Batista oil company may lose rights to exploration blocks -source

RIO DE JANEIRO Thu Jan 23, 2014 5:18pm EST

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RIO DE JANEIRO Jan 23 (Reuters) - Óleo e Gás Participações SA, the ailing oil producer controlled by Brazilian industrialist Eike Batista, stands to lose offshore exploration rights in Espírito Santo state if it fails to meet capital spending commitments by Friday, a source with direct knowledge of the situation said.

The company, which is behind in spending on drilling in offshore blocks ES-M-472, ES-M-529 and ES-M-531, has until Friday to show the country's oil industry watchdog, ANP, it can invest in proportion to the spending of its partners, Perenco SA and Sinochem International Corp, said the source, who declined to be quoted because of the sensitivity of the issue.

The deadline was approved by ANP on Jan. 10 and so far remains valid, the source said. The company also must show it will be able to meet its commitments to develop the Atlanta and Oliva fields in the Santos Basin on Friday, the source added.

Óleo e Gás, formerly known as OGX Petróleo e Gas Participações SA, filed for a $4.75 billion bankruptcy restructuring process on Oct. 30, but it is still required to show that it has the capacity to meet the exploration timetable agreed to with ANP.

The company struck a deal with most of its bondholders in December that could allow a successful bankruptcy restructuring. (Reporting by Sabrina Lorenzi; Writing by Reese Ewing; Editing by Peter Galloway)

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