OGX to Strike Brazilian Asset Deal by Year End

BEIJING (Dow Jones Newswires), Sep. 15, 2010

OGX is expecting to strike a deal worth $12 billion to $14 billion for a stake of up to 30% in oil discoveries it had made in Brazil's Campos Basin, an OGX official said Wednesday.

OGX hopes to close the sale by the end of this year, said Ricardo Juiniti Bernardo, OGX's executive manager for wells operations.

This is the first time that an OGX executive has put a value on the Brazilian assets being offered to potential bidders as part of a farm-out process, with past media reports saying a deal could be valued at $7 billion.

China Petrochemical and Cnooc, China's second- and third-biggest oil producers by capacity, have reviewed data on the oil discoveries as part of the farm-out process, Bernardo added.

Two companies from Europe, one from the U.S. and one from Australia are competing with one from Asia for the deal following the first round of bidding, said Edmundo Marques of OGX's exploration and production department.

The farm-out deals allow companies holding stakes in offshore exploration blocks to reduce risk by bringing minority investors into the fold.

OGX wants to capitalize on a series of oil finds the company made in the prolific offshore Campos Basin, where the company expects to pump its first oil in the first half of 2011.

In what was viewed as a precursor to any farm-out deal, OGX's board last month called for a shareholders' meeting to approve the shift of assets to a newly created subsidiary, OGX Campos.

OGX Campos will receive a 70% stake in seven offshore exploration blocks in the Campos Basin, where more than 85% of Brazilian crude oil is produced, according to minutes from the board meeting.

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