OREANDA-NEWS. May 18, 2011. OGX, an oil and gas company which is part of the EBX Group, owned by entrepreneur Eike Batista, closed the first quarter of 2011 with investments of BRL  679 million in its exploration and production (E&P) activities. Since 2007, when the Company was formed, it has invested more than BRL  5.3 billion in E&P in Brazil. The company is responsible for the largest exploratory campaign in Brazil, with nine drilling rigs chartered and more than 5,000 professionals involved, including outsourced personnel.

OGX ended the quarter with a solid cash position of BRL  4.1 billion (USD  2.5 billion), reflecting its ability to manage costs efficiently, especially at a time when the drilling campaign is being ramped up and the organizational structure strengthened, as the production phase approaches.

According to the CEO of OGX, Paulo Mendonca, the quarter was very important for OGX, because the company has intensified its appraisal campaign in the Campos basin, on the back of its successful exploratory campaign. A total of 16 wells have been spud since the beginning of the year, of which 10 are appraisal wells for the accumulations Waikiki, Pipeline and Illimani (Campos Basin) and Fazenda Sao Jose (Parnaiba Basin), with the intent of converting 3C contingent resources into 2C and 1C, and thereafter into reserves.

"OGX has evolved into a more mature organization as it enters the next stage of its development, transitioning from a pure exploration company focused on drilling wildcat wells, into a business aimed at producing its first oil at the Waimea production well later this year. In tandem with our focus on production, we continue to make new discoveries and to steadily develop them, expanding our exploratory portfolio, which we believe has enormous potential", added Mr. Mendonca.

The Company would like to highlight the following important upcoming events, which are expected to occur in the coming months: (i) the beginning of production in the second half of 2011 through an Extended Well Test in the Waimea accumulation; (ii) the continuation of its intensive appraisal campaign, mainly in the Campos basin; (iii) the initiation of the exploratory campaign in the Para-Maranhao and Espirito Santo basins in the first and second half of the year, respectively, and (iv) the declaration of commerciality for its existing discoveries in Campos and Parnaiba.

"Our production team is entirely focused on the extended well test, which will begin in the second half of this year, in anticipation of our first oil production and commercialization. At the same time, we are already evaluating production development in the Pipeline and Waikiki accumulations, also located in the Campos Basin, which are our top priorities after Waimea due to the advanced stage of their appraisal and the quality of their reservoirs", commented Reinaldo Belotti, OGX’s Production Officer.

Financial Performance

The net loss for the first quarter of 2011 was approximately BRL  33.9 million, which was the result of the positive contribution from Financial Results of BRL  17.9 million, Income Tax and Social Contribution credit and Minority Interest, offset by Exploration Expenses and General and Administrative Expenses.