OREANDA-NEWS. December 15, 2011. OGX, the oil and gas company  of the EBX Group, owned by the entrepreneur Eike Batista, closed the third quarter with investments of BRL  2.2 billion in its exploration and production (E&P) activities in Brazil in 2011. Since 2007, the company has invested a total amount of BRL  6.8 billion, meaning it has invested more than any other private oil company in Brazil. OGX currently has nine drilling rigs at its disposal and more than 6,000 professionals working for it, of which 350 are direct employees.

The company ended the third quarter with a solid cash position of BRL  6.7 billion (USD  3.6 billion), enough to support the exploration commitment and development of initial production.

The period was marked by intense implementation of company operations, with important advances towards the first oil, the beginning of development of the Parnaiba Basin and important results from drill-stem tests in the Santos Basin. Also related to exploration, the company confirmed the characteristics and extensions of previously discovered accumulations. “Towards the beginning of a robust cash generation, we signed a sales contract of our first cargo with Shell, which confirms the oil quality of Waimea,” commented Mr. Paulo Mendonca, OGX’s General Executive Officer and Exploration Officer.

During the third quarter, OGX remained focused on the exploratory campaign in the Campos Basin, where it drilled nine appraisal wells and one wildcat well. The company also performed drill-stem tests in the Santos Basin, obtaining significant results which confirmed the presence of gas and condensate. In the Parnaiba Basin, OGX Maranhao began drilling the first production well and completed the drilling of an important wildcat well.

In November 2011, it was initiated the first OGX exploratory well in the Espirito Santo Basin. OGX’s entry into this basin, a frontier basin with several oil fields already discovered and an active petrolific system, broadens our exploratory portfolio. Together with Perenco, the operator and partner in this basin, we have already defined two prospects to be spud, Moriche and Guarapari. The first exploratory well in deep waters (1,000 meters of water depth), in the Moriche prospect, is being drilled with the Ocean Star rig.

Towards the start of OGX production, OGX received the installation license for the Extended Well Test (EWT) and production development in Waimea, granted by IBAMA (the Brazilian Institute for Environment and Renewable Natural Resources). The company has begun the installation of the FPSO OSX-1 mooring system and the subsea equipment for the connection of the first production well (OGX-26HP). All necessary equipment for the Waimea EWT has already been delivered, including the FPSO OSX-1, which arrived in Brazil at the beginning of October.

“Having obtaining the required licenses, and with all the necessary equipment in hand, we have begun the installation of our production system. The EWT in Waimea demonstrates how OGX’s teamwork and ability to make quick decisions, combined with strong execution capacity, will produce OGX’s first oil in record time,” said Reinaldo Belotti, OGX’s Production Officer.

The following are important events that OGX expects in the near-term: (i) beginning of production; (ii) continuation of the appraisal campaign, especially in Campos and Santos Basins, (iii) exploratory campaign in the Espirito Santo Basin, (iv) continuation of the exploratory and appraisal campaign in the Parnaiba basin, (v) obtaining results of drill-stem tests in the horizontal wells which are already prepared to become production wells, and (vi) acquisition of seismic data for our blocks located in the Lower Magdalena Valley Basin, Colombia.

Financial Performance - OGX reported a net loss of approximately BRL  26.0 million this quarter, as compared to a net loss of approximately BRL  202.3 in the third quarter of 2010. The net loss for this quarter resulted from the positive contribution from Financial Results of BRL  138.8 million offset by General and Administrative Expenses of BRL  78.9 million, Exploration Expenses of BRL  50.2 million and Income Tax and Social Contribution of BRL  35.8 million and Minority Interest of BRL  8.5 million.