OGX Petroleo & Gas Participacoes SA declared its Remora field commercial two days after saying its only producing prospect may close in 2014.
The field, in a block partly owned by Malaysia’s Petroliam Nasional Bhd. offshore Rio de Janeiro in the southeastern Campos basin, was declared commercially viable, according to a statement on the Brazilian oil regulator’s website. The block comprising Remora is one of two where Petronas agreed to buy 40% stakes on May 8. The second block partly owned by Petronas was declared commercial in April 2012.
OGX shares have lost more than 50 percent in three days after the oil producer controlled by billionaire Eike Batista said it was closing fields, following missed output targets that have sent the shares plummeting since last year. The slump is extending a 92% decline this year, the most of more than 500 oil producers worth at least $100 million, according to data compiled by Bloomberg.
“I don’t know if it solves the situation or not. I don’t think so,” Henrique de la Rocque, a Rio-based money manager at Basif Gestao de Recursos, said of OGX’s partnership with Petronas. “The positive impact amid everything else is very small.”
OGX will have to be more cautious when developing Tubarao Martelo and other fields in Campos to avoid investing in deposits that aren’t profitable after disappointing results at Tubarao Azul, its first production project, said Cleveland Jones, a geology professor at Rio de Janeiro State University. While OGX was successful at identifying oil deposits, it rushed into the production phase without properly testing the flow rates at wells, he said.
“Now they’re going to have to be even more careful than before and produce on a test basis for several months,” Jones said. “Their last hope is something that could take even longer.”
The company plans to start producing at Tubarao Martelo before year-end, according to information on its website. OGX has already drilled wells and is waiting on the delivery of a production vessel to start pumping from the field.
Declaring a field commercial doesn’t ensure that it will be developed. OGX in March said that the Tubarao Tigre, Tubarao Gato, and Tubarao Areia fields were commercial and on July 2 said it plans to return the three licenses because it doesn’t have the technology to develop them. OGX also said two days ago that its only producing oil field, Tubarao Azul, may be shut down in 2014.
“The sale of the participation in blocks BM-C-39 and BM- C-40 guarantees the necessary funds to meet short term obligations,” the Rio-based company said July 3 a separate regulatory statement, referring to the two oil blocks where Petronas bought stakes. OGX said it may also exercise a $1 billion put option against controlling shareholder Eike Batista to help meet its obligations.
Petronas agreed in May to pay $850 million for the two blocks. It’s scheduled to pay $250 million once the deal is approved by the Brazilian oil regulator, which may occur this year. Another $500 million will be paid after oil production starts and the remainder when certain output targets are met.
Barclays Plc estimates that OGX may finish the quarter with about $150 million in cash, while Credit Suisse Group AG said in a report July 2 the oil producer may be left with about $13 million by year-end, assuming it doesn’t receive any payment from Petronas.
Chevron CEO Mike Wirth on Structural Changes to Gas Markets, Permian ‘Challenges’
2023-03-07 - Speaking during the CERAWeek by S&P Global conference, Chevron Chairman and CEO Mike Wirth said Russia’s invasion of Ukraine will have long-lasting effects on global natural gas markets while labor, supplies remain challenging in the Permian.
Exxon CEO Woods Argues Against Scope 3
2023-03-10 - Exxon Mobil Corp. CEO Darren Woods argued during CERAWeek by S&P Global in Houston that applying Scope 3 measures to a specific company had its downsides, although he said the Scope 3 measure for the GHG protocols was relevant at the macro level.
Geothermal, Oil Drilling Bond Strengthens
2023-03-08 - Developers of geothermal energy tap existing oil drilling expertise, while advancing new geothermal technologies.
Toby Rice: EQT Considers Own East Coast LNG [WATCH]
2023-03-17 - EQT President and CEO Toby Rice told Hart Energy in an exclusive interview at CERAWeek by S&P Global that the company has been considering its own LNG projects.