OGX to Begin Drilling Campaign on Schedule, Plans 6 Brazilian Wells in '09

OGX S.A. announced its first quarter results today. The following financial and operating information is presented on a consolidated basis, pursuant to Brazilian corporate law, in thousand of reais (R$), unless stated otherwise.

"In the first quarter, we continued to make progress executing our business plan and expect to begin our drilling campaign on schedule. The 3D seismic data is being processed and interpreted by our experienced team of geologists and geophysicists. This data, which has given us increased confidence with respect to our prospects, will play an essential role as it will help us in defining the parameters of the six wells to be drilled this year. Our 3D visualization room has also been a powerful tool throughout this process, contributing to a better understanding of the potential of our portfolio," commented Paulo Mendonca, OGX's General Executive Officer.

"Our cash position at the end of the first quarter reached R$7.8 billion and we generated net profit of R$147.6 million, which was primarily driven by financial income. Despite the ongoing disruption in the financial markets, we have maintained a very conservative treasury management policy in order to protect our capital and have invested our cash in fixed income securities of leading Brazilian financial institutions," noted Marcelo Torres, OGX's Chief Financial Officer. "This strategy has yielded solid returns and enabled us to develop the financial position necessary to fully fund our exploratory campaign and initial production."

Recent Highlights

  • OGX joined the IBrX and IBrX-50 theoretical portfolio indices. OGXP3's weight in the IBrX index will be of 1.68%, corresponding to the 12th position in the portfolio, and in the IBrX-50 of 1.91%, corresponding to the 11th position;
  • Mr. Eike Batista assumed the position of Chief Executive Officer, after Mr. Rodolfo Landim moved to the holding company, EBX, to develop new ventures. Mr. Paulo Mendonça assumed the position of General Executive Officer in addition to his existing position, Exploration and Production Officer;
  • OGX's Level I Global Depositary Receipts Program received approval from the Comissão de Valores on February 10th and started trading on the over-the-counter market under the symbol "OGXPY" on May 8th. Each one common share represents five GDRs. Bank of New York Mellon was hired as the depositary institution;
  • OGX acquired an additional 15% of concession rights and obligations in Block BM-S-29, on the Santos Basin. This transaction brings OGX's participation interest in the Block to 65%; Maersk Oil remains its operator.

"Recently announced discoveries in areas adjacent to our blocks in the Santos Basin, combined with the interpretation of newly reprocessed 3D data for Block BM-S-29, has helped us to better map this area and given us a clearer picture of the potential of this prospect. We will begin drilling our first well there in mid-2009, and we continue to believe that this is one of the more promising exploration areas in Brazil," concluded Mr. Mendonca.

Upcoming Events

The remainder of 2009 will be a pivotal period for OGX, one in which the Company will begin an ambitious drilling campaign in a relatively short time frame. The Company plans to begin the drilling of six wells in the Campos and Santos basins during 2009. By mid-year, drilling of the first well in the Santos Basin, the BM-S-29 block, will commence and it is estimated that it will take approximately 80 days to reach all layers. At the same time, OGX will start to drill the first of a sequence of four wells in the Campos basin, two of which will continue into 2010.

OGX Milestone Roadmap

Since the IPO, OGX's team has been focused on securing all of the equipment and services essential for the exploratory campaign. By the end of 2008, rigs, vessels, helicopters, wellheads and specialist services had been contracted from world-class suppliers.

This procurement of equipment and services was successfully executed well ahead of schedule due to the broad experience and expertise within the organization.