July 11, 2013 / 5:17 AM / 4 years ago

Batista's troubled flagship OGX loses two more board members

BRASILIA, July 10 (Reuters) - OGX Petroleo e Gas SA said on Wednesday that two members of its board were leaving, as the troubled flagship of Brazilian billionaire Eike Batista’s EBX group has failed to deliver on promised oil production.

Samir Zraick and Luiz do Amaral de França Pereira will no longer be members of its board of directors, OGX said in a statement, adding that the company will name new board members soon to comply with regulations for minimum board membership.

A more than 90 percent decline in the value of OGX stock in the last year has cost the company its place as the No. 2 Brazilian oil company by market value.

The Rio de Janeiro-based company is expected to shrink as part of the restructuring of Batista’s embattled group of energy, mining, shipbuilding and port companies.

OGX’s failure to generate revenue from its oilfields and doubts about Batista’s pledge to invest $1 billion more in the company have led investors to worry that it will not have enough money to finance needed new production and pay existing debt.

The company’s bonds (OGX) are trading at levels that suggest a debt-default is highly likely. Fitch Rating Service downgraded OGX debt to “CCC” on June 14.

A week after the downgrade, three high-profile OGX board members quit. The three rank among Brazil’s most respected financial, political and legal leaders: Pedro Malan, a former long-serving Brazilian finance minister; Rodolfo Tourinho, a former energy minister; and Ellen Gracie, a former chief justice of Brazil’s Supreme Court.

The six-year-old company is struggling to turn promising offshore discoveries into producing fields. Output from OGX’s first offshore field, Tubarão Azul, began in early 2012 at far below expectations. That raised concern OGX would be unable to generate revenue to finance ships and drill new wells.

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