RIO DE JANEIRO (Dow Jones Newswires), Apr. 18, 2011
OGX is continuing to explore the sale of part of its Campos Basin oil fields but has reduced the size of the stake to be sold, said OGX Chairman Eike Batista.
"We have discovered such high-quality oil and such high-productivity that we don't see it as necessary to sell a maximum of 30% of our assets," Batista said in a conference call with investors. "The farm-out is ongoing, but it will be reduced to 10%." OGX is part of the billionaire investor's ever-growing industrial conglomerate, which includes energy, mining, logistics and oilfield services companies.
OGX gave investors a clearer picture of the company's value late Friday, when it announced that oilfield consultants DeGolyer and MacNaughton had certified prospective, contingent and delineated resources of 10.8 billion barrels of oil equivalent, or BOE. That was up from an earlier estimate of 6.8 billion BOE made in September 2009. The total included OGX's first contingent resources in the offshore Campos Basin, where the company booked 3 billion barrels of oil equivalent, or BOE.
The report did not include any possible pre-salt resources from the Campos Basin, which could add more than 1 billion BOE to the 5.7 billion BOE total resources in the basin, Batista said.
"We have a huge area to be added," said OGX Chief Executive Paulo Mendonca. The company will further evaluate the pre-salt prospects with fresh three-dimensional seismic data, Mendonca added.
While OGX's pre-salt prospects will require further evaluation, the company is quickly closing in on moving from a pure exploration play to a crude oil producer.
In September, OGX plans to produce its first crude oil. The company will start an extended well test at the Waimea prospect, which is expected to produce about 20,000 barrels a day later this year. The OSX-1 floating production, storage and offloading vessel, or FPSO, will be installed at the site in August, OGX officials have said.
OGX's Batista said that the quality of the oil to be produced from the company's Campos Basin field would range between 20 and 21 degrees on the American Petroleum Institute's grading scale. In talks with refiners in Houston and London, the crude should fetch a better-than-expected price for the company, he added.
"We will fetch Brent oil prices considering today's market situation," Batista said. The company had previously expected to receive a price at a $10-a-barrel discount to U.S. WTI prices, he said.
The shallow waters of the basin will also allow the company to produce the crude at about $7 a barrel, with total operating expenses of about $16 a barrel, Batista said.
Copyright (c) 2011 Dow Jones & Company, Inc.
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