Mexican state oil company Petróleos Mexicanos (Pemex) reported a net loss of 87.9 billion pesos ($4.6 billion) for the third quarter, down from a 26.8 billion-peso (about $1.38 billion at the time) profit in the same period a year ago.

Pemex attributed the swing to foreign exchange (FX) effects and a sharp decline in crude oil revenue, from both exports and domestic sales.

The price for the Mexican crude oil export mix averaged $57.1/bbl during the period, down 7.5% year-over-year.

“This decrease is the most relevant variable that affected export sales in 3Q19,” Pemex said.

The price drop was due to the decline in global oil demand growth “associated with weaker global economic indicators, combined with stronger growth in supply from the USA and the commercial war between the USA and China.”

A 6.7% year-over-year drop in oil production to 1.728 million b/d also hurt export revenue, Pemex said, although on a sequential basis, crude output rose by 1.2%.

Wellhead natural gas production fell by 3.4% year-on-year to 3.69 Bcf/d, while dry gas production from Pemex processing centers dropped 1.8% to 2.37 Bcf/d.

The drop in wellhead output “is the result of the natural decline in mature fields and increased fractional water inflow in [the] north, south and marine regions,” Pemex said.

Gas production associated with oil wells fell by 99 MMcf/d to 2.742 Bcf/d, a result of higher nitrogen production from the Cantarell and Ku-Maloob-Zaap shallow water fields, as well as “water-oil contact at [the] Xanab field, where some high yield wells have been closed.”

Non-associated gas output, meanwhile, fell by 3.1% to average 943 MMcf/d, due to “the reallocation of resources to crude oil fields in the northern blocks.”

During an earnings call with analysts on Monday, CFO Alberto Velázquez highlighted that the company had not reported a sequential increase in oil production since 3Q2015.

Pemex’s 2019-2023 business plan calls for oil output to reach 2.53 million bbl by 2023, although analysts have expressed doubts about the plan’s feasibility.

The planned production increase centers around 20 high-priority shallow water and onshore fields. Upstream regulator Comisión Nacional de Hidrocarburos (CNH) has approved development plans for 17 of these projects.

According to Pemex, these 17 fields will supply 428 MMcf/d of combined new natural gas production by next year, and reach a peak of 894 MMcf/d by 2022.

Welligence Energy Analytics’ Pablo Medina, research vice-president, has said that Pemex’s output projections for these fields envision the best possible scenario, leaving no margin for error.

Foreign exchange effects also contributed substantially to the loss, Pemex said.

A decrease in the mark-to-market (MTM) value of Pemex’s derivatives portfolio, driven by the weakening of the British pound and the Euro against the U.S. dollar, resulted in a negative impact of around 20 billion pesos, or $1.05 billion.

“Moreover, a MXN 35.5 billion [$1.86 billion] exchange loss was recorded, as compared to a MXN 94.7 billion profit in 3Q18, mainly due to the depreciation of the Mexican peso against the U.S. dollar in the period,” Pemex said.

Pemex had negative working capital of 93.7 billion pesos, or about $4.9 billion, as of Sept. 30, compared to 54.7 billion at the end of 2018.

The company’s net debt stood at 1.89 trillion pesos, or about $98.9 million, as of Sept. 30, down from 2 trillion pesos at the end of 2018.