, and 1.635 million for the full year — a 7% annual drop attributed to the natural decline of mature fields and weather disruptions. Crude-only output averaged 1.367 million barrels per day in 2025, nearly 8% below 2024, leaving Pemex far short of its 1.8-million-barrel target.
Natural gas production was a brighter spot. Output reached 3,879 million cubic feet per day in 4Q25, a 7.4% increase driven by non-associated gas fields including Bakte and Ixachi, with the full-year average at 3,677 million cubic feet per day.
Pemex authorized 17 exploratory wells during the year and confirmed seven discoveries totaling an estimated 170 million barrels of crude equivalent.
Balance Sheet and Financing
Total financial debt stood at MXN 1.53 trillion ($85.2B) at year-end, with 92% denominated in foreign currencies — predominantly U.S. dollars. Pemex returned to the local bond market in February 2026 for the first time in six years, placing MXN 31.5 billion ($1.8B) in certificados bursátiles with 2.5 times oversubscription and 32 basis points of price compression.
Proceeds will fund 2026 maturities. The government’s equity contributions exceeded MXN 253 billion ($14.7B) in the third quarter alone.
Pemex Management Signals and Strategy Outlook
CEO Víctor Rodríguez Padilla framed the results as proof that Pemex “has the capacity to organize its finances, raise its operational performance, and respond responsibly to the challenges of the energy environment.” He added that the company is building “a more solid, efficient, and competitive public enterprise,” signaling that the financial restructuring is viewed as structural rather than one-off.
CFO Juan Carlos Carpio Fragoso highlighted the debt management strategy, stating that the goal is “less debt, a better maturity profile, and greater liquidity.” The coordinated approach with SHCP and SENER — which Pemex now calls the Estrategia Integral de Capitalización y Financiamiento — is expected to remain in place through 2026, with freed-up cash flow redirected to productive investment.
On the exploration front, Pemex has now signed 11 mixed contracts with private sector partners under the framework established by the 2024 constitutional energy reform, with a second tranche in progress. The contracts target approximately $8 billion in private investment and aim to add up to 450,000 barrels per day by 2033, with Pemex retaining at least 40% economic participation and full sovereignty over hydrocarbon resources.
What to Watch Next for Pemex
What to Watch Next
The mixed-contract program is the most important structural catalyst on the horizon. With 11 deals signed and a second batch expected before mid-2026, execution will determine whether Pemex can arrest the production decline that has now persisted for over two decades.
The government’s target of 1.8 million barrels per day by the end of the sexenio requires reversing a 7% annual drop — a tall order that will depend heavily on private capital and technology inflows through these contracts.
Olmeca’s trajectory toward full capacity will be closely watched. The refinery ended 2025 at roughly 62% utilization and management expects to push toward 340,000 barrels per day. Every incremental barrel processed domestically reduces import dependence and improves the downstream margin story, but the plant has had intermittent shutdowns and technical challenges since its June 2024 startup.
On the debt calendar, Pemex faces significant maturities in 2026–2028 that the recent buybacks and the February certificados bursátiles issuance are designed to address. With Pemex dollar bonds having returned approximately 24% in 2025 according to Bloomberg data — more than double the Latin American corporate debt average — continued sovereign support and market confidence will be essential to maintaining access to capital at improving spreads.
Pemex Key Figures Q4 2025 vs Q4 2024
| Metric | 4Q25 | 4Q24 | Δ YoY |
|---|---|---|---|
| Revenue | MXN 362.4 B | MXN 431.5 B | −15.9% |
| Cost of Sales | MXN 277.0 B | MXN 401.5 B | −31.0% |
| Operating Income | MXN 20.3 B | MXN −1.0 B | n.m. |
| Net Income (Loss) | MXN −0.1 B | MXN −350.5 B | −99.96% |
| Crude Processed (Mbd) | 1,136 | 787 | +44.4% |
| Petrolíferos Output (Mbd) | 1,177 | 832 | +41.5% |
| Liquid Hydrocarbons (Mbd) | 1,648 | 1,670 | −1.3% |
| Gas Production (MMcf/d) | 3,879 | 3,612 | +7.4% |
Pemex Full-Year 2025 vs 2024
| Metric | FY 2025 | FY 2024 | Δ YoY |
|---|---|---|---|
| Total Revenue | MXN 1.528 T | MXN 1.672 T | −8.6% |
| Cost of Sales | MXN 1.488 T | MXN 1.778 T | −16.3% |
| EBITDA | MXN 59.9 B | MXN 12.6 B | +375% |
| Net Loss | MXN −45.2 B | MXN −780.4 B | −94.2% |
| Total Debt (USD) | $85.2 B | $97.9 B | −13.0% |
| Mexican Blend (USD/bbl) | $61.75 | $70.23 | −12.1% |
| Liquid Production (Mbd) | 1,635 | 1,759 | −7.0% |
| Crude Exports (Mbd) | 581 | 806 | −28.0% |
Risk Factors for Pemex
Risks
Production decline remains the existential challenge. Hydrocarbon output fell 7% in 2025 to its lowest in 35 years, and crude-only production dropped nearly 8%.
Pemex’s 1.8-million-barrel target requires not just halting but reversing a structural decline driven by the maturation of legacy Gulf of Mexico fields. The mixed contracts with private operators are designed to address this, but their contribution — an initial 70,000 barrels per day, with 450,000 targeted by 2033 — remains speculative until wells are drilled and production ramps.
Oil price exposure is asymmetric. With the Mexican blend averaging $61.75 per barrel — already 12% below 2024 — any further deterioration in global crude prices would compress revenue without proportional cost relief.
Export volumes are already collapsing by design as Mexico prioritizes domestic refining, reducing the revenue buffer. At the same time, U.S. tariff risk on Mexican crude imports could threaten Deer Park’s economics, where the Texas refinery processes 80,000–120,000 barrels per day of Mexican oil.
Sovereign dependence is a structural constraint. The 2025 improvement was significantly enabled by government equity injections, a reformed tax regime, and coordinated refinancing — mechanisms that depend on Mexico’s fiscal capacity and continued political will.
With 92% of Pemex’s debt denominated in foreign currencies, the company remains acutely exposed to peso depreciation. And while the credit upgrades are positive, BB+ and B1 are still sub-investment-grade ratings that leave Pemex with limited standalone market access.
Mexican Oil and Energy Sector Context
Petróleos Mexicanos is Mexico‘s state oil company and the largest enterprise in Latin America by revenue, operating across the full hydrocarbon value chain from exploration and production through refining, petrochemicals, and commercial distribution. Created by President Lázaro Cárdenas’s 1938 nationalization decree, it operates seven domestic refineries — including the newly operational Olmeca plant at Dos Bocas — plus the 340,000-barrel-per-day Deer Park refinery in Texas, which Pemex acquired full ownership of from Shell in January 2022 for approximately $596 million.
The company is among the most indebted non-financial corporates in the world, though the 2025 deleveraging reduced financial obligations to $85.2 billion from a peak above $100 billion. A 2024 constitutional energy reform converted Pemex from an empresa productiva del estado to an empresa pública, granting it a new fiscal framework and enabling mixed development contracts with private operators. The administration of President Claudia Sheinbaum has maintained sovereign backing through equity injections and coordinated refinancing while opening limited upstream participation to private capital.
Pemex’s dollar bonds returned approximately 24% in 2025, the best performance among Latin American corporate issuers and more than double the regional average, according to Bloomberg data. The company’s securities trade on the BMV and its bonds are widely held by international institutional investors. Fitch rates Pemex at BB+ and Moody’s at B1, both with stable outlooks, reflecting the implicit sovereign guarantee that investors view as increasingly explicit.