OGX – Intensifying Discovery Appraisals and Planning on ordering 3 more FPSOs

Paulo Mendonça, CEO of OGX stated that the first quarter of 2011 was very important for the Brazilian operator. OGX has been intensifying the campaign to appraise its discoveries in the Campos basin, where 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 São José (Parnaíba Basin), with the intent of converting 3C contingent resources into 2C and 1C, and thereafter into reserves.

OGX has ambitious plans for the coming months including:

-Production start-up to begin during the third quarter of 2011 through an ongoing EWT at  its Waimea play;

-Increasing the rhythm of its appraisal campaign, specifically in the Campos basin;

-Starting off the exploratory campaign in the Pará-Maranhão and Espírito Santo basins along the year;

-Delivering the vital and time sensitive declaration of commerciality to ANP (National O&G regulator), related to the discoveries in Campos, Santos and Parnaíba Basins.

On a more extended plane, they also intend to order 3 more FPSOs by 2015, at this point OGX has ordered 5 FPSOs, which will be ordered from OSX its sister company specialized in shipbuilding and ship leasing. Both OGX and OSX are part of the EBX group belonging to Brazilian mega entrepreneur Eike Batista, currently the 8 richest man in the world, according to Forbes magazine.

The first FPSO, OSX 1 is part of a deal with BW Offshore, which is managing its convertion in Singapore, since the OSX shipyard, in partnership with HHI (Hyundai Heavy Industries) is  still being built in north Rio de Janeiro. OGX will pay $263 thousand a day to its sister company for the use of the FPSO, a figure which is definitely below the market average for FPSO lease.

The OGX shallow water discoveries off the coast of Rio de Janeiro are very impressive as is its discovery success in the Campos Basin, which is near 100%. Another important aspect of their discovery campaign is the fact that OGX has uncorked a new shallow oil province in the south Campos Basin. We are looking at an impressive net potential of resources for OGX in the Campos Basin of 5.7 billion boe, of which a considerable amount will come from this new oil province.

Claudio Paschoa

Above: Paulo Mendonça - CEO of OGX, who was a top Petrobras geologist and executive for over 30 years, before joining the new Brazilian player.