EUR 95.27 For Business Accounts Only

Pemex effect looks to be limited for now

Following uncertainty yesterday related to Pemex’s 2024 budget cuts and potential reduction in rig count, we understand that the initial effect looks to be limited to a handful of rigs (potentially four) for a short period only. Affected rigs look to be locally owned units, which suggest that international contractors (Borr Drilling and Paratus Energy) are not affected. Hence, we now see a scenario with less-direct effect for international contractors than feared by the capital market yesterday. Meanwhile, it seems too early to draw conclusions on any effect on Pemex’s budget and activity levels into 2025, which we believe will be highly sensitive towards oil prices and plans by the new management team. For contractors with Pemex exposure, the budgets cuts have put renewed attention on payment risk, which will be a key focus point ahead, as several contractors saw a buildup in receivables in Q2. In sum, based on our current assessment of the Pemex situation, we see little direct effect for international contractors, while near-term uncertainty in other markets (such as with Saudi Aramco) remains.