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Pemex, Mexico’s state oil company, is hoping that an infusion of capital from private equity firms and other foreign investors will help it stave off a pressing liquidity crunch. Pemex, which is going through a number of key reforms, is suffering from not only lower oil and natural gas prices, but also has had to increase its debt to fund outflows for taxes, duties and capital spending, all while seeing a roughly 6.7% year-over-year oil production decline. The company, which has a new director general and is responsible for providing close to 25% of the Mexican government’s annual budget from its operating cash flow, posted a $10 billion loss in the third quarter 2015, making it the 12th consecutive quarter in which losses were reported. In the first nine months of 2015 the company reported a loss of approximately $19.4 billion. In a late 2015 ratings action, Moody’s Investors Service said Pemex’s liquidity was “tight.” It said that in 2014 Pemex’s $9.1 billion of cash flow from operating activities “fell well short of covering $15.1 billion in capital spending outlays.” After noting that Pemex has or will have $11.8 billion of debt come due from the latter part of 2015 into and throughout 2016, while having an estimated $4.5 billion of cash at the end of 2015, Moody’s on Dec. 16 cut Pemex’s global scale senior unsecured rating one notch from A3 to Baa1. Said Moody’s, “The actions were prompted by Moody’s view that the company’s current weak credit metrics will deteriorate further in the near to medium term.” Down, but not out In early January, the Mexico City-based Pemex announced the layoff of as many as 10,000 oil service workers from its total work force of approximately 142,000, a rare thing in heavily unionized Mexico. The move was a cost-cutting measure, and more layoffs could follow. On Feb. 17, the Mexican Finance Ministry said the government would reduce spending this year by approximately $7.2 billion, or 0.7% of gross domestic product. Pemex, whose new Director General José Antonio González Anaya holds a Ph.D. in economics from Harvard and served until Feb. 8 as director general of the Mexican Institute of Social Security, is committed to cutting spending by $5.5 billion. The Pemex investment budget for 2016 is expected to be $17 billion, down from $22.5 billion in 2015 and $26 billion in 2014. For its 2016 budget, Pemex has reportedly used an average Brent crude price of $50/b. For the month of February, Brent has been tra...