UPDATE 1-Brazil's OGX may reduce stakes in older fields

Tue Dec 11, 2012 9:40am EST

Related Topics

* Expects to increase 2013 spending plan by up to $130 million

* May sell stake in mature blocks like Tubarao Martelo

RIO DE JANEIRO Dec 11 (Reuters) - OGX Petroleo e Gas SA , Brazil's second-largest oil company by market value, said on Tuesday that it might sell stakes in older blocks and fields to raise capital to finance exploration in more promising areas.

The company also expects to increase its 2013 investment plan by as much as $130 million, or about 11 percent, to up to $1.33 billion to pay for development of the BS-4 block in the Santos basin, Chief Financial Officer Roberto Monteiro said.

OGX agreed last month to purchase a 40 percent stake in the offshore block BS-4, operated by Queiroz Galvão Exploração e Produção SA, from Brazil state-led oil company Petrobras.

"We're in the process of adjusting costs," Monteiro said at an event with investors in Rio de Janeiro, OGX's base.

"In the future it would make sense for us to consider selling a stake in our more mature blocks such as Tubarao Martelo," he said, adding that there are not yet any formal talks with companies about possible sales.

The Tubarao Martelo field in the Campos Basin off the coast of Rio de Janeiro contains some of the oldest discoveries by OGX, which is controlled by Brazilian billionaire Eike Batista.

To gain more financial resources, OGX also has a put option to sell $1 billion in shares to Batista. Monteiro referred to the option as an "overdraft line" and reiterated that the company did not yet know if it will need to use it.

Monteiro also said heavy seas were delaying connection of a third well in OGX's only operating field, Tubarao Azul, to the OGX-1 floating production, storage and offloading platform.

The company had said on Dec. 4 that it planned to connect the well in coming weeks.

Initial production from Tubarao Azul's third well should average 6,000 barrels per day but would later fall to 5,000 bpd, Monteiro said.

That would be in addition to the average 10,100 bpd that OGX said the field had produced from two wells in November.

OGX expects output at the Tubarao Azul field, which started in January, to fall nearly 8 percent per year with water injection and 10 percent annually without it.

Oil production has been costing OGX $50 per barrel, but could over time fall to $30 per barrel, Monteiro said. He said OGX had been receiving $95 per barrel for its oil.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.