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UPDATE 1-Brazil's OGX Sept oil output drops; no offshore flows
October 11, 2013 / 1:29 AM / in 4 years

UPDATE 1-Brazil's OGX Sept oil output drops; no offshore flows

* Production down by around 1.5 pct from Aug

* No output in main offshore field for second month

* OGX considering all options to protect assets, stay in business

RIO DE JANEIRO, Oct 10 (Reuters) - Brazil’s OGX Petróleo e Gás SA, the cash-strapped oil company controlled by Brazilian tycoon Eike Batista, produced around 1.5 percent less oil and gas in September than the month before, with none from its main offshore oil field.

The company said on Thursday that it churned out an average of 13,200 barrels of oil and gas a day in September. OGX had no output from its main offshore field of Tubarão Azul in August either, the result of broken sea-floor pumps.

Tubarão Azul has had lower-than-expected output since it began production in early 2012. OGX expects to shut the field in 2014, years ahead of schedule. The field’s poor performance led to a more than 90 percent decline in OGX stock in the past year. That decline also prompted similar declines in the stock of other companies in Batista’s EBX mining, oil, energy, port and shipbuilding group.

All of OGX’s September output came from its 67 percent share in the Gavião Real field in the Parnaiba Basin in Brazil’s northeastern state of Maranhão. Nearly all of that output from Gavião Real, an average of 4.5 million cubic meters a day, was natural gas.

Another 2.1 million cubic meters was natural gas liquids. The production amount in barrels for September converts the amount of gas into its equivalent value in oil.

Batista’s shrinking fortune made him unable to continue financing EBX companies including OGX, most of which are start-ups or new companies with very little revenue. In the face of a cash crunch, Batista is attempting to reorganize his group and has given up control of several of his traded companies.

OGX is considering all options protect assets and stay in business, the company said Oct. 4. It recently put off payment of some of its debts and is in talks with investors on how to honor $3.6 billion of bonds.

Its bonds trade at less than 10 cents on the dollar and are rated as likely to default by major ratings agencies. A default would result in the largest-ever corporate debt restructuring in Latin America.

OGX shares rose 4.8 percent to 0.22 reais in São Paulo trading on Thursday.

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