* Oil company's cash position fell 31 pct in Q1
* Petronas buy, $1 bln Batista pledge back up cash
RIO DE JANEIRO May 10 Brazilian oil company OGX
Petroleo e Gas SA plans to burn cash at current
levels, but sees room to slow the pace in future, a company
executive said on Friday during a conference call to discuss
OGX's cash position fell by $507 million or 31 percent to
$1.148 billion in the first quarter from $1.655 billion in the
fourth quarter, the company, controlled by Brazilian billionaire
Eike Batista, said in a statement late Thursday.
The company's net loss in the first quarter nearly tripled
from a year earlier to 804.6 million reais ($400 million). The
loss deepened despite rising revenue after the company took a
charge of 1.19 billion reais to write off dry and non-commercial
The Rio de Janeiro-based oil company's stock has slipped by
about 90 percent since early 2012 when the six-year-old company
produced its first oil from the Tubarão Azul, or "Blue Shark",
field in Brazil's Campos Basin northeast of Rio de Janeiro.
Output from the field has been far below expected levels,
raising concern the company will have difficulty paying its
debts and could run out of cash and investment capital before it
can find and develop new fields.
OGX, however, said its cash position and investment capital
are strong, especially after the $850 million purchase of a 40
percent stake in the company's offshore Tubarão Martelo, or
"Hammerhead Shark", field by Petroliam Nasional Bhd,
the Malaysian state-owned oil company better known as Petronas.
Of the Petronas investment $250 million is being paid up
front and the rest has been put in escrow, to be released as
Tubarão Martelo meets production targets, OGX said late on
Executives said on Friday that $100 million was the lower
limit for the company's cash position, adding that Batista has
committed to add $1 billion of new capital if needed.
To increase cash flow, the company is rapidly developing the
Tubarão Martelo field and expects to start output by the end of
the year, said Paulo de Tarso, OGX's head of exploration.
Technical problems with the three producing wells in Tubarão
Azul are being fixed, he added, with the wells likely to be
working normally again by the end of June.
Problems with the carbonate rock reservoir in Tubarão Azul
have prompted the company to consider scrapping two additional
planned wells in the area, a fourth producing well and a water
injection well that would add pressure to increase oil flow.
"Something has changed in Tubarão Azul," De Tarso said
adding that it probably wasn't drastic. One of the changes has
been an increase in gas output as compared to oil, which has
caused temperature problems in underwater pumps.
Tubarão Martello, where Petronas bought a stake, has oil in
sandstone type rocks which are generally less difficult to
produce oil from because they are more porous and have higher