OGX Confirms Hydrocarbon Find in Santos Basin

OGX has confirmed the existence of pre-salt microbiolite reservoirs with hydrocarbons in the shallow waters of the Santos Basin. As previously announced, the wildcat well 1-OGX-63-SPS, located in the BM-S-57 block, identified hydrocarbon both in the Aptian and Albian sections. OGX holds a 100 percent working interest in this block.

"The confirmation of these pre-salt reservoirs in the shallow waters of the Santos Basin by OGX represents a milestone for the industry and reinforces the enormous potential of the Brazilian sedimentary basins," said Eike Batista, Chairman and CEO of OGX.

"This discovery demonstrates our team's ability to test new ideas, open new areas and create relevant perspectives for the potential of this basin," added Paulo Mendonça, General Executive and Exploration Officer of OGX.

As announced on January 16, 2012, the OGX-63 well identified a hydrocarbon column of approximately 1,000 meters with a net pay of approximately 361 feet (110 meters) in the Albian section. The drilling of the well reached the Aptian section, where it identified hydrocarbons through a high gas presence that resulted in a 'kick', indicating favorable permo-porosity characteristics and high pressure.

As operations continued, the above-mentioned 'kick' was controlled and the analysis of rock fragments led to the confirmation of a microbiolite reservoir of Aptian age, in other words, the same type of reservoir rock found in the deep and ultra-deep waters pre-salt of the Santos and Campos Basins. The well was drilled to a depth of 20,128 feet (6,135 meters), and has thus far discovered a column of approximately 492 feet (150 meters) in the Aptian section.

Due to the high pressures encountered, the drilling was temporarily suspended so that OGX can replace the current rig Ocean Quest (mid-water semisub) with the rig Ocean Star (DW semisub), also part of OGX's fleet. The Ocean Star has the requisite specifications to continue the operation, which is expected to include logging and possibly conducting at least one drill-stem test.

For the time being, the Company is maintaining its volume estimates of 1.8 billion boe for the Santos Basin. However, OGX anticipates that it will conduct additional tests and drill appraisal wells in order to better assess the volumes in the area, which could potentially exceed the current estimates.

The OGX-63 well, known as Fortaleza, is located in the BM-S-57 block and is situated approximately 63 miles (102 kilometers) off the coast of the state of Rio de Janeiro at a water depth of approximately 509 feet (155 meters).

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