Pemex to bring suspended drilling rigs back online by H2 2025: management

Mexico's Pemex plans to bring suspended rigs back into operation by the end of 2025 to normalize its crude oil and natural gas production, management said Feb. 27.

Mexico's state oil and gas company has been struggling to maintain steady production as it battles an aging portfolio and financial pressures.

"We do not expect additional [rig] suspensions for this year; actually, we are expecting those suspended back online by the second semester of the year," said a Pemex executive during the company's Q4 2024 earnings call with analysts.

Pemex did not disclose how many rigs were suspended, but according to industry estimates the number could be as high as 12. This led to a sharp decline in Pemex crude and gas output at the end of 2024.

On Feb. 20, Borr Drilling, one of Pemex major contractors, said it was optimistic that drilling activity in Mexico, which was suspended in the last quarter of 2024, would resume in the coming months as payments to contractors normalized.

According to Borr calculations, Pemex has suspended contracts for 12 of the rigs it used to lease, including three of its own, which represents 45% of its fleet, Bruno Moran, Borr's chief commercial officer, said during the company's fourth-quarter earnings call with analysts.

Borr added that it had reached an agreement with Pemex to receive $125 million of the current debt of the company. The company has already received $105 million, and the remaining $20 million will be received soon. Borr expects Pemex drilling activity to resume as payments are normalized.

During the company's earning call, Pemex management mentioned that it is actively working on normalizing contractor payments, which currently stand at around $25 billion, noting that the company has resorted to bank loans to cover for the payments.

Pemex has been struggling with economic problems for years after its foreign currency financial debt more than doubled during past administrations to over $100 billion.

The slowdown in drilling activity, together with a declining mature portfolio, has led to a decline in output. In January, Pemex produced 1.597 million b/d of liquid hydrocarbons, including 384,000 b/d of light crude and condensates. This compares with a production of 1.8 million b/d in January 2024, according to Pemex data.

During the earnings call, Nestor Martinez Romero, head of exploration and production, attributed the lower production to a "natural decline" of the Maloob, Zaap and Quesqui fields; lower production rates at the Xanab project; the extension of compression times of wells with high complexity, and the end of pump equipment at the Ayatsil project.

President Claudia Sheinbaum, who took office in October, has vowed to "fix" the current situation of the company and has designed a scheme to pay suppliers while keeping production steady.

During the earnings call, Pemex chief financial officer Juan Carlos Carpio said that payments to suppliers will continue to normalize during 2025 after reaching roughly $20 billion in 2024.

The company continues to work closely with the finance ministry to make sure its financial commitments are met, management said.