Waimea, Waikiki Carry OGX Toward Producer Wave

Waimea, Waikiki Carry OGX Toward Producer Wave

RIO DE JANEIRO - Brazilian independent driller OGX Petroleo e Gas Participacoes SA, the oil company created by billionaire businessman Eike Batista, will declare two offshore oil fields commercial in 2012.

The Waimea field in the Campos Basin, which produced OGX's first crude oil in January, will be declared commercial in the second quarter, Production Manager Ricardo Abi-Ramia said during a conference call with analysts. In addition, Exploration Manager Paulo Ricardo said a separate field, called Waikiki, will also receive a similar declaration this year.

The commercial declaration will complete OGX's transformation from a pure exploration play into a full-fledged oil producer. A development plan for Waimea will be submitted to Brazil's National Petroleum Agency, or ANP, in the second quarter, according to OGX. Once the plan is approved, additional wells can be connected to the FPSO OSX-1 floating production, storage and offloading vessel.

Waimea is currently producing about 12,500 barrels a day from a single production well, with output expected to reach between 40,000 and 50,000 barrels a day by the end of 2012, Abi-Ramia said. The increased output will come from an additional two production wells that will be connected this year, with engineering studies under way to gauge the feasibility of adding a fourth production well, Abi-Ramia said.

"We're getting very high efficiency, which is allowing us to produce this oil without any water," Abi-Ramia said.

While the first production well at Waimea showed potential to produce up to 20,000 barrels a day, executives said they were keeping output levels lower in order to preserve the reservoir.

"We must care very well for our first child," OGX Chief Executive Paulo Mendonca said. OGX could likely boost production from the well by adding water injection, but the move isn't necessary at the moment, the executive added.

The Waikiki prospect, meanwhile, is expected to enter production in 2013. Two additional FPSOs, OSX-2 and OSX-3, are about 30% complete and construction is going well at the shipyard in Singapore, Abi-Ramia said.

OGX is also moving quickly to capitalize on its natural gas discoveries in the Parnaiba Basin in Maranhao state, Abi-Ramia said. The Gaviao Real field will likely be operational in the second half of 2012, with production expected to reach 6 million cubic meters per day in 2013, the executive added.

In the Santos Basin, OGX is working quickly to restart drilling at a shallow-water pre-salt play known as Fortaleza. Drilling was stopped after the rig experienced a "kick" from a high-pressure zone. A second rig with capacity to handle the increased pressures is expected to be on site in 60 days, OGX's Ricardo said.

The Santos Basin is where a cluster of some of the world's largest discoveries in the past 30 years have been made in recent years. Unlike those discoveries, the Fortaleza prospect is closer to shore and in much shallower water, executives emphasized.

In total, OGX expects to drill 26 wells in 2012. That was up from a prior forecast of about 19 wells this year. The total will include the company's first well in Colombia planned for the second half of 2012.

OGX also estimated drilling 19 wells for 2013, up from previous forecasts of four wells next year.

Late Thursday, OGX reported a loss of 510 million Brazilian reais ($280 million) in 2011, from a loss of BRL135.5 million in 2010.

Copyright (c) 2012 Dow Jones & Company, Inc.


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CHANOS | Jun. 28, 2012
June 28, 2012: looks like Eike Batista has not been telling the truth.

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