PEMEX Investor Day Tokyo – November 10, 2014

Next Steps for the Successful and Sustainable Development of Mexico’s Most Promising Resources

Gustavo Hernández-García

PEMEX-Exploration & Production General Director

Content

Energy Reform in the context of Mexico´s transformation agenda

PEMEX´s Partnership Strategy

Initiative of Migration of current service Contracts to the new E&E Contracts

Farm Outs

Round One

1

Private

participation

Regulators

Changes to

PEMEX

Description

• The State retains ownership of sub-surface hydrocarbons

• Private ownership of hydrocarbons at wellhead conditions is allowed

• Four types of E&E contracts to be considered: service contracts, profit sharing, production sharing and licenses

• SENER (Ministry of Energy) will define areas to be tendered and create model contracts

• CNH (National Hydrocarbons Commission) will execute tender process and will manage contracts with bidders

• SHCP (Ministry of Finance) will define fiscal terms of contracts (royalties, tax rates, etc.)

• PEMEX will have budgetary autonomy

• Its organization and structure will be based on international best practices

• More freedom regarding procurement will be allowed

Key Reform Elements for Upstream

Source: SENER 2

Content

Energy Reform in the context of Mexico´s transformation agenda

PEMEX´s Partnership Strategy

Initiative of Migration of current service Contracts to the new E&E Contracts

Farm Outs

Round One

3

Optimal

• Keep core assets

• Strategic growth (DW and unconventional)

• A balanced E&E portfolio

The Benefits of Round Zero

Size of portfolio

Business

complexity

Too big • Limited options for growth

• Inability to meet goals

• Unavoidable production

decline

+

-

- +

• Complexity to prioritize

• Difficulty reaching efficiency

• Financial resources

restricted

• Size reduction is needed

Too small

4

Developing a Significant Amount of Resources

4.2, 17%

20.6, 83%

State

PEMEX

Mexico’s 2P Reserves:

24.8 Bboe

Mexico´s Prospective Resources:

112.8 Bboe 1

PEMEX will increase efficiency taking advantage of the existing infrastructure

These resources will allow PEMEX an organic growth

89.4

23.4

1. Include Conventional and Unconventional Resources

89.4, 79%

23.4, 21%

State

PEMEX

It represents 93

percent of

Proved Reserves

5

PEMEX will transform itself to be able to compete and maintain a leading position in a competitive landscape…

• Be the best investment option for the

monetization of Mexico’s hydrocarbon

resources and national development

• Continue to be one of the industry leaders

• Fast transformation to compete and

capture opportunities in an environment

with increasing technical complexity

• Strategic partnerships aimed at

maintaining PEMEX’s relevant position

PEMEX expectations post-Reform

• Human resources excellence

• Value-driven capital allocation

• Excellence on HSSE and Social

Responsibility performance

• Aggressive partnership

• Develop capabilities for complex projects

Strategic themes for E&E

6

JVs and JOAs hold 35% of Contracted Acreage and 71% of Total Reserves

PEMEX maintaining its leadership through JVs

Source: IHS 7

• A farm-out process will be implemented for select fields assigned to PEMEX in

Round Zero

• The farm-outs will enable the development of fields with high technical

complexity or high CAPEX requirements which otherwise would remain

underutilized

• Under the new legal framework, the existing contracts with the corresponding

contractors will be migrated into EEC

• By improving fiscal terms, contractors will gain access to additional resources,

currently classified as prospective or contingent, hence enhancing the reserves

and production for the contractor as well as earnings and taxes for the State

• PEMEX will develop technical and organizational capabilities to compete for

new blocks

• Capabilities acquired will allow to improve PEMEX’s position to compete for

blocks in future bidding rounds

Establish partnerships for

selected assigned fields to

PEMEX in Round Zero

Migrate the current E&P

Service Contracts (FPWC1

and EPIC2) into Exploration

and Extraction Contracts

(EEC)

Position PEMEX for

partnerships

in next rounds

PEMEX strategy in partnerships is focused on three main major objectives

1. FPWC. Financed Public Work Contracts

2. EPIC. Exploration and Production Integrated Contracts 8

The span of ~14 month which started after the enactment of the Reform will be key in the transition to an open market

Activity 2014 2015

Comments 08 09 10 11 12 01 02 03 04 05 06 07 08

PEMEX partnerships

Round One and subsequent

Round Zero results and

Round One publication

Definition of assets awarded to PEMEX and

assets to be tendered in Round One

Round One feedback

FPWC & EPIC Migration

Publication of terms and

conditions

Publication of model contracts between

Mexican State and operators

Terms and conditions

feedback

Bidding process and data

Room access

Bidders allowed to participate in the bidding

process. The ITT’s will be available by

phases according the type of play

Bidding process and

decision

Bidders submit proposals and bidding

process is undertaken

Mexico’s upstream sector future detailed timeline

1st stage 2nd stage

Shallow waters Extra-heavy oil Unconventional and Chicontepec Onshore Deepwater

Source: SENER 9

Upstream

Natural Gas and

Midstream

Description

• Cooperation in academic, scientific, technical and business areas, related to deepwater projects, revitalization of mature fields, offshore extra-heavy oil fields, and others upstream activities

• Exchange of experiences and best practices through visits, conferences and workshops

• Evaluation and cooperation regarding national and international business opportunities of mutual interest

• Identification and analysis of possible joint cooperation opportunities on the development of natural gas processing, transportation and storage projects, as well as liquefaction and regasification facilities;

• Exchange of experiences and best practices through visits, conferences and workshops

• Evaluate areas of common interest and cooperation related to the marketing and trading of products in international markets;

• Develop exchange programs of specialists through training programs

PEMEX intends to establish a cooperation framework with a number of entities, through MOUs and/or Collaboration Agreements (CAs)

Source: SENER

This strategy is aimed at exchanging technical knowledge, information, experiences, and practices regarding oil & gas opportunities

Activities

10

Safety &

Environmental

Human Capital

Description

• Exchange of best practices related to industrial safety and health at work

• Exchange experiences and best practices on the development and use of technology to reduce greenhouse emissions and on sustainability initiatives

• Cooperating and exchanging knowledge and experiences on the design and creation of learning and training programs that encourage human capital specialization, facilitating exchanges of professionals, technicians and specialists including study visits on agreed matters of interest, as well as exchange of best practices on talent management

• Organizing joint conferences, seminars, workshops, meetings, training sessions, outreach and educational programs

• Facilitating the relationship amongst representatives of academia, industry and government to promote best practices and technical solutions to matters of common interest to the Parties; engaging in such other activities as the Parties consider appropriate

PEMEX intends to establish a cooperation framework with a number of entities, through MOUs and/or Collaboration Agreements (CAs)

Source: SENER

• MOUs and CAs constitute an expression of non-binding intent and are not intended to create, nor shall it be deemed to create, any legally binding obligations enforceable between the Parties

Activities

11

General

Purpose

Agreements

MOUs

Collaboration

Agreements

Cooperation

Agreement

Up

str

eam

PEMEX intends to establish a cooperation framework with a number of entities, through MOUs and/or Collaboration Agreements (CAs)

12

Northern Region Marine Regions

Southern Region

Pemex has diverse infrastructure strategically distributed along the different regions across the country

258 platforms

1 FPSO, 1 FSO

41,577 km of pipelines

1 Storage terminal

773 production facilities

9,449 operating wells

13

Short Term

Medium Term

Long Term

New era in Mexico presents significant opportunities to grow

2.6-3.0

• Round Zero

• E&E Contracts

• Round Zero plus future

Rounds

• E&E Contracts

Extra-heavy oil

Unconventional

Chicontepec

• Round Zero plus future

Rounds

• E&E Contracts

Extra-heavy oil

Unconventional

Chicontepec

Deepwater

Million barrels per day

2.4-2.6

2.3-2.4

14

The State decision to grant resources in

deepwater and shale areas allows PEMEX

to diversify its portfolio of E&P projects as

well as to improve capabilities to compete

and develop additional areas in the future

15

Content

Energy Reform in the context of Mexico´s transformation agenda

PEMEX´s Partnership Strategy

Initiative of Migration of current service Contracts to the new E&E Contracts

Farm Outs

Round One

16

Mig

rati

on

in

itia

tive

Resu

lts

Backg

rou

nd

E&P Service Contracts were created to promote private capital investment in key assets

25 to 35 years term including exploration, development and production

• Fee per barrel plus partial cost reimbursement

• Minimum CAPEX commitment

• Contracts were tendered using the fee per barrel as the bid awarding variable

Three rounds of EPIC were held with mixed results

South Region mature fields: Two of the three tendered areas created widespread interest, all of them were awarded

• North Region mature fields: One of the six tendered areas failed to create widespread interest; the area was not awarded

• Chicontepec tight plays: All of the six tendered areas were awarded

Given the new legislation, FPWC & EPIC will be migrated to joint ventures between PEMEX and operators, with E&E Contracts with the State

Asset valuation and JV model creation

• Negotiation and agreement between PEMEX and operator

• Authorization and signing of E&E Contract

An initiative, already in progress, is related to the migration of E&P Service Contracts into the new E&E Contracts

17

11 E&P Service Contracts will be migrated within the next 6 months

Asset Fields

Years under

contract

execution

Area

(km2)

2P Reserves

(MMBBOE)

3P Reserves

(MMBBOE)

Resources

(MMBBOE)

Production

(As of may 2014)

Investment

(USD MM)

Oil

(MBD)

Gas

(MMCFD) 2013

2014-

2015

Cinco

Presidentes

Magalla

nes 2.7 169 36 93 - 7.4 10 138 133

Bellota-Jujo Santua

rio 2.7 130 41 41 - 8.0 4 200 133

APPRA Altamira 1.8 1,625 6 13 13 2.1 0 50 72

APPRA Arenque 1.6 2,035 66 82 994 5.4 0 241 215

APPRA Pánuco 1.8 1,839 29 37 132 1.6 8 155 331

APPRA San Andrés 1.8 209 202 531 100 3.2 0 86 177

APPRA Tierra Blanca 1.8 358 36 60 37 1.4 0 137 103

Burgos Nejo 7.3 1,165 32 44 - 9.9 210 450 602

Burgos Olmos 10.5 358 13 45 - 0.0 3 20 108

Burgos Misión 10.6 1,972 68 81 - 0.0 110 110 179

APPRA Ébano 10.9 1,584 40 56 - 0.3 0 249 575

Total 11,444 569 1,083 1,276 39 345 1,836 2,628

Burgos

APPRA

Bellota-

Jujo

Nejo

Misión

Olmos

Ébano

Panuco

San Andrés

Altamira Aranque

Tierra Blanca

Magallanes

Santuario

Cinco

Presidentes

18

Asset Field

Years under

contract

execution

Area

(km2)

2P Reserves

(MMBOE)

3P Reserves

(MMBOE)

Resources

MMBOE)

Production Historical

investment

(USD MM) Oil

(MBD)

Gas

(MMCFD)

Burgos Pirineo1 9.3 3,840 11 16 - 0 24.3 525.5

Burgos Cuervito1 10.6 231 58 68 - 0.65 30.6 311.1

Burgos Fronterizo1 10.6 231 31 35 - 0.41 26.6 270.4

Burgos Monclova1 7.3 3,358 3 4 - 0 17.9 490.6

ATG Amatitlán 0 230 368 929 252 0.1 0.1 -

ATG Miahuapan 0 128 88 279 101 0.3 0.4 -

ATG Miquetla 0.7 112 195 224 86 0.9 2.5

ATG Pitepec 0.1 230 440 1,049 252 0.1 0.1 -

ATG Humapa 0.7 128 260 503 157 1.1 2.1 -

ATG Soledad 0.7 125 179 281 128 3.4 8.1 -

Samaria Carrizo2 2.4 13 6 51 - - - -

Total 8,626 1,639 3,439 976 7 113 1,598

11 additional E&P Service Contracts will be updated during the second stage

1. Oil production is referred as condensate production

2 Suspended 19

Content

Energy Reform in the context of Mexico´s transformation agenda

PEMEX´S Partnership Strategy

Initiative of Migration of current service Contracts to the new E&E Contracts

Farm Outs

Round One

20

The JV process could occur within a wide variety of assets such as mature fields, extra-heavy oil and deepwater (1/2)

Fields Description

Rodador • Onshore fields producing for more than 10 years

Ogarrio • Require secondary-recovery and improved-recovery methods

Cárdenas – Mora • Access to capital to accelerate hydrocarbons recovery

Samaria (Tertiary)

Mature onshore

Mature offshore (shallow waters)

Assets considered for partnership with PEMEX Asset group (approximate location)

Bolontikú • Shallow water fields

Sinán • Producing fields for more than 10 years

Ek (UOJ) • Require secondary-recovery and improved-recovery methods

• Access to capital to accelerate hydrocarbons recovery

21

The JV process could occur within a wide variety of assets such as mature fields, extra-heavy oil and deepwater (2/2)

Assets considered for partnership with PEMEX

Fields Description

Ayatsil • Shallow water fields close to the Ku-Maloob-Zaap complex

Tekel • Extra-heavy oil in the range of 6.5 to 13.5° API.

Utsil • Ayatsil field under development. First production in the 4Q-2014

Kunah

• Non-associated gas fields located southward the Mexican GOM

• Water depth lower than 2,000 meters • Undeveloped fields

Piklis • Close to the Lakach field, the first Mexican gas field developed

in deepwater

Extra-heavy oil

Asset group (approximate location)

Trión • Light oil fields located at the Perdido Area in deepwater of the

Mexican GOM

Exploratus • Water depth greater than 2,500 meters

• Undeveloped fields

Maximino

Deepwater gas

Deepwater oil

22

Ministry of Energy

(SENER)

National

Hydrocarbons

Commission

(CNH)

Ministry of

Finance (SHCP)

Roles and responsibility

• Approves migration of assignments to E&E Contracts

• Select areas for bidding processes

• Develop technical design of exploration and extraction contracts and guides to execute bidding processes for areas

• Define prequalification criteria

• Participates in promotion events

• Prepare data rooms

• Issue bidding packages

• Execute bidding processes for fields and areas

• Subscribes the contract representing the State

• Management of exploration and production contracts with O&G companies

• Establish fiscal terms and economical conditions (royalties, taxes, etc.) of exploration and extraction contracts

• Defines bidding award variables

The Energy Reform has defined new roles for key authorities which set policies and rules in the sector

Authority / Company

Authorities responsibilities

23

Select JVs areas

• Determine areas that will be migrated to E&E contracts

• Determine whether PEMEX intends to have a sole operatorship role in the contract or a partnership strategy

According to the law, PEMEX will have key responsibilities in this process to ensure success in building JV partnerships

Assignment Migration with Partners

• Request to SENER to formally migrate entitlements to Exploration and Extractions contracts

• Prepare favorable opinion on technical, financial, execution and experience elements that legal entities should comply and be converted to technical criteria to be used in SENER’s bidding process

• Opinion on prequalification of partners in the bidding processes to be executed by CNH

Request migration

Favorable Opinion on

technical elements,

etc.

Opinion on candidate

prequalification criteria

24

Content

Energy Reform in the context of Mexico´s transformation agenda

PEMEX´s Partnership Strategy

Initiative of Migration of current service Contracts to the new E&E Contracts

Farm Outs

Round One

25

Shallow water

Strategy

• Access additional areas to complement portfolio to take advantage of technical and operational knowledge and existing infrastructure

Round One will focus heavily on partnerships for technology and execution capacity

Opportunities

Assets up for tender under Round One

Extra-heavy oil • Develop clusters to take advantage of existing infrastructure

Unconventional

and Chicontepec

• Oil and rich gas areas

• Existing infrastructure

Onshore • Management of mature fields through improved processes and existing infrastructure

Deepwater • Frontier exploration to diversify PEMEX portfolio

• Access to low risk areas

26

Both PEMEX and Partners can benefit from a JV in Round Zero and Round One assets (1/2) Expected value proposition from partners in a JV

Strategic Objectives

• Accelerate development of deepwater, extra-heavy oil and unconventional

projects

• Improve financial returns

• Gain access to new markets

• Acquire new technical and operational capabilities

• Minimize/share risk

• Improve project management and supply chain management skills in

complex projects and new plays

27

Why Mexico?

• Mexico is the 9th world oil producer with a

large and diversified endowment of resources

• Mexico is a country integrated to the global

dynamics, with a high diversity of international

trade agreements and member of the NAFTA.

Free flow of people and goods

• Existing local supplier base and proximity to

one of the more sophisticated supply industry

hubs in the world

• Macroeconomic and political stability for

investments

Why PEMEX?

PEMEX is a well established operator with long

history, good track record and experience, as

well as:

• Unparalleled understanding of the country’s

geology

• Knowledge of domestic E&P regulation

• Existing production infrastructure to expedite

commercializing

• Well established supply chain

• Expertise in stakeholder and community

management

Both PEMEX and Partners can benefit from a JV in Round Zero and Round One assets (2/2)

28

Investor Relations

(+52 55) 1944-9700

ri@pemex.com

www.ri.pemex.com