OilVoice - OGX Concludes Drilling of the Well OGX-12 in the Santos Basin

OGX Concludes Drilling of the Well OGX-12 in the Santos Basin

Sunday, July 18, 2010

OGX Petróleo e Gás Participações S.A., the Brazilian oil and gas company conducting the largest private exploratory campaign in Brazil, announced today that it has concluded the drilling of the well 1-OGX-12-SPS, located in the BM-S-57 block, in the shallow waters of the Santos Basin. OGX holds a 100% working interest in this block.

The drilling of well OGX-12, also known as Niterói, reached a total depth of 5,074 meters, and encountered carbonate reservoirs in the Albian section with good conditions of permo-porosity, although with an ineffective geological seal. In addition, two thin intervals of carbonate reservoirs with indications of hydrocarbons were found in the Aptian and Barremian sections, confirming an active petrolific system. Although these hydrocarbon evidences are considered to be non-commercial, information obtained in the drilling of this well will play a very important role in calibrating the new geological model for the region.

"After a highly successful exploratory campaign with announced discoveries in all 14 of our previously drilled wells, the drilling of the Niteroi prospect had as main objective the testing of a new geological model. The post-mortem of the well leads us to believe that the lack of a geological seal was the cause of a non-commercial hydrocarbon accumulation, given that the Albian structure is prominent. The fact that we encountered good reservoirs and confirmed the existence of an active petrolific system in this part of the basin is very positive since it decreases the risk in future wells," commented Paulo Mendonça, General Executive Officer of OGX.

The OGX-12 well, located in the BM-S-57 block, is situated approximately 95 kilometers off the coast at a water depth of approximately 150 meters. The rig used in this drilling will be moved to the BM-S-56 block and will drill the Belém prospect.

Update on Campos Basin Drilling Campaign
OGX is conducting the largest private exploratory campaign in Brazil. Seven wells drilled in the Campos Basin yielded discoveries estimated between 2.6 and 5.5 billion boe

“During the first quarter of 2010, OGX continued to make great advances in its drilling campaign, seeing significant progress in the identification of new accumulations as well as in the delineation of prior discoveries", commented Mr. Paulo Mendonça, OGX General Executive Officer. “In the coming months, we anticipate undertaking a series of Drillstem Tests, an important step toward the goal of initiating production in 2011. Production is currently expected to commence in the Vesuvio and Waimea prospects”, added Mr. Mendonça.

Highlights:
• Seven wells have previously announced volume estimates of 2.6 to 5.5 billion barrels of oil equivalent;
• Portfolio comprised of 34 exploratory blocks, of which 29 in Brazil, in the Campos, Santos, Espírito Santo, Pará-Maranhão and Parnaíba Basins and 5 in Colombia, in the Cesar-Ranchería, Lower Magdalena Valley and Middle Magdalena Valley Basins;
• Evaluation report issued by Degolyer & MacNaughton (D&M) certifying in 6.7 billion barrels of net risked prospective resources, considering an average probability of success of 34.5%, and 141 million boe of net contingent resources;
• Initial production expected to begin ahead of schedule in early 2011 and long-term production target aimed at achieving 730 thousand barrels per day by 2015 and 1.380 million by 2019;
• Signed a Strategic Cooperation Agreement with OSX Brasil S.A. that supports OGX’s long-term demand for equipment and production services. The equipment provided by OSX will contribute to OGX’s compliance with local content requirement obligations assumed under concession contracts with the ANP.
• Chartered the first FPSO (Floating Production Storage & Offloading) production vessel, OSX-1, from OSX Brasil S.A. for a period of 20 years;
• Gained approval from the ANP, the Brazilian Petroleum, Natural Gas and Biofuels Agency, for the transfer of the rights and obligations related to a 70% interest in seven exploratory onshore blocks in the Parnaíba Basin to OGX Maranhão Petróleo e Gás Ltda. (“OGX Maranhão”), a special purpose vehicle in which the Company holds a 66.7% stake and MPX Energia S.A. ("MPX") has 33.3% of the share capital.
• Eight drilling units chartered, of which 6 semisubmersibles, 1 onshore rig and 1 jack-up;
• OGXP3 was included in the Ibovespa index and subsequently its weighting within the index portfolio was increased. Since May 2010, OGXP3 has been given a weighting of 2.48%, corresponding to the 11th position in the selected portfolio of 66 stocks;
• OGX’s Level I Global Depositary Receipts (GDR) started trading on the over-the-counter market under the symbol “OGXPY”. Banco Itaú S.A. was hired as the custodian and Bank of New York Mellon as the depositary institution.