OGX

OGX is responsible for the largest private sector exploratory campaign in Brazil. Since its inception, in June 2007, OGX has established a leading position in the Brazilian oil and natural gas exploration and production sector by acquiring a diversified portfolio comprised of 35 exploratory blocks - 22 offshore and 13 onshore.

In November 2007, OGX raised US$1.3 billion in an equity private placement, generating capital to purchase concession rights in the Ninth Bidding Round held by the ANP (Brazilian National Petroleum Agency). In this round, OGX acquired concession rights to 21 exploratory blocks in the Campos, Santos, Espírito Santo and Pará-Maranhão basins, comprising a total area of 6,400 km².

Planning to pursue additional growth opportunities, OGX also entered into a farm-in agreement for a 50% participation interest in an exploration block in the Santos Basin. In May 2009, the ANP approved an additional participation of 15%, increasing OGX’s working interest in the block to 65%. And in November 2010, ANP approved the acquisition by OGX of an additional participation of 35% on this block. Now OGX controls 100% of the block, being responsible for its operation.

In September 2010, OGX acquired 70% participation interest in seven onshore exploratory blocks in the Parnaiba basin. In parallel, OGX signed an agreement with MPX Energia S.A. to formalize the transfer of OGX's participation to a new special purpose vehicle, OGX Maranhão, in which OGX holds 66.7% and MPX holds 33.3% of the capital, as well as to formalize the intention to execute an agreement for OGX Maranhão to supply natural gas to thermoelectric plants to be developed by MPX.

Additionally, in June 2010, OGX acquired five onshore exploratory blocks in Colombia, in the Open Round 2010, covering approximately 12,500 km² in the Cesar-Ranchería, Lower Magdalena Valley and Middle Magdalena Valley Basins.

In March 2008, OGX engaged DeGolyer & MacNaughton, a leading consultant in reserve certification for the oil and natural gas industry with over 70 years of experience, to prepare an appraisal report. Based on primarily 2D seismic data, the study indicated that the 22 exploratory blocks of the company contained total Risked Prospective Resources of 4.835 billion barrels of oil equivalent, considering an average probability of exploratory success of 27%. In November 2009, after the interpretation of recently-acquired the 3D seismic data and the acquisition of seven blocks in the Parnaíba Basin, a new certification study was conducted by D&M, evaluating Net Risked Prospective Resources of 6.672 billion of boe, based on an average probability of success of 34.5%, and Contingent Resources of 141 million boe. After several discoveries, OGX once again contracted D&M and had its net potential resources certified in 9.7 billion boe in December 2010 for its portfolio in Brazil and 1.1 billion boe for its portfolio in Colombia in March 2011, totaling a net potential resources of 10.8 billion boe.

In June 2008, OGX held its Initial Public Offering (IPO) whereby approximately R$6.7 billion were raised in a 100% primary offer, representing the largest IPO in Brazil’s history since then. The resources raised in the offering are being used to fund OGX’s exploration campaign and initial development of production.

The execution of OGX’s Business Plan is well underway, with seismic data acquired for all the offshore exploratory blocks and all the major equipment and services necessary for the exploration campaign and initial production already procured. OGX has chartered 10 drilling rigs, 13 vessels and four helicopters, as well as one onshore base in the city of Rio de Janeiro and one in the state of Maranhão. 

The month of August 2009 was marked by the commencement of drilling activities, with the drilling on the BM-S-29 block, located in the Santos Basin, operated by Maersk at that time.

In September 2009, drilling on the block BM-C-43, located in the Campos Basin, signaled the beginning of the drilling campaign on our wholly-owned and operated blocks. Since then, 48 wells were drilled, of which eight are still in progress. The drilling activities represent a cycle of big discoveries for the company in the Campos, Santos and Parnaiba Basins. Until 2013, OGX will have drilled 87 wells in its five Brazilian sedimentary basins.

This year OGX will drill new wildcat wells and appraisal wells, mainly in the Campos Basin, and will also initiate drilling operations in the Pará-Maranhão basin and the Espírito Santo Basin (in partnership with operator Perenco).

The beginning of production is expected for the third quarter of 2011, in the Campos Basin. This will be an important milestone in the company’s history and will contribute to its ongoing growth trajectory in the coming years. The production will be in the Waimea accumulation, in the BM-C-41 block, through an extended well test (EWT), which could record flows up to 20,000 barrels/day. 

Email ri@ogx.com.br