Grupo Mexico SAB (GMEXICOB), the country’s biggest resources company by market value, expects to double the amount of shallow-water rigs it leases to Petroleos Mexicanos as the state-owned oil producer boosts output.
Grupo Mexico is seeking to buy two more rigs known as jack- ups, Chief Financial Officer Daniel Muniz said yesterday by telephone from Mexico City. The company bought two rigs earlier this year for $355 million and two modular platforms for about $200 million, according to company filings.
Pemex, as the largest operator of shallow-water rigs is known, plans to lease about 12 jack-ups next year after delaying the production increases at some fields amid a shortage of the equipment. The crude producer is seeking to end a seven-year streak of annual output declines after last month boosting by 2 percent its average production to 2.579 million barrels a day.
Grupo Mexico’s size and flexibility allows it to respond to Pemex’s demands for rigs better than some competing contractors, Muniz said.
“It offers an extra value to Pemex that the company leasing you the equipment is not a small contractor with limited financing options,” he said. “When we ordered the jack-ups, we had to make a $400 million decision before we get any financing. Not everyone is able to do that.”
Muniz sidestepped a question about whether the company is interested in seeking projects where the contractor manages and operates fields in exchange for cash payments based on volume.
Pemex’s shallow-water exploration efforts have been diminished “amid a lack of equipment in the past two years,” Jose Antonio Escalera, deputy director for technical exploration at Pemex, said Sept. 11. “We can’t get our hands on all the jack-ups we want,” he said at the time.
Credit Suisse estimates the new equipment to begin contributing in 2014.
Grupo Mexico gets close to $30 million of annual earnings before interest, taxes, depreciation and amortization, a measure of profit known as Ebitda for each jack-up, Vanessa Quiroga, an analyst at Credit Suisse Group AG in Mexico City, wrote in a note today. The new purchases are “a clear sign that the company’s infrastructure branch wants to participate more actively with Pemex,” she wrote.
Grupo Mexico rose 3.8 percent, the most since July 27, to close at 44.72 pesos.
Grupo Mexico sold last week $575 million of debt due in 2032. The project bonds, issued through unit Mexico Generadora de Energia, rose to 101.84 cents per dollar from 101.53, pushing down the yield to to 5.35 percent from 5.37 percent.
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