U.S. oilfield services firm Weatherford International said on Wednesday that oilfield activity in Mexico has normalized and it was starting to get paid after a new financial mechanism helped raise funds for state-run energy company Pemex to pay its suppliers after long delays.
Oilfield service companies had significantly reduced activities amid Pemex’s accumulation of billions of dollars in pending payments to contractors and providers in recent years. A payment mechanism approved by the government to secure up to $13 billion for companies involved in oil projects has since last year contributed to debt amortization.
“Right now, we’re just very pleased with the fact that activity levels have normalized, and we are starting to get paid,” said Girish Saligram, Weatherford’s CEO, on the company’s quarterly earnings call.
“We think that stability will continue on an activity level… So I think over the next few years, it will be a bright spot,” he added.
The total balance owed to Weatherford by its main customer in Mexico ended at about $283 million as of March 31, said the company’s Chief Financial Officer Anuj Dhruv, without identifying the customer by name.
Weatherford received a large payment in the fourth quarter and another in the first quarter from that customer, Dhruv said.
Since the changes were implemented, payments from Weatherford’s largest customer in Mexico have been like “clockwork,” Dhruv said.
“We expect this trend to continue. And so we’re expecting collections to come in Q2, as well as in the back half of this year,” he added.
Mexico’s government in August said it aimed to cease funding Pemex by 2027, when the company should become financially self-sufficient. Last year, some 250 billion Mexican pesos ($13 billion) went to pay contractors and providers, leaving Pemex’s accounts payable to providers at some $24 billion.
(Reporting by Arathy Somasekhar in Houston; Editing by Nia Williams)