UPDATE 1-Mexico’s Pemex cuts Q3 loss as oil prices rise

* Pemex posts 2.758 bln peso loss ($218 million) in qtr

* Higher export, domestic prices cut losses from yr ago

* Equity remains negative amid heavy borrowing, losses
(Recasts, updates with details from report)

MEXICO CITY, Oct 28 (BestGrowthStock) – Mexico’s state oil company
Pemex [PEMX.UL] reported a narrower quarterly loss on Thursday,
aided by higher crude oil prices and reduced fuel subsidies,
the company said in a filing with Mexico’s stock market.

The company said it lost 2.758 billion pesos ($218 million)
in the quarter, down from a loss of 3.690 billion pesos in the
third quarter of 2009.

Pemex regularly loses money due to its crushing tax burden,
which has forced it to rely on borrowing to fund much of its
business plan.

Accumulated losses and a mounting debt load have wiped out
its equity but Pemex is not subject to normal insolvency
proceedings due to its status as a state corporation.

The Mexican government has been gradually lifting fuel
prices, which has helped Pemex’s finances to a small degree by
reducing losses on imported fuel it is forced to assume when it
sells imported fuel for less than its cost.

Pemex was also helped by crude oil prices (CLc1: ) rising 5.7
percent in the third quarter to $79.97 per barrel and rising
more than 13 percent from the end of the third quarter of
2009.

Pemex managers regularly complain the company’s tax burden
makes it difficult for them to sustain necessary levels of
investment. Mexican oil production has held steady since
September 2009 but Pemex still lacks many short-to-medium term
options to boost output at new fields.

The company is due to hold conference calls with its bond
investors to discuss its performance on Friday.
($1 = 12.6250 at end Sept)
(Reporting by Robert Campbell; Editing by Lisa Shumaker)

UPDATE 1-Mexico’s Pemex cuts Q3 loss as oil prices rise