An update. All of the ROE employees of the Mexican Office have been sent home to work from home, to comply with the social distancing requirements. The workers in Canada are all respecting the guidelines as well. As Management said, he and his dog have been going for a lot of walks. He is spending family time, but there are not many activities as everything is closed here as well as in Mexico. He is working from home.
Oil field and oil drilling activities are not an essential service, so there is currently no activity in the oil fields in Mexico.
He expects the deadlines for drilling the Chiapas blocks will be extended but has no confirmation of this. As everything is locked down on pretty much all oil projects in Mexico, it is impossible to drill and meet the timelines.
The lock down has affected a lot of Government services. CNH has been doing little as they have been in a lockdown as well. They are scheduled to go back to work at their offices this week.
ROE has been trying to get approval to sell the Ponton block. Management says all of the paperwork has been prepared and is waiting for signatures and approvals. Management says that a real frustrating part is Pemex and the various companies and agencies involved do not do anything by email. It all has to be done by paper when it comes to getting approvals and signing off. So everything is sitting in a pile on a desk.
The Head of CNH, who is a political appointee of ALMO has been speaking out that Pemex needs to have partners and likely will be signing partnerships soon. He was one of AMLO’s campaign managers. He used the words imminent. But which partnerships and projects have not been disclosed.
ROE’s relationship with Pemex is excellent. But until AMLO and Nahle say move forward everything sits. While Nahle is the Energy Minister she also is the Chair of the Board of Directors of Pemex.
Roe has been waiting for the Government’s new policies to be announced. It has been imminent for months. I spoke to management just before AMLO made his announcement last week.
One key has been the rhetoric has changed substantially and with Pemex in mega financial trouble, it is putting a lot of pressure on AMLO and Nahle. While the hedge program has helped Pemex a little, it will need a major bailout by the Government this year.
Management states that while the Government has been pushing service contracts, no company in the private sector wants them or is signing up on any of them.
Management, like everyone has been waiting for the new Government policies, but have been waiting for months. Since I spoke to management we saw some further shift in the rhetoric with AMLO saying that that a stimulus package is being introduced and that there will be more announcements in a few days.
I expect that AMLO wants legislative approval on the stimulus package before he announces the details of the specific projects. When there will be legislative approval is another unknown. I have not been able to find much information on the status of the legislature. “There is no specific date in the announcement ( of being shutdown) for when Senate work will be renewed, meaning the postponement is effectively indefinite.”
I would expect that Mexico will have some system of getting emergency legislation approved, but there has been no reporting in the press.
Management states they have no idea of what projects will be approved, how many, or when? They are optimistic that once the door is opened that there will be a flow of new projects and that if they are not on the first list, that there will be ongoing approvals.
Everyone just has to keep waiting.
The Investor presenation has been updated to April 2020. I didn't see much new. It indicates the comapnay had cash reserves of $3.1 million as of March 31, 2020.
The 2019 Annual and 4th Quarter reports should be out soon. I would expect soemtime this week.