Pemex Posts First Quarterly Profit in Over a Year as Government Cash Flows In

Petroleos Mexicanos reported a second-quarter net profit of 59.52 billion pesos, about $3.2 billion, its first quarterly profit in more than a year. The result landed on July 28, 2025, the same day Mexico's Finance Ministry finalized a $12 billion debt offering engineered to shore up the state oil producer's battered balance sheet. Together, the two numbers mark the clearest sign yet that President Claudia Sheinbaum's financial backstop is loosening the cash squeeze that has been strangling Pemex.

Read the profit carefully before you cheer. It came out of the same company that lost roughly $2.3 billion in the first quarter and around $30 billion across all of 2024. What flipped the sign this time was not a gusher of new oil. It was the peso.

A profit built on currency, not crude

Pemex carries close to $99 billion in financial debt, most of it dollar-denominated. When the peso strengthens against the dollar, the peso value of that debt shrinks, and the company books a paper gain. That is most of what happened in the second quarter. The peso rallied alongside a broader move into risk assets, and a lower cost of sales did the rest. Strip out the foreign-exchange swing and the underlying business looks about as strained as it did three months earlier.

Production tells the honest story. Crude and condensate output fell 8.6% from a year earlier. Natural gas dropped 3.7%. Those are not rounding errors. They are the continuation of a long decline at aging fields that Pemex has struggled to arrest for a decade. A currency tailwind can turn a loss into a profit on paper. It cannot pull more barrels out of the ground.

The $12 billion deal doing the heavy lifting

The financing that closed the same day matters more than the earnings line. Mexico raised $12 billion, well above the $10 billion it originally floated, through dollar debt maturing in August 2030. The instrument is unusual: pre-capitalized securities, known as P-Caps, a structure borrowed from asset-backed finance and rarely aimed at a state oil company.

Here is how it works. Mexico set up an entity called Eagle Funding LuxCo to sell the P-Caps. The proceeds buy a portfolio of U.S. government debt, mostly Treasuries. Pemex then pledges that Treasury portfolio as collateral to borrow in the repurchase market and spends the cash as it needs. The securities do not sit on Pemex's balance sheet, and they do not sit on Mexico's either. They count as public debt of the Mexican government, held one step removed from both.

If Pemex cannot repay the loans, the banks seize the Treasury collateral and walk away whole. The P-Caps investors are left holding Mexican sovereign debt instead of their collateral. The sovereign, in other words, stands behind Pemex without stamping a formal guarantee on the paper.

That distinction is the whole point. A direct sovereign guarantee would blow up Mexico's own debt metrics and rattle its credit rating. The P-Caps route delivers the protection investors want while keeping the liability at arm's length. It is the first time a sovereign has used pre-capitalized trust securities to prop up a state-owned enterprise.

The market bought it

Investors did more than show up. Demand let Mexico price the deal at 170 basis points over Treasuries, down from initial talk of 200 basis points, and upsize it by $2 billion. Tighter pricing on a bigger book is the market saying it believes the government will not let Pemex fail.

Fitch Ratings had already signaled as much. On July 22 it placed Pemex on Ratings Watch Positive, flagging a possible upgrade into the BB category if the transaction went through. The offering went through. For a company that has spent years fending off downgrades, a credible path upward is a change in weather.

Sheinbaum's bet, and its limits

The backstop fits a pattern. Sheinbaum's administration handed Pemex roughly 80 billion pesos, about $4.26 billion, in the first quarter alone, most of it steered toward debt reduction. The P-Caps deal is the same instinct at larger scale and with more financial engineering. The government has decided Pemex is too central to Mexican sovereignty and public finances to be left to the market's mercy.

What the money buys is time, not a turnaround. Pemex also owes suppliers about $22.79 billion, a backlog that has choked service companies up and down the supply chain and slowed the drilling the company needs to stabilize output. Executives told investors they want to push crude production toward 1.8 million barrels a day using mixed contracts with private partners. That target depends on continued government support and on those private partners believing the checks will clear.

What to watch next

The second-quarter profit is real, but it is a currency story wearing an operations costume. The durable question is whether the fresh liquidity gets spent on the things that actually raise production and pay down suppliers, or whether it simply refinances yesterday's obligations at a better rate. If Fitch follows through with an upgrade and the supplier backlog starts to clear, the P-Caps will look like the moment Mexico stopped patching Pemex and started stabilizing it. If output keeps sliding and the peso reverses, the next quarter could swing right back into the red, and the $12 billion will have bought little more than breathing room.

For now, Sheinbaum has proven she can raise money for Pemex on decent terms without formally putting the sovereign on the hook. That is a genuine win. The harder job, turning a shrinking oil company into a growing one, is still waiting.