OGX Petróleo e Gás Participações S.A. OGXP today announced its results for the fourth quarter and year ended December 31, 2011. The financial and operational data below is presented on a consolidated basis, in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board - IASB and, in reais (R$), except where otherwise indicated.
“Since its creation just over four years ago, OGX has established new paradigms and set new parameters for the global oil and gas industry. A prime example is the production of our first oil in just over two years following the discovery of Waimea, which awarded our efforts throughout 2011. OGX has taken bold actions, and the results followed quickly, with the discovery of billions of barrels in Campos, Santos and Parnaíba; the production in Waimea (Campos Basin); and our first commercialization contracts now signed. With a clear entrepreneurial vision and a unique portfolio of assets, we have become a reference point for global E&P companies, successfully executing our operations and demonstrating an excellent capacity to raise the necessary capital for the future development of our portfolio. Our long-term goal is to become a premier oil and gas company that will significantly contribute to Brazil's continued development of its natural resources,” commented Eike Batista, CEO of OGX.
Paulo Mendonça, General Manager and Exploration Officer for OGX, added: “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. In addition, we raised US$2.6 billion through our first bond issue, allowing us to continue developing our discoveries. 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.”
In addition to the significant achievements in the Campos Basin in 2011, OGX also discovered important developments in the Santos and Parnaíba Basins. After the successful drill-stem tests in the Natal and Maceió accumulations, OGX confirmed the discovery of a pre-salt reservoir with hydrocarbons in the shallow waters of the Santos Basin, reinforcing the enormous potential of Brazilian sedimentary basins. In the Parnaíba Basin, where the Company declared commerciality of two accumulations last year, OGX has a 70% success rate in its 10 appraisal wells. The Company expects to begin production in this basin in the second half of the year, with an estimated available production capacity of approximately 6 million m3/day in 2013 when the thermoelectric projects come on-stream.
Throughout 2012, OGX will continue with the appraisal campaign of its portfolio and will begin drilling in unexplored areas, constantly maintaining focus on maximizing the cash flow of its current assets.
2011 Highlights and Subsequent Events:
- OGX's portfolio potential updated to 10.8 billion boe of net potential resources based on new estimates for Campos, Parnaíba and the first estimates of the Colombian basins
- Fundraising of US$2,563 billion through a bond issue, providing significant financial flexibility
- Drilling of 47 wells in 2011, including wildcat, appraisal and production wells in the Campos, Santos, Parnaíba and Espírito Santo basins
- Drill-stem tests, license attainment and preparation of the OGX-26HP well to begin production
- Arrival of the first production unit, FPSO OSX-1, in Brazil in early October
- Beginning of production at the Waimea accumulation in January 2012
- First oil sale agreement with Shell signed, priced at a US$5.50 discount from Brent (market reference price)
- Acquisition of a 20% stake from Maersk in BM-C-37 and BM-C-38 in the Campos Basin, taking OGX's interest to 70%, and becoming the operator
- Drill-stem tests performed on the Maceió (OGX-47) and Natal (OGX-11D) accumulations in the Santos Basin, both with excellent results
- Discovery of hydrocarbons in a pre-salt microbialite reservoir in the shallow waters of the Santos Basin (OGX-63 appraisal well, named ‘Fortaleza')
- Declaration of commerciality and beginning of the development of two gas fields – Gavião Real and Gavião Azul – in the Parnaíba Basin, with the drilling of 6 production wells
- Acquisition of a 50% stake in block PN-T-102 in the Parnaíba Basin, through OGX Maranhão, and assumption of operational control
- Fundraising of R$600 million, through OGX Maranhão, for the development of the Gavião Real and Gavião Azul fields in the Parnaíba Basin
Campos Basin
2011 was marked by major achievements in the Campos Basin with regards to both the expansion of OGX's exploration campaign and the start of the first oil production in the Waimea accumulation.
Highlights of the Exploration Campaign
During 2011, OGX intensified its exploratory campaign in the Campos Basin, drilling 31 wells, including 5 appraisal, 21 wildcat and 5 horizontal production wells. The Company made important discoveries throughout the year, such as the Carambola B (MRK-5), Osorno (OGX-31) and Tambora (OGX-52) accumulations.
The main focus of OGX's campaign was the appraisal of its discoveries in the basin. Significant results were achieved in the Waimea, Waikiki, Pipeline, Illimani, Fuji, Ingá, Osorno, Tambora and Peró accumulations. The results of the campaign were very important to appraise the different accumulations, giving the Company's confidence in its geological assumptions for the basin. Approximately 90% of the wildcat wells showed the presence of hydrocarbonate reservoirs. In 2012, OGX will continue drilling wildcat wells in the blocks where it has a 100% stake and, most importantly, will accelerate drilling in two blocks where the Company has recently increased its participation to become the operator (BM-C-37 and BM-C-38).
With the transfer of the operation to OGX, the Company will use its operating structure to drill approximately six wells in the BM-C-37 and BM-C-38 blocks to confirm the extension of the accumulations discovered and test the existence of prospects that are yet to be drilled. OGX will carry out all of the studies and tests that are necessary to convert the Company's resources into reserves.
Below are highlights of the significant results that OGX achieved in the quarter:
Waimea: Concluded drilling of the OGX-55HP and OGX-60HP wells, as well as the OGX-65D well, in which 97 net pay meters were identified in the Albian section, which was the pilot for the OGX-68HP well, another of the accumulation's horizontal wells.
Fuji: Concluded the OGX-69 well, in which hydrocarbons were found in the Albian section with a net pay of approximately 38 meters.
Pipeline: Concluded the drilling of the OGX-70 well, where the limits of the structure were tested, but nonetheless found a sealed reservoir without hydrocarbons. OGX also drilled the OGX-72 well, the seventh wildcat well in this accumulation, where it found an excellent hydrocarbon zone with 129 meters of net pay in the Albian section.
Illimani: Completed another wildcat well, OGX-61, with approximately 9 meters of net pay in the Albian section.
Ingá: Concluded the drilling of the OGX-64 well, in which 23 meters of net pay were identified in the Santonian section, in addition to the OGX-67 and OGX-71 wells, in which the reservoir's limits were tested, having observed reservoirs without hydrocarbons.
Osorno: Concluded drilling of the OGX-73 well, in which 37 net pay meters were found in the Albian section.
Tambora: Began drilling the first wildcat well, OGX-75, which is still in progress.
Peró: Began drilling the first wildcat well of this accumulation, OGX-76, which is still in progress.
Highlights of Production Startup in Waimea
Preparation for Production:
After the discovery of the Waimea accumulation through well OGX-3 in December 2009, OGX began preparing for the production of its first oil. During the past two years, the Company has focused on appraising the accumulation and, after an important drill-stem test in the OGX-26HP horizontal well in January 2011, began contracting the necessary production equipment. In mid-2011, OGX held a public hearing and, in September, the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA) granted the preliminary and installation licenses. With these licenses, OGX began the installation of the subsea equipment at the OGX-26HP well, using the Aker Wayfarer vessel, which installed the FPSO OSX-1 mooring system, and connected the wells through flexible lines. OGX successfully installed all of the subsea equipment (piles, cables, chains and middle water arch). The buoy (a detachable turret) was then mobilized in order to begin installation and connection to the flexible lines. Afterwards, the team connected the flexible lines and umbilicals and the wet christmas tree to the buoy. In December 2011, with the buoy installed, the Company waited for the arrival of FPSO OSX-1 to the site to begin hooking the buoy up to it.
In early January, 2012, OGX obtained the last necessary license (Operational License) from IBAMA, authorizing the operation of the FPSO OSX-1 unit and the respective submarine structures for the Extended Well Test (EWT) and production development in Waimea. FPSO OSX-1, which arrived in Brazil at the beginning of October, went through final commissioning processes and inspections before being cleared for operation at the Waimea accumulation. In mid-January, OGX finished connecting the buoy to FPSO OSX-1 and, on January 31, 2012, the first oil production began through the EWT in just over two years after the discovery of the Waimea accumulation, a record for the industry.
The challenges of this operation and the complexity of the project have given OGX valuable experience that will help the Company execute future projects more efficiently.
Production Performance:
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 95%, 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.
Strategy for Declaring Commerciality and Next Steps:
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 Agência Nacional do Petróleo Gás Natural e Biocombustíveis (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 bpd by 2H2012.
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. 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.
Production Projections in 2013:
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.
Specifically to support OSX in the financing of FPSO OSX-3, which will be used in the Waikiki complex, OGX has contracted DeGolyer and MacNaughton (D&M) to certify Waikiki's contingent resources. As opposed to previous reports that were separated by sedimentary basins, the scope of this report was only one accumulation in the Campos Basin, resulting in the certification of contingent resources of 212 mboe (2C) and 302 mboe (3C).
Below is a summary of the wells, both finished and in progress, in the Campos Basin:
| WELLS CONCLUDED IN 4Q11 | |||||||||||||||||
| WELL | BLOCK | PROSPECT | RIG |
COAST DISTANCE |
WATER DEPTH |
NET PAY |
DRILLING AREA¹ |
||||||||||
| OGX-61 | BM-C-41 | Illimani - 2 | Ocean Ambassador | 87 km | 124m | Albian: 9m | 3C | ||||||||||
| OGX-65D | BM-C-41 | Waimea – 4D | ENSCO 5002 | 83 km | 135m | Albian: 97m | 1C | ||||||||||
| OGX-64DP | BM-C-40 | Ingá - 1 DP | Ocean Lexington | 93 km | 105m | Santonian: 23m | 3C | ||||||||||
| OGX-69 | BM-C-41 | Fuji - 4 | ENSCO 5002 | 81 km | 125m | Albian: 38m | 3C | ||||||||||
| OGX-70 | BM-C-41 | Pipeline - 5 | Ocean Lexington | 80 Km | 123m | - | 3C | ||||||||||
| OGX-60HP | BM-C-41 | Waimea – 2D | ENSCO 5004 | 84 Km | 132m |
Albian: >1,000m (horizontal section) |
1C | ||||||||||
| OGX-67 | BM-C-40 | Ingá - 2 | Ocean Ambassador | 93 km | 111m | - | 3C | ||||||||||
| OGX-71 | BM-C-40 | Ingá - 3 | Ocean Ambassador | 93 km | 112m | - | 3C | ||||||||||
| OGX-73 | BM-C-41 | Osorno - 1 | Ocean Ambassador | 78 km | 130m | Albian: 37m | N/A² | ||||||||||
| OGX-72 | BM-C-41 | Pipeline - 7 | Ocean Lexington | 78 km | 130m | Albian: 129m | 3C | ||||||||||
| ONGOING WELLS | |||||||||||||||||
| WELL | BLOCK | PROSPECT | RIG |
COAST DISTANCE |
WATER DEPTH |
STATUS |
DRILLING AREA¹ |
||||||||||
| OGX-68HP | BM-C-41 | Waimea – 4HP | ENSCO 5004 | 83 km | 135m |
In progress since 11/24/11 |
1C | ||||||||||
| OGX-75 | BM-C-41 | Tambora - 3 | Ocean Ambassador | 76 km | 130m |
In progress since 02/24/12 |
N/A² | ||||||||||
| OGX-76 | BM-C-40 | Peró - 1 | Ocean Lexington | 96 km | 103m |
In progress since 03/10/12 |
2C | ||||||||||
|
¹ As per D&M´s Dec/10 reports |
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Parnaíba Basin
2011 was also a year of major achievements in the Parnaíba Basin, with the drilling of several appraisal and wildcat wells, as well as the beginning of production development of two gas fields in this basin. It should be noted that during the exploratory campaign – which is still in progress – OGX drilled 10 wells (both appraisal and wildcat) with a 70% success rate. Four accumulations have been discovered and two have already been declared commercial.
Development of Gavião Real and Gavião Azul Fields:
In 2011, OGX presented to the ANP the declaration of commerciality and development for the Gavião Real and Gavião Azul gas fields, the first two natural gas fields to be developed by OGX. OGX estimates that these projects will be capable of sustaining an available production capacity of approximately 6 million m3/day beginning in 2013.
OGX has begun developing production drilling in the first producing well in the Gavião Real (GVR-1D) field where, in September 2011, a drill-stem test identified dry gas and an excellent production potential of 5.0 million m³/day at absolute open flow. As of today, OGX has drilled another five production wells (GVR-2D, GVR-3D, GVR-4D, GVR-5D, and GVR-6D) in the basin.
In November of 2011, OGX held a public hearing and obtained the preliminary and installation licenses from the Environment and Natural Resources Secretary of the State of Maranhão (SEMA/MA), which allowed the Company to initiate the implementation of the project's Gas Treatment Unit - GTU. Moreover, OGX signed an Engineering, Procurement & Construction (EPC) agreement for the construction and installation of the gas treatment and collection facility at Parnaíba with the Valerus-Geogas consortium, which will be responsible for surface installation and the project's gas processing plant.
Construction is already underway in the region, with the opening of rights-of-way, through which the pipelines that will transport the gas will run, and also the construction of the GTU. This project will supply natural gas for the MPX Parnaíba Thermoelectric Complex, which is a joint venture between MPX Energia and Petra Energia S.A., both of whom are OGX partners in this basin. The current total capacity of the Complex has already reached 1.5 GW, underscoring the synergies between OGX and MPX.
MPX already has EPC contracts for implementing the MPX Parnaíba Thermoelectric Complex, which includes the Parnaíba – Phase I and II thermoelectric power plants. Additionally, MPX has already contracted turbines for the complex from GE Energy, with three of the six turbines ordered having already been shipped.
Project Financing:
In January 2012, OGX Maranhão raised R$600 million for the development of the Gavião Real and Gavião Azul fields in the Parnaíba Basin. This financing is intended to meet OGX Maranhão's cash needs for the development of this first project in the basin, including well drilling and the construction of the GTU building and other facilities.
Acquisition of a New Block and Focus for 2012:
Also in 2011, in order to expand the Company's operations in the Parnaíba basin, OGX acquired a 50% stake in another exploratory block in the basin, PN-T-102, through its subsidiary OGX Maranhão Petróleo e Gás Ltda, which now operates this block. With this new concession, OGX Maranhão now has participation in eight different on-shore exploratory blocks in the Parnaíba Basin with a total area in excess of 24.500 km². This acquisition reinforces OGX's positioning in the region after the drilling of successful exploratory wells.
OGX currently has three rigs drilling and three seismic crews responsible for 1,000 people working in the region. The third onshore rig contracted was recently built by BCH Energy Services, and is currently being mobilized. Thus, in addition to maintaining OGX's focus on appraising and developing the two current fields, the Company will continue drilling new prospects that have already been identified in its extensive concession, like Fazenda Axixá prospect, which we recently begin drilling OGX-77 well.
Below is a summary of the wells, both those concluded and still in progress, in the Parnaíba Basin:
| WELLS CONCLUDED IN 4Q11 | |||||||||||||||||||
| WELL | BLOCK | PROSPECT | RIG |
COAST DISTANCE |
WATER DEPTH |
NET PAY | DRILLING AREA¹ | ||||||||||||
| GVR-1D | PN-T-68 | Gavião Real | QG-1 | Onshore Block | Development well | 3C | |||||||||||||
| OGX-66 | PN-T-67 | Angical | BCH-05 | Onshore Block | - | Prospective | |||||||||||||
| GVR-3D | PN-T-68 | Gavião Real | QG-1 | Onshore Block | Development well | 3C | |||||||||||||
| GVR-2D | PN-T-68 | Gavião Real | BCH-05 | Onshore Block | Development well | 3C | |||||||||||||
| GVR-4D | PN-T-68 | Gavião Real | QG-1 | Onshore Block | Development well | 3C | |||||||||||||
| GVR-5D | PN-T-68 | Gavião Real | BCH-05 | Onshore Block | Development well | 3C | |||||||||||||
| ONGOING WELLS | |||||||||||||||||||
| WELL | BLOCK | PROSPECT | RIG |
COAST DISTANCE |
WATER DEPTH |
STATUS | DRILLING AREA¹ | ||||||||||||
| GVR-6D | PN-T-68 | Gavião Real | QG-1 | Onshore Block |
In progress since 02/21/12 |
3C | |||||||||||||
| OGX-77 | PN-T-85 | Fazenda Axixá - 1 | BCH-05 | Onshore Block |
In progress since 03/16/2012 |
||||||||||||||
|
¹ As per D&M´s Dec/10 reports |
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Santos Basin
Expanding Knowledge of the Basin:
Throughout OGX's exploratory campaign in this basin, 11 wells have been drilled with a 70% success rate as of this report. In 2011, we saw important and conclusive results, confirming the significant potential of this area. Drilling of the OGX-30 well in the Salvador accumulation was concluded, confirming a new play in fractured carbonates in the Albian section, with a major gas column and large structured area. OGX also drilled the OGX-63 well in the Fortaleza accumulation, where reserves were discovered in the Albian and Aptian (pre-salt) reservoirs were discovered.
Shallow Water Pre-Salt Discovery:
OGX began drilling the appraisal well in the Fortaleza accumulation, OGX-63, which, in addition to identifying a 1,000-meter hydrocarbon column in Albian reservoirs and about 110 meters of net pay, confirmed the existence of microbialite reservoirs at the pre-salt layer with hydrocarbons in shallow waters – which is the same type of reservoir rock previously found only in pre-salt in deep and ultra-deep waters of the Santos and Campos Basins. The well was drilled down to 6,135 meters until a kick was encountered with hydrocarbons, suggesting the presence of reservoirs with good permo-porosity conditions and high pressure. As of now, a column of approximately 150 meters has been identified. Due to the verified high pressure, drilling was temporarily stopped, and will be continued by the Ocean Star rig, which is part of OGX's current fleet, as it has a more appropriate configuration for the operations which will likely include logging and possibly at least one drill-stem test by mid-2012.
These discoveries prompted OGX to seek a better understanding of the region. Thus, the rock fragments obtained during drilling have been analyzed and OGX has concluded that the same type of reservoir rock existing here was previously found only in the pre-salt deep and ultra-deep waters of the Santos and Campos Basins.
This pre-salt discovery in the Santos Basin's shallow waters is extremely important to OGX, as it opens a new dimension for the basin's potential and reinforces the Company's vision of intensifying the exploratory campaign through complementary tests and the drilling of more wildcat wells to evaluate the volumes and existing types of hydrocarbons within the area.
Drill-stem Tests and Appraisal Campaign:
OGX carried out drill-stem tests in the basin at the Maceió (OGX-47) and Natal (OGX-11D) accumulations, which had already presented excellent production potentials in sandstone reservoirs, ensuring the presence of gas and condensate of 50° and 47° API, respectively, providing more information for the development study of this basin.
At the moment, OGX is drilling the OGX-74 well, in the Natal accumulation.
Below is a summary of the wells, both those concluded and those still in progress, in the Santos Basin:
| WELLS CONCLUDED IN 4Q11 | ||||||||||||||||||||
| WELL | BLOCK | PROSPECT | RIG |
COAST DISTANCE |
WATER DEPTH |
NET PAY | ||||||||||||||
| OGX-63 | BM-S-57 | Fortaleza |
Ocean Quest |
102 km | 155m |
Albian: 110m Aptian: 150m (column) |
||||||||||||||
| ONGOING WELLS | ||||||||||||||||||||
| WELL | BLOCK | PROSPECT | RIG |
COAST DISTANCE |
WATER DEPTH |
STATUS | ||||||||||||||
| OGX-74 | BM-S-59 | Natal - 1 |
Ocean Quest |
115 km | 196m |
In progress since 02/09/12 |
||||||||||||||
Espírito Santo Basin
In November 2011, OGX began an exploratory campaign in the Espírito Santo Basin, drilling the first two wells in the region. Together with Perenco, the Company's operator and partner in this basin, drilling of the PERN-1 and PERN-2 wells has been concluded in the Moriche and Guarapari prospects, respectively. The presence of hydrocarbons was not able to be verified in either of the wells drilled in the basin.
The first two wells were concluded in the region as per the Minimum Exploratory Program (PEM) commitment with ANP. In the second half of 2012, drilling will resume in this region in the southern blocks of OGX's portfolio, which have similarities to the remainder of the Espírito Santo Basin unlike the northern blocks.
Below is a summary of the concluded wells in the Espírito Santo Basin:
| WELLS CONCLUDED IN 4Q11 | ||||||||||||||||||||
| WELL | BLOCK | PROSPECT | RIG |
COAST DISTANCE |
WATER DEPTH |
NET PAY | ||||||||||||||
| PERN-1 | BM-ES-37 | Moriche | Ocean Star | 52 km | 1,148m | - | ||||||||||||||
| PERN-2 | BM-ES-38 | Guarapari | Ocean Star | 110 km | 823m | - | ||||||||||||||
Other Exploration Highlights
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 through 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.
The table below shows the current drilling schedule for the exploration and appraisal wells:
|
Wildcat + Appraisal Wells |
2009 |
2010 |
2011 |
2012 |
2013 |
Total |
||||||||||||||||||||||
|
Campos Basin |
5 |
18 |
31 |
12 | 2 |
68 |
||||||||||||||||||||||
|
Santos Basin |
1 |
6 | 3 | 4 | 1 |
15 |
||||||||||||||||||||||
|
Espírito Santo Basin |
0 |
0 | 2 | 1 | 2 |
5 |
||||||||||||||||||||||
|
Pará-Maranhão Basin |
0 |
0 |
0 |
2 |
3 |
5 |
||||||||||||||||||||||
|
Parnaíba Basin |
0 |
2 | 8 | 6 |
8 |
24 |
||||||||||||||||||||||
|
Colombia |
0 |
0 | 0 | 1 | 3 |
4 |
||||||||||||||||||||||
|
Total |
6 |
26 |
44 |
26 |
19 |
121 |
||||||||||||||||||||||
Upcoming Events
OGX has several important events for the coming months, including: (i) continuation of the exploration and mapping campaign in the Campos, Santos and Parnaíba Basins; (ii) declaration of commercial viability and presentation of the Waimea Development Plan to ANP; (iii) connection between additional producing horizontal wells in Waimea and increased production; (iv) continued drilling of development wells in Parnaíba; (v) drill-stem test results in Santos; (vi) commencement of drilling in Cesar-Ranchería in Colombia and; (vii) a possible new ANP round in Brazil, as well as participation in Colombia's ANH round.
Financial Performance
“The Company closed the year with a solid cash position of R$5.5 billion, or US$2.9 billion, as a result of our commitment to executing our business plan and efficiently managing our resources,” said Marcelo Torres, OGX Financial and Investor Relations Officer.
|
In R$ thousand |
|||||||||||||||
| Main Items | 2011 | 2010 | Variance | ||||||||||||
| Net Financial Result | 6,120 | 258,506 | (252,386) | ||||||||||||
| Financial Income | 2,531,222 | 694,411 | 1,836,811 | ||||||||||||
| Financial Loss | (2,525,102) | (435,905) | (2,089,197) | ||||||||||||
| Exploration Expenses | (425,830) | (97,841) | (327,989) | ||||||||||||
| General and Administrative | (308,164) | (319,072) | 10,908 | ||||||||||||
| Taxes | 217,989 | 22,882 | 195,107 | ||||||||||||
| Net profit (loss) for the period | (509,885) | (135,525) | (374,360) | ||||||||||||
| Attributed to minority shareholders | (27,720) | (12,048) | (15,672) | ||||||||||||
| Attributed to controlling shareholders | (482,165) | (123,477) | (358,688) | ||||||||||||
| Main Items | 12/31/2011 | 12/31/2010 | Variance | ||||||||||||
| Intangibles and property, plant and equipment | 7,685,507 | 4,617,042 | 3,068,465 | ||||||||||||
| Cash* | 5,458,780 | 4,788,166 | 670,614 | ||||||||||||
| Loans and Financing | (4,772,414) | - | (4,772,414) | ||||||||||||
|
*Cash and Cash Equivalents + Marketable Securities + Restricted Deposits |
|||||||||||||||
Net Financial Result
The year's net financial result was positive R$6.1 million, mostly as a result of: (i) revenue from financial transactions in the amount of R$383 million; (ii) the positive effect of marked-to-market derivatives of R$234.7 million; which was offset by (iii) net losses with derivative financial instruments related to the forex hedging at R$358.3 million; (iv) expenses for debt servicing of R$196.6 million and; the negative impact of foreign exchange variation of R$71.6 million (primarily from the exchange variation on foreign debt).
Exploration Expenses
Exploration expenses increased from R$97.8 million in 2010 to R$425.8 million in 2011. This amount comprised of: (i) the exploratory campaign in the Campos, Santos, Parnaíba and Espírito Santo Basins with total outlays of R$189.8 million; (ii) costs related to four wells considered non-commercial – one in the Campos Basin (OGX-58DP) and three in the Parnaíba Basin (OGX-49, OGX-57 and OGX-66) – totaling R$40.4 million and; (iii) costs related to the mobilization of the exploratory campaign in the Pará-Maranhão Basin at R$195.6 million. In January 2011, with the intention of obtaining the license in the short-term, we supported vessels, helicopters, rigs and other equipment and services. In addition, we solicited the necessary environmental licenses from IBAMA to begin drilling. As the license had not been issued by the fourth quarter of 2011, due to IBAMA's request for additional information to complement the Environmental Impact Study elaborated for the basin, the Company's Board chose to demobilize the equipment and professionals involved and incur no more costs until the license is granted. For this reason, OGX will proceed with the licensing process so that the exploratory campaign can be started as soon as possible in the Company's blocks within this basin, for which OGX has obtained with the ANP and additional exploratory period of 496 days, counting from the granting of the IBAMA license.
General and Administrative Expenses
General and administrative expenses decreased from R$319.1 million in 2010 to R$308.1 million in 2011. This positive R$11.0 million variation was mostly due to: (i) reduced expenses related to stock option plans, which was partially offset by: (ii) increased personnel expenses due to the increased workforce; and (iii) increased office expenses.
Losses
In 2011, OGX posted a loss of R$509.9 million, as compared to R$135.5 million in the previous year. This result was due to four factors: (i) increased exploration expenses of R$328 million; (ii) a reduction of the net financial revenue to R$252.4 million, which was partially offset by: (iii) lower administrative expenses of R$10.9 million; and (iv) the increased net tax credit of R$195.1 million.
Intangibles and property, plant and equipment
Intangibles and property, plant and equipment represent capital expenditures during the exploration and development stages, and include expenses related to the acquisition of the concession rights, drilling campaigns and acquisition of E&P equipment. The increase in these line items during the period was approximately R$3.1 billion, due to the heightened drilling campaign, with 47 wells drilled in 2011 versus 26 in 2010.
Cash
The consolidated cash of the Company and its subsidiary totaled approximately R$5.5 billion, or US$2.9 billion, which was sufficient to cover OGX's exploratory commitments and initial production development. The earnings from fixed income financial securities in Brazil and abroad was R$383.0 million. The average return in Brazil was 12% p.a., equivalent to 103.5% of the CDI, and 2.29% p.a. abroad.
| Information as per IFRS - R$ thousand - Consolidated | |||||||||||
| Balance Sheet | |||||||||||
| Assets | 12/31/2011 | 12/31/2010 | |||||||||
| Total Assets | 14,350,197 | 9,988,534 | |||||||||
| Current Assets | 5,573,730 | 5,083,508 | |||||||||
| Cash* | 5,458,780 | 4,788,166 | |||||||||
| Recoverable taxes | 78,137 | 279,334 | |||||||||
| Financial instruments - Derivatives | 8,879 | - | |||||||||
| Others | 27,934 | 16,008 | |||||||||
|
*Cash and Cash Equivalents + Marketable Securities + Restricted Deposits |
|||||||||||
| Non-current Assets | 8,776,467 | 4,905,026 | |||||||||
| Inventory | 390,071 | 223,793 | |||||||||
| Recoverable taxes | 278,810 | - | |||||||||
| Deferred taxes | 282,693 | 45,640 | |||||||||
| Related parties | 139,386 | 18,551 | |||||||||
| Property, plant and equipment | 276,856 | 27,624 | |||||||||
| Intangibles | 7,408,651 | 4,589,418 | |||||||||
| Liabilities + Shareholders' Equity | 12/31/2011 | 12/31/2010 | |||||||||
| Total Liabilities | 14,350,197 | 9,988,534 | |||||||||
| Current Liabilities | 719,308 | 736,978 | |||||||||
| Suppliers | 431,931 | 446,907 | |||||||||
| Taxes and contributions payable | 26,070 | 23,643 | |||||||||
| Wages and labor charges | 54,507 | 29,208 | |||||||||
| Loans and Financing | 22,301 | - | |||||||||
| Financial instruments - Derivatives | - | 225,794 | |||||||||
| Accounts payable to related parties | 96,692 | - | |||||||||
| Other accounts payable | 87,807 | 11,426 | |||||||||
| Non-current Liabilities | 4,761,856 | 11,758 | |||||||||
| Loans and Financing | 4,750,113 | - | |||||||||
| Accounts payable to related parties | - | 11,758 | |||||||||
| Provisions and contingencies | 11,743 | - | |||||||||
| Minority interest | 54,473 | 24,653 | |||||||||
| Shareholders' Equity | 8,814,560 | 9,215,145 | |||||||||
| Capital stock | 8,810,307 | 8,806,451 | |||||||||
| Capital reserves | 274,109 | 224,256 | |||||||||
| Retained earnings (losses) | - | 185,586 | |||||||||
| Cumulative conversion adjustment | 19,588 | (1,148) | |||||||||
| Accumulated losses | (289,444) | - | |||||||||
| Financial Statement | 12/31/2011 | 12/31/2010 | |||||||||
| Operating income (expenses) | |||||||||||
| Exploration Expenses | (425,830) | (97,841) | |||||||||
| General and Administrative Expenses | (308,164) | (319,072) | |||||||||
| Financial Income | 2,531,222 | 694,411 | |||||||||
| Financial Expenses | (2,525,102) | (435,905) | |||||||||
|
Pre-tax profit (loss) |
(727,874) | (158,407) | |||||||||
| Income tax and social contribution | 217,989 | 22,882 | |||||||||
| Net profit (loss) before minority interest | (509,885) | (135,525) | |||||||||
| Attributed to minority shareholders | (27,720) | (12,048) | |||||||||
| Net profit (loss) for the period | (482,165) | (123,477) | |||||||||
| Average weighted shares | 3,233,565,690 | 3,232,436,138 | |||||||||
| Basic and diluted loss per share (in R$) | (0.14911) | (0.03820) | |||||||||
|
Conference Call: |
|
Friday, March 23 at 9 A.M. (Brasília Time Zone); 8:00 A.M. (EST) Telephone (Brazil): +55 (11) 4688-6341 or +55 (11) 2104-8901 Telephone (US): +1 (888) 700-0802 Code: OGX Webcast in Portuguese: www.ccall.com.br/ogx/4t11.htm |
|
Webcast in English: www.ccall.com.br/ogx/4q11.htm |
Audio will be available three hours after the conference call on the IR website: www.ogx.com.br/ri.
The conference call will be conducted in English with simultaneous translation into Portuguese.
ABOUT OGX
OGX Petróleo e Gás SA is focused on oil and natural gas exploration and production and is conducting the largest private-sector exploratory campaign in Brazil. OGX has a diversified, high-potential portfolio, comprised of 30 exploratory blocks in the Campos, Santos, Espírito Santo, Pará-Maranhão and Parnaíba Basins in Brazil, and 5 exploratory blocks in Colombia, in the Middle Magdalena Valley, the Lower Magdalena Valley and the Cesar-Ranchería basins. The total extension area is of approximately 7,000 km² in sea and approximately 37,000 km² on land, with 24,500 km² in Brazil and 12,500 km² in Colombia. OGX relies upon an experienced management team and holds a solid cash position, with approximately US$2.9 billion in cash (as of December, 2011) to fund its E&P investments and new opportunities. In June of 2008, the company went public raising R$6.7 billion, which at the time was the largest amount ever raised in a Brazilian IPO. OGX is a member of the EBX Group, an industrial group founded and under the leadership of Brazilian entrepreneur Eike F. Batista, who has a proven track record in developing new ventures in the natural resources and infrastructure sectors. For more information, please visit: www.ogx.com.br/ri. You can also follow the beginning of OGX's first oil production at www.ogx.com.br/primeirooleo.
LEGAL NOTICE
This document contains Company-related statements and information that reflect the current vision and/or expectations the Company and its management have regarding its business plan. These include, among others, all forward-looking statements that involve forecasts and projections, indicate or imply results, performance or future achievements, and may contain words such as “believe,” “foresee,” “expect,” “consider,” “is likely to result in” or other words or expressions of similar meaning. Such statements are subject to a series of expressive risks, uncertainty and premises. Please be advised that several important factors can cause the actual results to diverge materially from the plans, objectives, expectations, estimations, and intentions expressed in this document. In no event shall the Company or the members of its board, directors, assigns or employees be liable to any third party (including investors) for investment decisions or acts or business carried out based on the information and statements that appear in this presentation, or for indirect damage, lost profit or related issues. The Company does not intend to provide to potential shareholders with a revision of the statements or an analysis of the differences between the statements and the actual results. You are urged to carefully review OGX's offering circular, including the risk factors included therein. This presentation does not purport to be all-inclusive or to contain all the information that a prospective investor may desire in evaluating OGX. Each investor must conduct and rely on its own evaluation, including of the associated risks, in making an investment decision.
OGX
Investors:
Marcelo Torres, marcelo.torres@ogx.com.br
Eduardo
Lucchesi, eduardo.lucchesi@ogx.com.br
Gustavo
Trindade, gustavo.trindade@ogx.com.br
Bianca
Carsalade, bianca.carsalade@ogx.com.br
+55
21 2555 6237
or
Media:
Camila Manfredini, camila.manfredini@ogx.com.br
+55
21 2555 4673
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