(Adds Pemex's comments, background)
MEXICO CITY, April 25 (Reuters) - Mexican state-owned oil company Pemex said on Tuesday it has hedged its output through December, the first time it has done so in 11 years, in a bid to protect its balance sheet from a potential drop in oil prices.
Petroleos Mexicanos, as the company is officially known, said the oil hedging program will run from May to December and guarantees a price of $42 per barrel for up to 409,000 barrels per day. It will cost the company $133.5 million.
The Pemex hedge is separate from the much larger oil price hedge undertaken by the finance ministry.
"For the first time in 11 years, Pemex has its own hedging program, which will favor the fulfillment of its operational and investment commitments and provide greater certainty to its income considering a possible drop in oil prices," the firm said in a statement.
Pemex said the hedge will provide protection if the average monthly price of the Mexican oil mix is between $37 and $42 per barrel, adding that if prices fall below $37, Pemex will receive the maximum amount of "contracted protection."
In its latest budget forecast, Mexico's Finance Ministry forecast average Mexican oil prices of $42 per barrel in 2017 and $46 per barrel in 2018.
While the Finance Ministry's hedging program "ensures the oil revenues of the Federal government, Pemex's hedging program protects the company's balance sheet," the company said.
Long used as a cash cow for the nation's government, Pemex now contributes less than a fifth of federal revenue, down from more than a third a few years ago.
The Mexican government is implementing an energy industry revamp finalized in 2014. It ended the decades-long production monopoly enjoyed by Pemex, which has led to the first-ever competitive oil auctions and joint venture partnerships. (Reporting by Anthony Esposito and Gabriel Stargardter; Editing by Jonathan Oatis)