Mexico’s state oil company Pemex posted another quarter of major losses, weighed down by falling output and lower crude prices, as the heavily indebted firm faces the prospect of a fresh downgrade from credit agencies critical of its direction.

President Andres Manuel Lopez Obrador has pledged to rescue the ailing Mexican oil giant by growing the firm’s government-supplied budget, lowering its tax bill and rooting out corruption, but the latest numbers remained mostly gloomy.

Pemex’s second quarter loss of 52.7 billion pesos ($2.7 billion) was nearly 70 per cent lower than the losses it chalked up during the same period last year, a drop it said was driven by a reduction in costs.

During the April to June period, the company’s crude production dipped more than 10 per cent to 1.661 million barrels per day (bpd) compared to the same quarter last year, according to a filing with the Mexican stock exchange.

The filing, however, emphasised that average crude output in the second quarter was stable compared to output during the first three months of the year.

The price of Pemex’s crude export mix dipped about 3 per cent during the quarter to average about $60.30 per barrel, compared to roughly $62.10 during year-ago period.

In June, ratings agency Fitch downgraded Pemex debt to speculative, or so-called junk status, while Moody’s changed the company’s credit outlook to negative which usually implies a possible downgrade within six months to a year.

If Moody’s were to also downgrade Pemex’s debt to junk, it would likely trigger billions of dollars in forced selling of bonds and push the company’s financing costs up.

Total financial debt, however, fell nearly 4 per cent during the quarter to total $104.4 billion, the company said, while financing costs slid by nearly half due in part to the Mexican peso’s strengthening relative to the US dollar.