Deepwater Brazil Oil Output at 300,000 BOE/D by 2012

LONDON (Dow Jones Newswires), November 4, 2008

Ouput from the Tupi, Iara and Guara deep water fields in the Santos basin off the Brazilian coast should hit 300,000 barrels of oil equivalent a day by 2012, said BG Group Tuesday.

"First commercial production is now expected from the 100,000 barrel-a-day Tupi pilot by fourth quarter 2010. In addition, the exploration success with Guara and Iara has led the partnership to fast-track planning on two additional 100,000 barrel-a-day pilot schemes, with the objective of achieving first production in 2012," the company said in a statement.

Other partners in the fields are Petroleo Brasileiro SA and Galp Energia SGPS SA.

BG Group Chief Executive Frank Chapman said the recent sharp fall in crude oil prices will not affect the developments. "We are comfortable that these developments are economic at prices significantly below where we are today," he said.

BG estimated its net share of reserves and resources in the Santos Basin at 3 billion barrels of oil equivalent, of which 2 billion barrels of oil equivalent can be classified as proven or probable.

Evolution Securities analyst Richard Griffith said these figures make a strong argument that BG is seriously undervalued at its current share price.

"At $60 per barrel long-term, our valuation with a bid premium is 1,628 pence, 75% above the current price," he said.

Copyright (c) 2008 Dow Jones & Company, Inc.


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