2Q11 Presentation final
Transcript of 2Q11 Presentation final
OGX: 2Q11 Results
Disclaimer
This presentation uses the terms “prospective resources” and “contingent resources” to describe those quantities of petroleum
that are potentially recoverable from accumulations yet to be discovered. Because of the uncertainty to commerciality and lack of
sufficient exploration drilling, prospective resources cannot be classified as reserves. Investors are advised that the U.S.
Securities and Exchange Commission (SEC) and other international securities regulators do not recognize prospective and
contingent resources. Prospective resources have a great amount of uncertainty as to their existence. There is no certainty that
any portion of the prospective resources will be discovered and, if discovered, whether they could be developed economically.
Therefore, investors are cautioned not to assume that all or any part of OGX’s prospective resources exist, or that they can be
developed economically. Accordingly, information concerning prospective and contingent resources contained in this
presentation are not comparable to information permitted to be made public by U.S. or other international companies subject to
SEC reporting and disclosure requirements, especially Industry Guide 2 under the Securities Act.
Certain of the information and conclusions set forth herein are based on projections. These projections were prepared for the
limited purpose of analyzing the potential risks and benefits of an investment in the securities by illustrating under certain
limited assumptions. In addition, because of the subjective judgments and inherent uncertainties of projections and because the
projections are based on a number of assumptions, which are subject to significant uncertainties and contingencies that are
beyond the control of OGX, there can be no assurance that the projections or conclusions derived therefrom will be realized.
Under no circumstances should the projections set forth herein be regarded as a representation, warranty or prediction that OGX
will achieve or is likely to achieve any particular future result. There can be no assurance that OGX’s future results or projections
will not vary significantly from those set forth herein. Accordingly, investors may lose all of their investment to the extent the
projections or conclusions included herein are not ultimately realized.
This presentation also contains forward-looking statements, which may be identified by such words as
"may", "plans", "expects", "believes" and similar expressions, or by their context. These statements are made on the basis of
current knowledge and, by their nature, involve numerous assumptions and uncertainties.
Various factors could cause OGX's actual future results, performance or events to differ materially from those described in this
presentation. In no event shall the Company or the members of its board, directors, assigns or employees be liable to any third
party (including investors) for investment decisions or acts or business carried out based on the information and statements that
appear in this presentation, or for indirect damage, lost profit or related issues. The Company does not intend to provide to
potential shareholders with a revision of the statements or an analysis of the differences between the statements and the actual
results. You are urged to carefully review OGX's offering circular, including the risk factors included therein. This presentation
does not purport to be all-inclusive or to contain all the information that a prospective investor may desire in evaluating OGX.
Each investor must conduct and rely on its own evaluation, including of the associated risks, in making an investment decision.
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2Q11 Highlights and Subsequent Events
First oil expected in October/November 2011
— Horizontal well OGX-26HP (Waimea) prepared for start-up of production
— All key equipment already secured and delivered
— FPSO OSX-1 expected to arrive in September
Important new discoveries announced during the quarter
— Campos Basin: OGX-33 (Chimborazo) and OGX-52 (Tambora)
— Parnaíba Basin: OGX-34 (Bom Jesus)
— Santos Basin: OGX-30 (Salvador) and OGX-47 (Maceió)
Continued intensification of appraisal campaign
— 11 wells in Campos Basin, 2 wells in Parnaíba Basin
New drill-stem tests in horizontal wells
— OGX-39HP (Pipeline) and OGX-44HP (Waikiki) in the Campos Basin
— New tests to be performed in Campos and Santos Basins
Declaration of commerciality in the Parnaíba Basin
— 2 fields: Gavião Real and Gavião Azul
Successful $2.6bn bond offering
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Financial Results Highlights
2Q11 Financial Results
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Net Financial Results: Impact of interest
income, net losses on hedging of future
commitments in foreign currency and
negative impact of marking-to-market the
fair value of financial instruments
Exploration Expenses: Primarily related to
the acquisition of seismic data in the
Parnaíba, Espírito Santo and Campos basins
General and Administrative Expenses:
Increase in the number of employees from
184 to 266 between 2Q10 and 2Q11 and the
stock options plan
Intangibles: Impacted by the intensification
of our drilling campaign mainly in
Campos, Santos and Parnaíba Basins
Financial Statements
R$ ('000) 2Q11 2Q10 1H11
Net Financial Result (30,157) 135,548 (12,256)
Financial Income 160,159 151,292 290,760
Financial Expenses (190,316) (15,744) (303,016)
Exploration Expenses (42,689) (25,252) (74,982)
G&A Expenses (87,047) (57,119) (130,486)
Taxes 47,667 (5,346) 66,404
Minority Interest (3,469) (9,960) (8,679)
Net Result (108,757) 57,791 (142,641)
Balance Sheet
R$ ('000) 06/30/2011 12/31/2010 Δ
Cash and cash equivalents 7,012,272 4,788,166 2,224,106
Intangible 5,932,045 4,589,418 1,342,627
Exploratory drilling and studies 4,369,661 2,948,754 1,420,907
Mobilization of rigs 70,661 148,941 (78,280)
Signature Bonus on exploratory blocks 1,491,723 1,491,723 -
Net Financial Debt (3,938,823) - (3,938,823)
Financing Secured Until OGX is Cash Flow Positive
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OGX raised US$ 2.563 billion in a bond issuance on
May 26, 2011
Moody’s, Fitch and S&P gave OGX B1, B+ and B
(positive outlook) ratings, respectively
Largest non-investment grade offering ever in the
industry
Transaction Highlights Summary of Terms
Investor Breakdown
Issuer:OGX Petróleo e Gás
Participações S.A.
Guarantors:Subsidiaries with over 75% of
OGX’s resources
Security Description:
Senior unsecured notes
Distribution: 144A / Reg-S
Ratings: B1 / B (positive outlook) / B+
Size: US$2.563 billion
Tenor: 7 year NC4
Maturity: June 3, 2018
Coupon: 8.500%
Price: $100.00
Use of Proceeds:
Fund the appraisal and
development of Campos Basin
and other concessions
US78%
Europe18%
Asia3%
LAtam3%
0.0
2.0
4.0
6.0
0.0
2.0
4.0
6.0
1Q11 APR MAY JUN
Cash in R$ Cash in US$
Robust Cash Position Following Bond Offering
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Solid cash position of R$7.0 billion, or US$4.5
billion, to support the exploratory commitments, the
development and beginning of production until
becomes cash flow positive
Foreign exchange hedge position of approximately US$
901.2 million, representing approximately 5 months of
financial commitments denominated in US$
Cash allocated in R$: Average cumulative gross return
equivalent to approximately 103.6% of the Interbank
Deposit Rate (CDI), or 11.7% p.a., generating R$223.4
million of interest income for the period
Cash Allocated in US$: Average cumulative gross return
equivalent to approximately 1.5% p.a, generating US$ 2.8
million of interest income for the period.
Cash invested in fixed income instruments with some of
the most solid financial institutions in Brazil
Allocation by InstitutionR$ billion US$ billion
Cash Position Evolution Cash Allocation
Itau Unibanco
33%
Bradesco37%
Votorantim4%
Santander8% Safra
3%
BTG Pactual8%CS4%Others
3%
Path to Production
Production Will Begin in the Waimea Accumulation
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Beginning of Production
Horizontal production well already drilled, completed and successfully tested
Hydraulic Power Unit (HPU)
installed
Umbilicals delivered
Flexible lines delivered
Anchor system (moorings and
piles) delivered Installation support vessel
delivered
Wet christmas tree installed Electrical submersible pump
installed
EWT approved by ANP
(National Petroleum Agency)
1st Oil Production Concept
OGX first oil expected for October/November through Extended Well Test (EWT)
Main characteristics:
Production potentialof 40 kbpd w/ capacity limited to 20 kbpd
Oil quality of 20° API
Water depth of 140 meters
BuoyOSX-1
Risers andUmbilicals
Flexiblelines
Wetchristmastree
Mooringsand Piles
Illustrative frames
Electricalsubmersiblepump
Flexible lines / umbilicalsconnection and risers installation
Moorings and Piles installationArrival of the Buoy and
installation
Arrival of the FPSO OSX-1 Buoy hook-up and connection to the FPSO
Beginning of production
Final Steps Towards Production
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1
54
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Illustrative frames
Waimea Complex Production Concept
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Pioneer Project Development
5 development wells connected to
the FPSO OSX-1
— 3 horizontal production wells
— 1st production well, OGX-
26HP, ready for production
— 2nd production well, OGX-
55HP, currently being
drilled
— 3rd production well, OGX-
53D, currently being drilled
— Average production per well
10–20 kbpd
— 2 subsea injection wells
1 FPSO: OSX-1
— OSX-1 expected arrival for
September/2011
OGX-55HP and OGX-53D wells to be
hooked-up to OSX-1 after the
declaration of commerciality next
year
With 3 production wells on
stream, OGX should reach
production levels of ~50 kbpd
Illustrative frame
Pioneer Production Concept
Development Wells
ProductionWell 1(OGX-26HP)
ProductionWell 2(OGX-55HP)
ProductionWell 3(OGX-53D)
InjectionWell 1
InjectionWell 2
Campos Basin: Production Concept
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Full Project Development
Illustrative frame
Future production concepts in the Campos Basin will contemplate pairs of 1 FPSO and 1 WHP per project
Waimea Project:
3 FPSOs and 2 WHPs
— OSX-1 (expected arrival for Sep/11)
— OSX-2 (under development by SBM)
— WHP-1 (engineered by Techint)
Waikiki Project:
1 FPSO and 1 WHP
— OSX-3 (under development by Modec)
— WHP-2 (engineered by Techint)
Module 1
Module 2
Module 4
Module 3
Module N
Moving Forward with Parnaíba Basin Business Plan
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Declaration of commerciality of two
fields (Gavião Real & Gavião Azul)
already submitted to ANP
Initial production expected in 2H12
Second seismic crew contracted to work
on the southern blocks
Recently approved leasing agreement of
2 additional rigs
MPX has obtained an additional 1,859
MW of installation license, totaling
3,722 MW
MPX acquired 2 projects from Bertin with
a total capacity of 660 MW, which will be
transferred to Parnaíba’s Complex after
ANEEL’s approval
Paraníba Complex
Legend:
Seismic Lines
Gavião Real
Gavião Azul
Exploratory Campaign
Appraisal Wells
26 wildcat wells and 19 appraisal wells drilled with hydrocarbons and results which support expectations
Campos Basin: Focusing on Wildcat & Appraisal Wells
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Wildcat Wells
Note:1 Numbers indicate the well drilling area as per D&M’s Dec/10 reports and net pay
2011¹ Activities
Well Drilling Area
OGX-35D 3C – Albian 80m
OGX-36D/OGX-39HP
3C – Albian 60m
OGX-40D 2C – Albian 107m
OGX-41D/OGX-44HP
2C – Albian 92m
OGX-42D 3C – Albian 82m
OGX-43D Delineation – Albian 50m
OGX-45D Delineation – Maastric. 5m
OGX-48 3C – Albian 12m
OGX-50D/OGX-55HP
1C – Albian 52m
OGX-53 1C – Ongoing
OGX-54 Delineation - Ongoing
OGX-56D 3C - Ongoing
2010 Activities
OGX-9D
OGX-13
OGX-21D/OGX-26HP
2009 Activities
OGX-1
OGX-2A
OGX-3
2010 Activities
OGX-4
OGX-5
OGX-6
OGX-7A
OGX-8
OGX-10
OGX-14
OGX-15
OGX-18
OGX-20
MRK-3/4P
2011 Activities
OGX-25/27
OGX-28D
OGX-29/32
OGX-31
MRK-5
OGX-33
OGX-37
OGX-52
OGX-58DP
Waimea OGX – 26HP
Production capacity of up to 20,000 bbl/day
Oil Quality of 20o API
Tested in Jan/2011
Recent Horizontal Wells TestedCampos Basin: Positve Horizontal Wells TestResults
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3 drill-stem tests already performed in horizontal wells prepared for production
and more to come in the second half
Pipeline OGX-39HP
Production capacity of around 10,000 bbl/day
Oil Quality of 19o API
Tested in Jul/2011
Waikiki OGX-44HP
Production capacity of up to 20,000 bbl/day
Oil Quality of 23o API
Tested in Jun/2011
Drill-stem tests performed in horizontal wellsHorizontal wells tested
Appraisal Wells
Declaration of commerciality declared only 20 months after beginning of exploration campaign
Parnaíba Basin: Rapid Declaration of Commerciality
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Wildcat Wells
Note:1 Numbers indicate the well drilling area as per D&M’s Dec/10 reports and net pay
2010 Activities
OGX-16
OGX-22
2011 Activities
OGX-34
OGX-49
2011¹ Activities
Well Drilling Area
OGX-38 3C – 43m
OGX-46D 3C – 15m
OGX-51D 3C – 8m
OGX-57 3C - Ongoing
Recent discoveries OGX-30 (Salvador) and OGX-47 (Maceió) tested classic targets and new geological models reinforcing the gas province in the Basin
Santos Basin: New Significant Discoveries
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Wildcat Wells
2010 Activities
MRK-2B
OGX-11D
OGX-12
OGX-17
OGX-19
2011 Activities
OGX-23
OGX-24
OGX-30
OGX-47
Continued Progress
Beginning of production in October/November through an EWT in the Waimeaaccumulation (OGX-26HP)
Commercialization contracts for first oil sale prior to the beginning of production
Continue appraisal campaign in the Campos and Parnaíba Basins
Commencement of the drilling campaign in the Espírito Santo and Pará-Maranhão Basins in 2H11
New drill-stem tests in Campos, Santos and Parnaíba Basins
Beginning of exploratory campaign in Colombia initiating seismic shooting and interpretation
Participation on ANP next bidding rounds
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