OGX Petroleo e Gas Participacoes SA, the Rio de Janeiro-based oil producer controlled by billionaire Eike Batista, will cut the size of its only producing oil field after missing production targets.
OGX, which has plunged 85 percent over the past year, is “stabilizing” output at its third well at the Tubarao Azul field in the Campos Basin after encountering more complicated geology than it was expecting, Chief Executive Officer Luiz Carneiro said in an earnings report. The first two wells at the field off the coast of Brazil’s Rio state are producing a little less than 10,000 barrels a day, he said.
Batista’s personal wealth has fallen almost $26 billion in the past year as the market value of OGX and his other commodities and logistics companies sank. OSX Brasil SA (OSXB3), Batista’s shipbuilder that depends on OGX to rent its production vessels, is down 74 percent in the past year.
“We continue completely concentrated on optimizing the total recoverable volumes at the field in line with the best industry practices, but we also recognize that the estimate of total recoverable volumes should be reduced,” Carneiro said.
OGX estimated Tubarao Azul’s recoverable volumes at 110 million barrels in a March 11 presentation. It didn’t offer a new estimate in the earnings report. The company originally planned to pump as much as 20,000 barrels a day at each well at Tubarao Azul and began scaling back estimates after production missed targets.
OGX increased its planned 2013 investments 8.3 percent to $1.3 billion after it bought a stake in the Atlanta and Oliva oil fields in November. It had $1.66 billion in cash at the end of 2012, down from $2.86 billion a year earlier, it said.
The company reported a 286 million reais ($142 million) loss in the fourth quarter, less than the 303 million reais estimate in a Bloomberg survey of two analysts.
To contact the reporter on this story: Peter Millard in Rio de Janeiro at firstname.lastname@example.org
To contact the editor responsible for this story: James Attwood at email@example.com