OGX JV Sets Sights on Gas in Parnaiba Basin

OGX announced that, through its subsidiary OGX Maranhão, has identified presence of gas in the Devonian section of well 1-OGX-16-MA, in the block PN-T-68, in the onshore basin of Parnaiba. OGX Maranhão, an entity formed by OGX S.A. (66.6%) and MPX Energia S.A. (33.3%) is the operator and holds a 70% stake in this block, while Petra Energia S.A. holds the remaining 30%.

"This discovery opens a new exploratory frontier in an onshore basin, the first in two decades. It is important to note that this exploratory campaign was initiated in October 2009 and is conducted by Brazilian companies, obtaining important results in record time," commented Mr. Paulo Mendonça, General Executive Officer of OGX.

"Viva Brazil, viva the Brazilian intelligence," commented Mr. Eike Batista, OGX's controlling shareholder and Chairman.

After drilling the first 10 meter in the devonian section with significant gas shows, in the depth of 1.654 meters, OGX Maranhão has decided to conduct a Drill Stem Test. The flow has started today, at 5:30 am, and after 10 minutes of flowing, it was identified the presence of gas at the surface and, at 6:00 am, the wellhead pressure was of 1,900 psi, then the well was shut in for the first build up period. During the second flow, initiated at 8:00 am, the well was aligned to the burner, showing a 15 meter long flame.

With the seismic data recently acquired, 20 new prospects were already mapped, 5 of which located in the same trend of this discovery, indicating the great potential in part of the basin, where OGX Maranhão owns 7 blocks, in a total of 21,000 km². The drilling of well OGX-16, also known as the California prospect, is still in progress and is expected to continue to a maximum final depth of approximately 3,450 meters.

The OGX-16 well, located in the PN-T-68 block, is situated approximately 260 kilometers of São Luis, the capital of the state of Maranhão. The rig QG-1 initiated drilling activities there on July 5, 2010.