OGX Gears Up for Exploratory Campaign Offshore Brazil

OGX, the largest Brazilian independent oil and natural gas company in terms of offshore exploratory acreage, has successfully procured all of the critical elements necessary to initiate its exploratory campaign. Among the milestones reached are the implementation of a 3D seismic campaign, hiring of four semisubmersible drilling rigs, chartering of six vessels and two helicopters for logistical support, contracting of an onshore base, acquisition of all critical drilling materials to support exploration and the construction of a state-ofthe-art 3D visualization center.

"OGX has assembled a world class team with a strong track record in the Brazilian oil and gas sector. Leveraging the experience, knowledge, and relationships within this group, we were able to secure equipment and develop the necessary infrastructure to support the initiation of our exploratory campaign. We have now procured the necessary equipment to begin the initial drilling in the Campos and Santos basins ahead of our projected schedule. Although we have accelerated our timeline, we have been able to control our costs, which in some cases are actually below budget," commented Rodolfo Landim, CEO of OGX.

"Our unique portfolio encompasses approximately 7,000 km2 of offshore exploratory acreage in four Brazilian basins. We are effectively managing our business and plan to drill 51 wells in the next four years in order to prove our oil and gas reserves while developing our initial discoveries. With our solid financial position of over R$7.5 billion in cash, a well-documented risked resource profile of 4.8 billion barrels of oil equivalent and strong technical expertise, we are well on our way to achieving our goal of transforming these resources into proven
reserves," added Landim.

During the past six months, OGX has reached important milestones and secured critical elements of its exploratory campaign, notably:

  • Seismic Campaign: 3D seismic data shooting in the Campos and Para-Maranhao basins was fully completed in December 2008. Seismic acquisition in the Espirito Santo blocks is well under way and seven months ahead of the original timetable. Existing 3D seismic data for the Santos basin has been further improved with modern special reprocessing techniques, and is already available to OGX's interpretation team. Data interpretation will be complete by mid-2009 for our blocks in the Campos, Santos and Para- Maranhao basins, while Espirito Santo will be ready by December 2009;
  • Drilling Rigs: OGX hired four semisubmersible rigs, three of them from Diamond Offshore and one from Pride International, which will allow the Company to carry out its entire exploratory drilling campaign in the Campos and Santos basins. Two rigs are starting in September 2009, another will begin in October and the last one is scheduled to start in the beginning of 2010, but can be anticipated;
  • Logistics: The Company has chartered six vessels, five of which are being built in Brazil, and two helicopters to transport personnel and goods to the offshore drilling rigs operating in the Campos and Santos basins. This equipment was contracted from world-class contractors including Edison Chouest, Norskan Offshore and Aeroleo. In addition, the Company secured with Briclog its onshore base in the city of Rio de Janeiro, where supplies will be stored and handled into and out of the vessels;
  • Drilling Services and Equipment: All critical drilling materials, services and equipment have been secured from leading international suppliers, including wellheads from Vetco, a wholly-owned subsidiary of General Electric, casings from V&M do Brasil, and drilling fluid from MI-SWACO. In addition, the Company has hired engineering services from Schlumberger and Halliburton and casing running services from Frank's International. Orders for materials to be used in the six wells to be drilled in 2009 have been placed;
  • 3D visualization center: OGX has built a state-of-the-art visualization center at their Rio de Janeiro headquarters to further enhance integration between the various expert teams, improve decision-making processes and increase productivity.

"By the end of the second quarter, we will begin drilling in the Santos basin with our partner and operator, Maersk Oil. Following this, we will drill two wells in the Campos basin beginning in September after arrival of the first two rigs. Upon completion of the first two wells operated by OGX, we expect to begin drilling two additional prospects in the Campos basin, which will most likely begin towards the end of 2009 and continue into early 2010. Our sixth well scheduled for 2009 will be in the Santos basin and should start in November after we receive our third rig," concluded Landim.