Pemex net profit plunges 70% in Q2 despite debt reduction
Petróleos Mexicanos reported a net profit of 18.02 billion pesos ($1.04 billion) in the second quarter of 2026, marking a 69.7% decline from the same period in 2025, according to a filing with the Mexican Stock Exchange on Friday.
The state oil company attributed the profit decline to a 177% annual increase in financial costs, higher tax obligations, and an unfavorable exchange rate. The peso strengthened approximately 2.5% against the US dollar during the quarter, impacting the company's financial results.
Despite the steep profit drop, Pemex emphasized what it called "favorable results" in key operational and financial indicators. The company maintained its production base and increased industrial transformation while ensuring domestic market supply in what it described as a "highly volatile international environment."
Production and refining gains
Between April and June, Pemex's total hydrocarbon production averaged 2.477 million barrels of crude oil equivalent per day, representing a 4.6% annual increase. Liquid hydrocarbon production reached 1.658 million barrels per day, supported by strategic fields including Ixachi, Bakté, Itta, Koban and Maloob.
However, this production level remains below the government's target of 1.8 million barrels per day and represents a decline compared to 2025. The challenge is particularly significant given that Mexico's oil output peaked at approximately 3.4 million barrels per day in 2004 and has declined steadily to roughly 1.6 million barrels per day currently.
Crude processing at refineries increased 2.9% annually to 1.008 million barrels per day during the quarter. National sales of oil and petroleum products rose 9.8% to 1.471 million barrels per day, while revenue from sales and services jumped 30.3% to 510.4 billion pesos ($29.45 billion).
Operating profit reached 85.5 billion pesos ($4.93 billion), a dramatic improvement from an 11 billion-peso loss in the second quarter of 2025.
Debt reduction continues
Pemex reported total debt of $77.5 billion as of June 30, down 9.1% from year-end 2025. This marks the continuation of a significant debt reduction trajectory that has seen the company's obligations fall from a peak of $113.2 billion in 2020 through five consecutive years of decline, reaching $84.5 billion at the end of 2025.
The company noted that short-term debt now represents a smaller share of total obligations, easing immediate financial pressures and strengthening financial flexibility. Pemex stated this aligns with its commitment to achieving zero net debt. The government has set a goal for the company to reach financial self-sufficiency by 2027, eliminating the need for direct government funding support.
As part of its debt management strategy, Pemex prepaid $4.8 billion of 2026 obligations in 2025, reducing the outstanding balance to $13.4 billion. The company also made advance payments of $4.7 billion and $2.2 billion on loans scheduled to mature in 2027 and 2028.
Supplier debt restructuring
According to the company's stock exchange filing, Pemex had restructured 255.39 billion pesos ($14.74 billion) of supplier debt incurred in 2025 under an eight-year payment scheme as of June 30. In 2025, the company paid 582 billion pesos to suppliers, including approximately 192 billion pesos from a 250-billion-peso fund provided by the National Development Bank, reducing supplier debt to 434.4 billion pesos by year-end.
Government support and credit concerns
The Mexican government has provided substantial financial backing to Pemex in recent years, allocating between $137 billion and $150 billion to support the company between 2019 and 2025, according to estimates from the Center for Economic Budget and Research. President Claudia Sheinbaum asserted in February that the company had "recovered" after previous administrations "dedicated 36 years to trying to disappear" it between 1982 and 2018.
However, when Moody's downgraded Mexico's sovereign credit rating to Baa3 from Baa2 on May 20-21, 2026—placing the country at the lowest tier of investment grade and just one notch above junk status—the ratings agency warned that "continued support for Pemex will continue to limit fiscal consolidation."
Partnership strategy and production outlook
Pemex has increasingly directed production to domestic refineries as part of the government's push for energy self-sufficiency, even as stronger oil prices could make exports more lucrative, Reuters reported. The company is pursuing partnerships with private firms to boost output, though progress has been slower than anticipated.
One key collaboration is with Brazil's Petrobras, formalized through a memorandum of understanding signed on June 23, 2026. The two-year renewable agreement focuses on deepwater exploration and production in the Gulf of Mexico. Petrobras brings two decades of expertise in Brazil's pre-salt reservoirs and is recognized as a world-leading deepwater operator, operating in water depths exceeding 3,000 meters.
Mexico's 2025-2035 Strategic Plan includes 21 priority mixed contracts with private companies that could potentially boost production by up to 450,000 barrels per day. These partnerships represent a key element of the government's strategy to reverse years of declining output while the company works to reduce its financial obligations to bondholders, banks, suppliers and contractors.
