presentation earnings release 2011
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TRANSCRIPT
OGX: 2011 RESULTS
March 2012 |
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 there from 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.
DISCLAIMER
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First oil on January 31, 2012
Efficient execution: from discovery to production in record timing (2 years)
High operational efficiency with very good well performance
All environmental licenses obtained for Waimea OSX-1 project development
Sale of first oil to Shell priced at a discount of US$ 5.5 to Brent
Offload expected for end of March, 2012
Drilling of 47 wells in 2011 – 13 wildcat, 26 appraisal and 8 production wells
Acquisition of 20% of blocks BM-C-37 and BM-C-38 from Maersk, with OGX becoming the operator
Excellent drill-stem test results in Santos Basin
Pre-salt discovery confirming microbiolite reservoir in shallow waters of the Santos Basin
Declaration of commerciality and initial development of 2 fields in the Parnaíba Basin
Spudding of the first two wells in the Espírito Santo Basin
Successful US$ 2.6bn bond offering in May 2011
Raising of R$ 600 million to finance the development of the Gavião Real and Gavião Azul fields
2011 HIGHLIGHTS AND SUBSEQUENT EVENTS
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FINANCIAL RESULTS HIGHLIGHTS
Net Financial Results:
Impact of interest income, net losses on hedging of future commitments in foreign currency, offset by positive impact of marking-to-market the fair value of financial instruments, interest expenses and exchange rate variations
Exploration Expenses:
Primarily related to the exploration campaign in the Campos, Santos, Parnaíba and Espírito Santo basins. Write-off of 4 non commercial wells (1 in Campos and 3 in Parnaíba) and of expenses incurred on the Pará-Maranhão exploratory campaign
General and Administrative Expenses:
Decrease in expenses related to the stock options plan partially offset by the YOY increase in the number of employees
Intangibles:
Impacted by the intensification of our drilling campaign mainly in Campos, Santos and Parnaíba basins, going from 26 wells drilled in 2010 to 47 in 2011
2011 FINANCIAL RESULTS
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Financial Statements - Main Items
R$ ('000) 2011 2010 Δ
Net Financial Result 6,120 258,506 (252,386)
Financial Income 2,531,222 694,411 1,836,811
Financial Expenses (2,525,102) (435,905) (2,089,197)
Exploration Expenses (425,830) (97,841) (327,989)
G&A Expenses (308,164) (319,072) 10,908
Taxes 217,989 22,882 195,107
Net Result for the period (509,885) (135,525) (374,360)
Interest of non controlling shareholders (27,720) (12,048) (15,672)
Attributed to controlling shareholders' interest (482,165) (123,477) (358,688)
Balance Sheet
R$ ('000) 12/ 31/ 2011 12/ 31/ 2010 Δ
Cash and cash equivalents* 5,458,780 4,788,166 670,614
Intangible + PP&E 7,685,507 4,617,042 3,068,465Financial Debt 4,772,414 - 4,772,414* cash and cash equivalent + marketable securities
STRONG CASH POSITION
Solid cash position of R$ 5.5 billion, or US$ 2.9 billion, to support exploration commitments, development and initial production:
~58% of total cash protected against FX variations
US$ 1.6 billion invested in offshore deposits
US$ 54.6 million hedged through NDF (non deliverable forward) contracts
R$ 600 million bridge loan raised in January 2012 to fund Parnaíba development
Cash allocation in R$: Average cumulative gross return equivalent to 103.5% of the Interbank Deposit Rate (CDI), or 12% p.a.
Cash Allocation in US$: Average cumulative gross return equivalent to 2.3% p.a.
Cash position in fixed income instruments allocated to Brazil’s most solid financial institutions
R$ billion US$ billion
Cash Position Evolution Cash Allocation
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Bradesco30%
Itau Unibanco34%
BTG Pactual7%
Santander8%
Votorantim8%
CS4%
Others9%
EXPLORATORY CAMPAIGN
CAMPOS BASIN
16 wells drilled
No horizontal well drilled
59 wells drilled in total, since inception
More than 90% success rate
6 producer horizontal wells drilled
Several drill-stem tests performed
2010 2011/2012
Exploratory Campaign Evolution
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CAMPOS BASIN
2011 - Drilling Area 1C¹
OGX-50D/OGX-55HP Waimea 1C – Albian 52m
OGX-53D/OGX-60HP Waimea 1C – Albian 71m
OGX-65D/OGX-68HP Waimea 1C – Albian 97m
2011 - Drilling Area 2C¹
OGX-40D Pipeline 2C – Albian 107m
OGX-41D/OGX-44HP Waikiki 2C – Albian 92m
2011 - Drilling Area 3C¹
OGX-35D Waikiki 3C – Albian 80m
OGX-36D/OGX-39HP Pipeline 3C – Albian 60m
OGX-42D Pipeline 3C – Albian 82m
OGX-48 Pipeline 3C – Albian 12m
OGX-56D Fuji 3C – Albian 60m
OGX-61 Illimani 3C - Albian 9m
OGX-62 Ingá 3C – Santonian 26m Albian 20m
OGX-64DP Ingá 3C – Santonian 23m
OGX-67 Ingá 3C -
OGX-69 Fuji 3C - Albian 38m
OGX-70 Pipeline 3C -
2011 - Drilling Area Delineation
OGX-43D Illimani Delineation– Albian 50m
OGX-45D Waikiki Delineation – Maastric. 5m
OGX-54 Fuji Delineation– Albian 24m
Note:¹Drilling area as per D&M’s Dec/10 reports and net pay indicated in meters*Prospects not contemplated in D&M’s Dec/10 report
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2012 - Drilling Area ¹
OGX-71 Ingá 3C -
OGX-72 Pipeline 3C – Albian 129m
OGX-76 Peró 2C – In progress
2012 - Drilling New Areas*
OGX-73 Osorno Albian 37m
OGX-75 Tambora In progress
Highlights
Blocks that OGX acquired 20% from Maersk (OGX now owns 70%)
Intensified Appraisal And New Prospective Discoveries
Successful appraisal campaign with 32 wells drilled and a 91% hit ratio since the beginning of exploratory campaign
Important new discoveries in 2011 - YTD Illimani Osorno Carambola B Chimborazo Tambora
New D&M certification for Waikiki accumulation
2C = 212 Mboe
3C = 302 Mboe
Waimea and Waikiki declaration of
commerciality underway
Acquisition of 20% of blocks BM-C-37 and BM-C-38 from Maersk, with OGX becoming operator
SANTOS BASIN
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Main Achievements
Next Steps
Exploration Campaign
Successful drilling of 11 wells
More than 70% success rate
DST performed in Maceió (OGX-47) and Natal (OGX-
11)
Accumulations with 20-25% of condensate (47-
50° API) and excellent flow rates
Significant discovery in Fortaleza (OGX-63) in Albian
and Aptian (pre-salt) reservoirs
Conclude drilling of pre-salt discovery with Ocean
Star rig
Logging and testing results by mid-2012
Appraisal campaign in Maceió and Natal
accumulations
New drill-stem tests
Adding Further Value to the Basin
SANTOS BASIN
Good porosity
Dolomitized layers with open fractures
MDT Dual-Packer Test collected 47º API
hydrocarbons
Pore
Dolomitized microbial
Connected vugular porosity
Light oil/condensate shows
Oil
Highlights Albian Gas Interval
Aptian Interval
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Pre-Salt Discovery in Shallow Waters
Albian reservoir
Approximately 1,000 meters of column and 110 meters of net pay
Good permoporosity and fractures
Shallow waters Pre-salt (Aptian reservoir)
Drilled up to 6,135 meters and thus far identified column of 150 meters
1st microbiolite Pre-salt discovery in shallow waters in Brazil
Same reservoir rock in pre-salt as only seen so far in deep and ultra-deep waters in the Santos and Campos Basins
Strong kick in the last drilled layer of the reservoir with shows of hydrocarbons
PARNAÍBA BASIN
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Highlights
Appraisal wellsWildcat wells
Gavião Real
Gavião Azul
new seismic acquisition
Bom Jesus
Fazenda
Torrão
Fazenda Axixá
¹
Exploration Campaign
7 wells drilled with gas finds and 3 dry wells
70% success rate
2 accumulations declared commercial and 2
others discovered
6 wildcat wells to be drilled in 2012
3 seismic crews working on the region (more
than 1,000 people mobilized)
3rd drilling rig contracted and being mobilized
Note:¹ Drilling in progress
EXPLORATORY CAMPAIGN
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PARÁ-MARANHÃO BASIN ESPÍRITO SANTO BASIN COLOMBIA
Waiting for IBAMA environmental license
OGX obtained an additional exploratory period of 496 days, counting from IBAMA license granting
1st well expected to be drilled in 2012
2 dry wells drilled in commitment blocks (PERN-1 and PERN-2)
More wells to be drilled until 2013 in the southern blocks
Acquiring seismic for the Lower Magdalena Valley block
Negotiations with local communities for environmental licenses
1st well planned to be drilled in Cesar-Ranchería in 2H12
OGX to participate in new ANH round in 2H12
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Other Basins in the Portfolio
PRODUCTION
CAMPOS BASIN
Dec 23,
2011Concluded the connection of the flexible lines to the detachable turret
Sep 16,
2011Granting of the preliminary and installation license by IBAMA
Sep 17,
2011Beginning of the subsea installation (piles, moorings and MWA)
Dec 19,
2011Flexible lines launched and connected to the wet christmas tree
Dec 25,
2011Sail away of the FPSO OSX-1 from the port of Rio de Janeiro
Jan 31,
2012FPSO OSX-1 begins production
Jan 12,
2012Connection of the FPSO OSX-1 to the turret
Dec 18,
2009Discovery of Waimea OGX-3
Oct 4,
2011Arrival of the FPSO OSX-1 in Rio de Janeiro
1st Oil
Record Time from Discovery to 1st Oil
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Highlights and Ongoing Production Performance
CAMPOS BASIN
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FPSO OSX-1 Operational Efficiency
Average Efficiency
Feb: 95%
Mar: 99%
Electrical submersible pump working path
to highest operational performance
standards
Processing plant and FPSO OSX-1 operating
with ~95% operational efficiency, an
outstanding achievement for the first
month
Tested production levels between 10 and
18 kbpd since production began
Average flow rate of 11.1 kbpd in Feb 2012
Flow rate estimated to stabilize at between
10 and 13 kbpd for the coming few months
(before the water injection)
1st Month of Production
0%
20%
40%
60%
80%
100%
1-Feb 6-Feb 11-Feb 16-Feb 21-Feb 26-Feb 2-Mar 7-Mar 12-Mar 17-Mar
CAMPOS BASIN
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Production Concept
BuoyOSX-1Risers and Umbilicals
Flexible lines
Wet christmas tree 1OGX-26HP
Moorings and Piles
Wet christmas tree 2
Wet christmas tree 3
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Illustrative frame
Highlights and Future Development
Oil quality of 20° API
Water depth of 140 meters
Environmental license already obtained for all OSX-1 producing
system
Production in the Waimea Accumulation
OGX-26HP in production since Jan 2012
2 additional horizontal wells drilled, to be
connected to FPSO OSX-1 in mid-2012
2nd well to be connected – OGX-68HP
3rd well to be connected – OGX-60HP
Engineering the connection of a 4th producer
well
Expected production ramp-up to 40-50 kbpd
level by end of 2012
CAMPOS BASIN
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OSX-2 (SBM – Keppel shipyard, Singapore)
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Highlights
Future Development of the Basin
OSX-3 (Modec – Jurong shipyard, Singapore)
OSX-2 and OSX-3 construction on schedule
and financing in place
30% of projects concluded, on
average, in Singapore by SBM and
Modec, respectively
Expected delivery dates confirmed for
2H13
Four sub-sea wells to be connected to
each of the FPSOs (OSX-2 and OSX-3)
WHPs to arrive by 1H14 and be connected
to both FPSOs
PARNAÍBA BASIN
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Execution Highlights Thermal Power Plant
E&P
GE TURBINES CONTRACTED BY MPX
CONTRACTED RIG AND DRILL-STEM TEST PERFORMED
Environmental permits already granted (LP+LI)
5 producing wells already drilled and 1 well in progress
Drilled and tested the first production well GVR-1
Production potential of 5.0 M m³/day (AOF)
EPC contracted for the construction of the gas processing facility
Awarded to Valerus-Geogas
Beginning of the civil works on the site in Feb 2012
Clearing the rights-of-way for the pipeline
Gas treatment facility construction
Project Development
PARNAÍBA BASIN
2020
Production Development Timeline
Well Drilling
System pre-assembly Site activities
Project Concept Basic ProjectEIA
(Environmental Impact Study)
Public Hearings Preliminary
license
MAR 2011 AUG 2011 SEP 2011 NOV 2011 DEC 2011
Installation
license
JAN 2012 2H2012
LO
JUL 2012
1st GAS
Rapid execution of the Parnaíba project since conceptual fase
Commissioning of the Gas Treatment Unit and turbines during 2H12
1st gas produced in 2H12 and commercialization by beginning of 2013
PARNAÍBA BASIN
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Manifolds and PumpsSpools and headers skidsProject Development
PARNAÍBA BASIN
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Works on the Rights-of-Way Gas Treatment Unit - GTU
Project Development (Cont’d)
Continue exploration and appraisal campaigns in the Campos, Santos, Parnaíba and Espírito Santo Basins
Declaration of commerciality of Waimea and submit Development Plan to the ANP
Connection of the two additional production horizontal wells in Waimea by mid-2012 and possibly a 4 th producer
Drilling of approximately 6 exploration wells in blocks BM-C-37 and BM-C-38, where OGX recently became operator
Drill-stem test results in the Santos Basin (pre-salt results by mid-2012)
Continue with the drilling of development wells in the Parnaíba Basin
Beginning of drilling in the Cesar-Ranchería Basin in Colombia
Potential new ANP bidding round in Brazil
Participation in next ANH bidding round in Colombia
UPCOMING EVENTS
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