OREANDA-NEWS. March 28, 2012. OGX, the oil and gas company  of the EBX Group, owned by the entrepreneur Eike Batista, closed the fourth quarter of 2011 with investments of BRL  3.1 billion in its exploration and production (E&P) activities in Brazil. From 2007 to 2011, the company has invested a total amount of BRL  7.7 billion, meaning it has invested more than any other private oil company in the country. This growth is due to the heightened drilling campaign, with 47 wells drilled in 2011 versus 26 in 2010. OGX currently has nine drilling rigs at its disposal and more than 6,000 professionals involved in its activities, of which around 350 are direct employees.

“We achieved many key milestones during 2011 and in the beginning of 2012. In our exploration campaign, we drilled 47 wildcat, appraisal and production wells and increased our knowledge about our accumulations, including the first discovery of a shallow-water pre-salt reservoir in the Santos Basin. We produced our first oil through solid execution by our management and operational teams, and sold it at an excellent market price,” said Paulo Mendonca, General Manager and Exploration Officer for OGX. “We see 2012 as an important year for achieving stable production in our first producing well, beginning to declare commerciality of our accumulations in the Campos Basin and increasing our production, with another two producing wells that we expect to be connected to FPSO OSX-1 by mid-year.”

EWT – Since the beginning of the EWT on January 31, 2012, OGX has enjoyed strong operating performance, with all equipment working effectively at both FPSO OSX-1 and well OGX-26HP (submerged centrifugal pump). In addition, the reservoir has confirmed excellent characteristics. OGX’s team tested various flow levels between 10,000 – 18,000 barrels/day, seeking to assess the behavior of the reservoir and establish optimum production flow.

In February, OGX achieved average production of 11,100 barrels/day and operating efficiency of 94%, an excellent result for the first month of a start-up production facility. The Company estimates that production at this well will remain between 10,000 – 13,000 barrels/day for the next several months, without water injection into the reservoir.

OGX plans to announce Waimea’s commerciality after obtaining additional and conclusive data about the reservoir, which should occur in the second quarter of this year. After this, the Waimea Development Plan will be submitted to the Agencia Nacional do Petroleo Gas Natural e Biocombustiveis (ANP) and, when approved, the Company expects to connect two additional horizontal wells already drilled and potentially a fourth production well, which should increase production to around 40,000 – 50,000 barrels per day by the end of 2012.

The beginning of Waimea’s EWT is a landmark for OGX and signals the beginning of a new phase in the commercialization of our resources, with the first shipment of 600,000 barrels expected to be dispatched to Shell at the end of March of this year, beginning the Company’s cash generation. “OGX has become the first private Brazilian company to produce offshore oil in Brazil, which is a landmark for a company that has only been operating for a little more than four years,” commented Mr. Mendonca. The Waimea accumulation, which was discovered in December of 2009, is the first to start producing for OGX in the Campos Basin, and is expected to be followed by Waikiki in 2013, intensifying the field’s development.

To proceed with OGX’s production growth, the Company anticipates receiving two additional FPSOs, OSX-2 and OSX-3, in mid-2013. Both are already under construction in Singapore by SBM and Modec, respectively. The projects are running on schedule, with an average of 30% of the work already completed and financing guaranteed.

Drilling Schedule Review – The drilling schedule of exploratory wells (appraisal and wildcat) was reviewed and increased to include the drilling of 26 wells in 2012 compared to the 19 previously planned. In addition, drilling for 2013 was increased to 19 wells compared to the previous plan of four. The total number of wells to be drilled for the exploratory campaign until 2013 has increased to 121 wells, including concluded wells and the additions for 2012 and 2013. This increase is the result of the high success rate of appraisal wells, which led the Company to intensify the wildcat campaign of the discovered accumulations.

Financial Performance – In 2011, OGX posted a loss of BRL 509.9 million, as compared to BRL 135.5 million in the previous year. This result was due to four factors: (i) increased exploration expenses of BRL 328 million; (ii) a reduction of the net financial revenue to BRL 252.4 million, which was partially offset by: (iii) lower administrative expenses of BRL 10.9 million; and (iv) the increased net tax credit of BRL 195.1 million.