Petrobras (PN): Petrobras-Pemex: A Deep Dive into Mexican O&G industry

Research evidence excerpt

Petrobras (PN): Petrobras-Pemex: A Deep Dive into Mexican O&G industry

though we have 12/28E 8.68 9.10

profiled in the reports Hokchi, Citla and Fieldwood, private upstream players have

nearly no representativeness in the industry, other than Pemex itself. Oil production Tasso Vasconcellos

peaked at 3.4mn bpd in 2004 and has declined since, driven by limited major Analyst

discoveries. The downturn has been exacerbated by Pemex’s weak financial tasso.vasconcellos@ubs.com

+55-11-2767 6683position, stemming from capital allocation issues and a high government take,

alongside market concentration, repeated production misses, and regulatory Matheus Enfeldt

instability, all of which have constrained investment and hindered recovery. Analyst

matheus.enfeldt@ubs.com

+55-11-2767 6975

Chasing the rebound: Mexico's potential new frontiers

1) Offshore deepwaters: it's the largest undeveloped O&G frontier, and Petrobras' Joao Barichello

Associate Analystarea of expertise. Notable assets include Trion (Woodside 60% op. stake and Pemex

joao-pedro.barichello@ubs.com

40%) and Lakach, a 100% Pemex non-associated natgas field with multiple failed +55-11-2767 6364

development attempts and now supported by Grupo Carso. 2) Offshore shallow-

waters: the core of current production, with ongoing discoveries, such as Zama

field. President Sheinbaum recently stated Petrobras could support exploration in

the matured Cantarell cluster, seeking deeper geological layers. 3) Onshore shale:

Northern basins has similarities with US' formations, with Mexico holding the 6th

largest shale gas reserves. However, it still lacks a clear regulatory framework.

Valuation: Buy; PTs of R$60/sh for PETR3/PETR4; US$22/ADR for PBR/PBRa

Highlights (R$m) 12/23 12/24 12/25 12/26E 12/27E 12/28E 12/29E 12/30E