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Presentation Earnings Release 2011

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Ogx2011

OGX achieved first oil production from its Waimea field in the Campos Basin in January 2012, within a record time frame of less than 3 years from discovery. In its first month of production, the FPSO OSX-1 operated with an average efficiency of 95-99%, highlighting the company's efficient execution from exploration and appraisal drilling to initial oil production. However, the document also cautions that OGX's resources are not proven reserves and are subject to significant risks and uncertainties.

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OGX: 2011 RESULTS March 2012 |
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 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. 2
2011 HIGHLIGHTS AND SUBSEQUENT EVENTS 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 3
FINANCIAL RESULTS HIGHLIGHTS
2011 FINANCIAL RESULTS Net Financial Results: Financial State me nts - Main Ite ms R$ ('000) 2011 2010 Δ Impact of interest income, net losses on hedging of future commitments in foreign currency, offset by N et Financ ial Res ult 6,120 258,506 (252,386) positive impact of marking-to-market the fair value Financial Income 2,531,222 694,411 1,836,811 of financial instruments, interest expenses and Financial Expenses (2,525,102) (435,905) (2,089,197) exchange rate variations Exploration Expens es (425,830) (97,841) (327,989) Exploration Expenses: G&A Expens es (308,164) (319,072) 10,908 Taxes 217,989 22,882 195,107 Primarily related to the exploration campaign in the N et Res ult for the period (509,885) (135,525) (374,360) Campos, Santos, Parnaíba and Espírito Santo basins. Interest of non controlling shareholders (27,720) (12,048) (15,672) Write-off of 4 non commercial wells (1 in Campos and 3 in Parnaíba) and of expenses incurred on the Attributed to controlling shareholders' interest (482,165) (123,477) (358,688) Pará-Maranhão exploratory campaign Balance She e t General and Administrative Expenses: R$ ('000) 12/31/2011 12/31/2010 Δ Decrease in expenses related to the stock options Cas h and c as h equivalents * 5,458,780 4,788,166 670,614 plan partially offset by the YOY increase in the Intangible + PP&E 7,685,507 4,617,042 3,068,465 number of employees Financ ial Debt 4,772,414 - 4,772,414 * cash and cash equivalent + marketable securities 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 5
STRONG CASH POSITION Cash Position Evolution Cash Allocation R$ billion US$ billion Others CS 9% 4% Votorantim 8% Bradesco 30% Santander 8% Itau Unibanco BTG Pactual 34% 7% Solid cash position of R$ 5.5 billion, or US$ 2.9 billion, to Cash allocation in R$: Average cumulative gross return support exploration commitments, development and initial equivalent to 103.5% of the Interbank Deposit Rate (CDI), production: or 12% p.a.  ~58% of total cash protected against FX variations Cash Allocation in US$: Average cumulative gross return  US$ 1.6 billion invested in offshore deposits equivalent to 2.3% p.a.  US$ 54.6 million hedged through NDF (non Cash position in fixed income instruments allocated to deliverable forward) contracts Brazil’s most solid financial institutions  R$ 600 million bridge loan raised in January 2012 to fund Parnaíba development 6
EXPLORATORY CAMPAIGN
CAMPOS BASIN Exploratory Campaign Evolution 2010 2011/2012 16 wells drilled 59 wells drilled in total, since inception No horizontal well drilled More than 90% success rate 6 producer horizontal wells drilled Several drill-stem tests performed 8
CAMPOS BASIN Intensified Appraisal And New Prospective Discoveries 2011 - Drilling Area 1C¹ OGX-50D/OGX-55HP Waimea 1C – Albian 52m Highlights OGX-53D/OGX-60HP Waimea 1C – Albian 71m OGX-65D/OGX-68HP Waimea 1C – Albian 97m Successful appraisal campaign with 32 wells 2011 - Drilling Area 2C¹ drilled and a 91% hit ratio since the beginning OGX-40D Pipeline 2C – Albian 107m of exploratory campaign OGX-41D/OGX-44HP Waikiki 2C – Albian 92m 2011 - Drilling Area 3C¹ Important new discoveries in 2011 - YTD OGX-35D Waikiki 3C – Albian 80m  Illimani OGX-36D/OGX-39HP Pipeline 3C – Albian 60m OGX-42D Pipeline 3C – Albian 82m  Osorno OGX-48 Pipeline 3C – Albian 12m  Carambola B OGX-56D Fuji 3C – Albian 60m OGX-61 Illimani 3C - Albian 9m  Chimborazo OGX-62 Ingá 3C – Santonian 26m Albian 20m  Tambora OGX-64DP Ingá 3C – Santonian 23m New D&M certification for Waikiki OGX-67 Ingá 3C - accumulation OGX-69 Fuji 3C - Albian 38m OGX-70 Pipeline 3C -  2C = 212 Mboe 2011 - Drilling Area Delineation OGX-43D Illimani Delineation– Albian 50m  3C = 302 Mboe OGX-45D Waikiki Delineation – Maastric. 5m OGX-54 Fuji Delineation– Albian 24m Waimea and Waikiki declaration of 2012 - Drilling Area ¹ Blocks that OGX acquired commerciality underway OGX-71 Ingá 3C - 20% from Maersk (OGX OGX-72 Pipeline 3C – Albian 129m now owns 70%) Acquisition of 20% of blocks BM-C-37 and BM- OGX-76 Peró 2C – In progress C-38 from Maersk, with OGX becoming 2012 - Drilling New Areas* OGX-73 Osorno Albian 37m Note: operator OGX-75 Tambora In progress 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 9
SANTOS BASIN Adding Further Value to the Basin Exploration Campaign Main Achievements 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 Next Steps 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 10
SANTOS BASIN Pre-Salt Discovery in Shallow Waters Highlights Albian Gas Interval Albian reservoir Good porosity  Approximately 1,000 meters of column Dolomitized layers with open fractures and 110 meters of net pay MDT Dual-Packer Test collected 47º API  Good permoporosity and fractures hydrocarbons Shallow waters Pre-salt (Aptian reservoir) Aptian Interval  Drilled up to 6,135 meters and thus far Oil identified column of 150 meters Dolomitized microbial  1st microbiolite Pre-salt discovery in Connected vugular porosity shallow waters in Brazil Light oil/condensate shows  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 Pore 11
PARNAÍBA BASIN Exploration Campaign Fazenda Highlights Torrão Bom Jesus 7 wells drilled with gas finds and 3 dry wells 70% success rate 2 accumulations declared commercial and 2 others discovered Gavião Azul 6 wildcat wells to be drilled in 2012 Gavião Real 3 seismic crews working on the region (more than 1,000 people mobilized) Fazenda Axixá ¹ 3rd drilling rig contracted and being mobilized Appraisal wells Wildcat wells new seismic Note: ¹ Drilling in progress acquisition 12
EXPLORATORY CAMPAIGN Other Basins in the Portfolio PARÁ-MARANHÃO BASIN ESPÍRITO SANTO BASIN COLOMBIA Waiting for IBAMA 2 dry wells drilled in commitment Acquiring seismic for the Lower environmental license blocks (PERN-1 and PERN-2) Magdalena Valley block OGX obtained an additional More wells to be drilled until 2013 Negotiations with local exploratory period of 496 days, in the southern blocks communities for environmental counting from IBAMA license licenses granting 1st well planned to be drilled in 1st well expected to be drilled in Cesar-Ranchería in 2H12 2012 OGX to participate in new ANH round in 2H12 13 13
PRODUCTION
CAMPOS BASIN Record Time from Discovery to 1st Oil 1st Oil Sep 16, Granting of the Dec 25, Sail away of the FPSO 2011 preliminary and 2011 OSX-1 from the port installation license of Rio de Janeiro by IBAMA Dec 19, Flexible lines launched 2011 and connected to the Jan 31, FPSO OSX-1 begins Dec 18, Discovery of wet christmas tree 2012 production Oct 4,Arrival of the 2009 Waimea OGX-3 2011 FPSO OSX-1 in Rio de Janeiro Dec 23, Concluded the connection of Jan 12, Connection of the Sep 17, Beginning of the subsea 2011 the flexible lines to the 2012 FPSO OSX-1 to the 2011 installation (piles, detachable turret turret moorings and MWA) 15
CAMPOS BASIN 1st Month of Production FPSO OSX-1 Operational Efficiency Highlights and Ongoing Production 100% Performance Electrical submersible pump working path 80% to highest operational performance 60% standards 40% Processing plant and FPSO OSX-1 Average Efficiency operating with ~95% operational Feb: 95% 20% Mar: 99% efficiency, an outstanding achievement for 0% the first month 1-Feb 6-Feb 11-Feb 16-Feb 21-Feb 26-Feb 2-Mar 7-Mar 12-Mar 17-Mar 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) 16
CAMPOS BASIN Production in the Waimea Accumulation Production Concept Highlights and Future Development OGX-26HP in production since Jan 2012 2 additional horizontal wells drilled, to be connected to FPSO OSX-1 in mid-2012 OSX-1 Buoy 2nd well to be connected – OGX-68HP Risers and 3rd well to be connected – OGX-60HP Umbilicals Wet christmas Engineering the connection of a 4th producer tree 3 Moorings well Wet and Piles christmas Flexible Expected production ramp-up to 40-50 kbpd tree 1 lines Wet OGX-26HP christmas level by end of 2012 tree 2 Illustrative frame Oil quality of 20° API Water depth of 140 meters Environmental license already obtained for all OSX-1 producing system 17
CAMPOS BASIN Future Development of the Basin OSX-2 (SBM – Keppel shipyard, Singapore) Highlights 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 OSX-3 (Modec – Jurong shipyard, Singapore) 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 18
PARNAÍBA BASIN Project Development Execution Highlights Thermal Power Plant GE TURBINES CONTRACTED BY MPX 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) E&P CONTRACTED RIG AND DRILL-STEM TEST PERFORMED 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 19
PARNAÍBA BASIN Production Development Timeline System pre-assembly Site activities Well Drilling EIA Project Concept Basic Project Public Hearings Preliminary Installation 1st GAS (Environmental Impact Study) license license MAR 2011 AUG 2011 SEP 2011 NOV 2011 DEC 2011 JAN 2012 2H2012       LO Rapid execution of the Parnaíba project since conceptual fase JUL 2012 Commissioning of the Gas Treatment Unit and turbines during 2H12 1st gas produced in 2H12 and commercialization by beginning of 2013 20
PARNAÍBA BASIN Project Development Spools and headers skids Manifolds and Pumps 21
PARNAÍBA BASIN Project Development (Cont’d) Works on the Rights-of-Way Gas Treatment Unit - GTU 22
UPCOMING EVENTS 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 4th 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 23
Presentation Earnings Release 2011

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Presentation Earnings Release 2011

  • 2. 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 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. 2
  • 3. 2011 HIGHLIGHTS AND SUBSEQUENT EVENTS 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 3
  • 5. 2011 FINANCIAL RESULTS Net Financial Results: Financial State me nts - Main Ite ms R$ ('000) 2011 2010 Δ Impact of interest income, net losses on hedging of future commitments in foreign currency, offset by N et Financ ial Res ult 6,120 258,506 (252,386) positive impact of marking-to-market the fair value Financial Income 2,531,222 694,411 1,836,811 of financial instruments, interest expenses and Financial Expenses (2,525,102) (435,905) (2,089,197) exchange rate variations Exploration Expens es (425,830) (97,841) (327,989) Exploration Expenses: G&A Expens es (308,164) (319,072) 10,908 Taxes 217,989 22,882 195,107 Primarily related to the exploration campaign in the N et Res ult for the period (509,885) (135,525) (374,360) Campos, Santos, Parnaíba and Espírito Santo basins. Interest of non controlling shareholders (27,720) (12,048) (15,672) Write-off of 4 non commercial wells (1 in Campos and 3 in Parnaíba) and of expenses incurred on the Attributed to controlling shareholders' interest (482,165) (123,477) (358,688) Pará-Maranhão exploratory campaign Balance She e t General and Administrative Expenses: R$ ('000) 12/31/2011 12/31/2010 Δ Decrease in expenses related to the stock options Cas h and c as h equivalents * 5,458,780 4,788,166 670,614 plan partially offset by the YOY increase in the Intangible + PP&E 7,685,507 4,617,042 3,068,465 number of employees Financ ial Debt 4,772,414 - 4,772,414 * cash and cash equivalent + marketable securities 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 5
  • 6. STRONG CASH POSITION Cash Position Evolution Cash Allocation R$ billion US$ billion Others CS 9% 4% Votorantim 8% Bradesco 30% Santander 8% Itau Unibanco BTG Pactual 34% 7% Solid cash position of R$ 5.5 billion, or US$ 2.9 billion, to Cash allocation in R$: Average cumulative gross return support exploration commitments, development and initial equivalent to 103.5% of the Interbank Deposit Rate (CDI), production: or 12% p.a.  ~58% of total cash protected against FX variations Cash Allocation in US$: Average cumulative gross return  US$ 1.6 billion invested in offshore deposits equivalent to 2.3% p.a.  US$ 54.6 million hedged through NDF (non Cash position in fixed income instruments allocated to deliverable forward) contracts Brazil’s most solid financial institutions  R$ 600 million bridge loan raised in January 2012 to fund Parnaíba development 6
  • 8. CAMPOS BASIN Exploratory Campaign Evolution 2010 2011/2012 16 wells drilled 59 wells drilled in total, since inception No horizontal well drilled More than 90% success rate 6 producer horizontal wells drilled Several drill-stem tests performed 8
  • 9. CAMPOS BASIN Intensified Appraisal And New Prospective Discoveries 2011 - Drilling Area 1C¹ OGX-50D/OGX-55HP Waimea 1C – Albian 52m Highlights OGX-53D/OGX-60HP Waimea 1C – Albian 71m OGX-65D/OGX-68HP Waimea 1C – Albian 97m Successful appraisal campaign with 32 wells 2011 - Drilling Area 2C¹ drilled and a 91% hit ratio since the beginning OGX-40D Pipeline 2C – Albian 107m of exploratory campaign OGX-41D/OGX-44HP Waikiki 2C – Albian 92m 2011 - Drilling Area 3C¹ Important new discoveries in 2011 - YTD OGX-35D Waikiki 3C – Albian 80m  Illimani OGX-36D/OGX-39HP Pipeline 3C – Albian 60m OGX-42D Pipeline 3C – Albian 82m  Osorno OGX-48 Pipeline 3C – Albian 12m  Carambola B OGX-56D Fuji 3C – Albian 60m OGX-61 Illimani 3C - Albian 9m  Chimborazo OGX-62 Ingá 3C – Santonian 26m Albian 20m  Tambora OGX-64DP Ingá 3C – Santonian 23m New D&M certification for Waikiki OGX-67 Ingá 3C - accumulation OGX-69 Fuji 3C - Albian 38m OGX-70 Pipeline 3C -  2C = 212 Mboe 2011 - Drilling Area Delineation OGX-43D Illimani Delineation– Albian 50m  3C = 302 Mboe OGX-45D Waikiki Delineation – Maastric. 5m OGX-54 Fuji Delineation– Albian 24m Waimea and Waikiki declaration of 2012 - Drilling Area ¹ Blocks that OGX acquired commerciality underway OGX-71 Ingá 3C - 20% from Maersk (OGX OGX-72 Pipeline 3C – Albian 129m now owns 70%) Acquisition of 20% of blocks BM-C-37 and BM- OGX-76 Peró 2C – In progress C-38 from Maersk, with OGX becoming 2012 - Drilling New Areas* OGX-73 Osorno Albian 37m Note: operator OGX-75 Tambora In progress 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 9
  • 10. SANTOS BASIN Adding Further Value to the Basin Exploration Campaign Main Achievements 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 Next Steps 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 10
  • 11. SANTOS BASIN Pre-Salt Discovery in Shallow Waters Highlights Albian Gas Interval Albian reservoir Good porosity  Approximately 1,000 meters of column Dolomitized layers with open fractures and 110 meters of net pay MDT Dual-Packer Test collected 47º API  Good permoporosity and fractures hydrocarbons Shallow waters Pre-salt (Aptian reservoir) Aptian Interval  Drilled up to 6,135 meters and thus far Oil identified column of 150 meters Dolomitized microbial  1st microbiolite Pre-salt discovery in Connected vugular porosity shallow waters in Brazil Light oil/condensate shows  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 Pore 11
  • 12. PARNAÍBA BASIN Exploration Campaign Fazenda Highlights Torrão Bom Jesus 7 wells drilled with gas finds and 3 dry wells 70% success rate 2 accumulations declared commercial and 2 others discovered Gavião Azul 6 wildcat wells to be drilled in 2012 Gavião Real 3 seismic crews working on the region (more than 1,000 people mobilized) Fazenda Axixá ¹ 3rd drilling rig contracted and being mobilized Appraisal wells Wildcat wells new seismic Note: ¹ Drilling in progress acquisition 12
  • 13. EXPLORATORY CAMPAIGN Other Basins in the Portfolio PARÁ-MARANHÃO BASIN ESPÍRITO SANTO BASIN COLOMBIA Waiting for IBAMA 2 dry wells drilled in commitment Acquiring seismic for the Lower environmental license blocks (PERN-1 and PERN-2) Magdalena Valley block OGX obtained an additional More wells to be drilled until 2013 Negotiations with local exploratory period of 496 days, in the southern blocks communities for environmental counting from IBAMA license licenses granting 1st well planned to be drilled in 1st well expected to be drilled in Cesar-Ranchería in 2H12 2012 OGX to participate in new ANH round in 2H12 13 13
  • 15. CAMPOS BASIN Record Time from Discovery to 1st Oil 1st Oil Sep 16, Granting of the Dec 25, Sail away of the FPSO 2011 preliminary and 2011 OSX-1 from the port installation license of Rio de Janeiro by IBAMA Dec 19, Flexible lines launched 2011 and connected to the Jan 31, FPSO OSX-1 begins Dec 18, Discovery of wet christmas tree 2012 production Oct 4,Arrival of the 2009 Waimea OGX-3 2011 FPSO OSX-1 in Rio de Janeiro Dec 23, Concluded the connection of Jan 12, Connection of the Sep 17, Beginning of the subsea 2011 the flexible lines to the 2012 FPSO OSX-1 to the 2011 installation (piles, detachable turret turret moorings and MWA) 15
  • 16. CAMPOS BASIN 1st Month of Production FPSO OSX-1 Operational Efficiency Highlights and Ongoing Production 100% Performance Electrical submersible pump working path 80% to highest operational performance 60% standards 40% Processing plant and FPSO OSX-1 Average Efficiency operating with ~95% operational Feb: 95% 20% Mar: 99% efficiency, an outstanding achievement for 0% the first month 1-Feb 6-Feb 11-Feb 16-Feb 21-Feb 26-Feb 2-Mar 7-Mar 12-Mar 17-Mar 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) 16
  • 17. CAMPOS BASIN Production in the Waimea Accumulation Production Concept Highlights and Future Development OGX-26HP in production since Jan 2012 2 additional horizontal wells drilled, to be connected to FPSO OSX-1 in mid-2012 OSX-1 Buoy 2nd well to be connected – OGX-68HP Risers and 3rd well to be connected – OGX-60HP Umbilicals Wet christmas Engineering the connection of a 4th producer tree 3 Moorings well Wet and Piles christmas Flexible Expected production ramp-up to 40-50 kbpd tree 1 lines Wet OGX-26HP christmas level by end of 2012 tree 2 Illustrative frame Oil quality of 20° API Water depth of 140 meters Environmental license already obtained for all OSX-1 producing system 17
  • 18. CAMPOS BASIN Future Development of the Basin OSX-2 (SBM – Keppel shipyard, Singapore) Highlights 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 OSX-3 (Modec – Jurong shipyard, Singapore) 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 18
  • 19. PARNAÍBA BASIN Project Development Execution Highlights Thermal Power Plant GE TURBINES CONTRACTED BY MPX 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) E&P CONTRACTED RIG AND DRILL-STEM TEST PERFORMED 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 19
  • 20. PARNAÍBA BASIN Production Development Timeline System pre-assembly Site activities Well Drilling EIA Project Concept Basic Project Public Hearings Preliminary Installation 1st GAS (Environmental Impact Study) license license MAR 2011 AUG 2011 SEP 2011 NOV 2011 DEC 2011 JAN 2012 2H2012       LO Rapid execution of the Parnaíba project since conceptual fase JUL 2012 Commissioning of the Gas Treatment Unit and turbines during 2H12 1st gas produced in 2H12 and commercialization by beginning of 2013 20
  • 21. PARNAÍBA BASIN Project Development Spools and headers skids Manifolds and Pumps 21
  • 22. PARNAÍBA BASIN Project Development (Cont’d) Works on the Rights-of-Way Gas Treatment Unit - GTU 22
  • 23. UPCOMING EVENTS 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 4th 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 23

Editor's Notes

  1. Good morning everyone. This is Paulo Mendonça, and with me on the call today are [X, Y and Z].I’m glad to host this important event today. 2011 was a great year for OGX, with our first oil production in January 2012 in the Waimea accumulation in the Campos Basin, only a little over two years after its discovery, consolidating OGX as a full operating and leading E&P company. We started our extended well test which has proven to be one of the best wells in the shallow water platform in Brazil. We have been producing for almost 2 months and having tested between 10 and 18 thousand barrels per day with very good results. But it is important to remind you that it is our only child and we are taking good care of it. During this presentation we will walk you through our production performance and the expected flow rates.We have nearly 600 thousand barrels in the tank now, which we have sold to Shell at Brent minus US$ 5.50 per barrel and will be offloaded next week, marking the beginning of our cash flow generation.I would like to highlight and thank our team’s hard work and dedication which made this extraordinary achievement possible.Last year, we drilled 47 wells and continued to intensify our exploratory efforts obtaining very significant results that will help us to convert our resources into reserves.In order to expedite our operations in the Campos Basin, we acquired a 20% stake from Maersk in two blocks and took over the operation of these assets. Our intention is to drill new prospects and appraise existing accumulations. Important to note that Waimea results validate our model for these carbonate reservoirs and support our enthusiasm for the region.Also in 2012, we have had some very exciting discoveries, especially in the Santos Basin where we discovered significant new accumulations and confirmed the huge potential of this area, including the Pre-Salt discovery in shallow waters.In the Espírito Santo Basin, we have drilled two wells, operated by Perenco, which were unfortunately dry, but we still see significant potential in the southern portion of our blocks.On the financing side, we successfully raised US$ 2.6 billion through a bond issuance that provided us with the flexibility to continue our drilling and developmentcampaigns. We have also raised recently R$ 600 million at the OGX Maranhão level to fund our ParnaíbaBasin production development which is on-track to start producing in the second half of this year.I will now hand over to Marcelo Torres, who will provide you with an overview of our financial performance for the period. Marcelo…
  2. Thank you Paulo, and good morning everyone.Turning to Slide 5, you can see that our Net Financial Result for 2011 was a positive R$ 6.1 million. This was driven by: (one) revenue from financial transactions of R$383 million; (two) the positive effect of marking-to-market derivatives of R$ 234.7 million impacted by (three) thenet losses on derivative financial instruments associated with a foreign exchange hedge of R$ 358.3 million; (four) debt servicing expenses of R$ 196.6 million and (five) the negative effect of forex of R$71.6 associated with the exchange variation on our foreign debt.Exploration expenses increased from R$97.8 million in 2010 to R$425.8 million in 2011. The increase was attributable to the (one) the exploratory campaign in the Campos, Santos, Parnaíba and Espírito Santo Basins with total outlays of R$189.8 million; (two) the R$40.4 million costs related to the four non-commercial wells in the Campos and Parnaíba Basins; (and finally) the R$195.6 million cost associated with the mobilization of the exploratory campaign in the Pará-Maranhão Basin. G&A Expenses decreased by 3.4% year-over-year to R$308.1. This improvement was primarily driven by: reduced expenses associated with stock option plans which was partially offset by cost increases from higher personnel and office expenses. We reported a Net Loss of R$509.9 million compared to a loss of R$135.5 million last year. The increased loss was due to increased exploration expenses of R$328 million and a reduction of net financial revenue. These were partially offset by lower administrative costs and a net tax credit of R$195.1 million.Intangible Assets increased to R$7.4 billion versus R$4.79 billion in 2010. This increase was the result of additional investments and expenses related to the acquisition of the concession rights, drilling campaigns and the acquisition of E&P equipment.
  3. Thanks, Marcelo. I would kindly ask you to move to page 8, where we can clearly see how intense was the drilling activities in the blocks in which we have 100% participation and how fast we are working to convert our resources into reserves. Until March, 2013, we expect to have drilled every single structure in the seven blocks that we now operate, in order to appraise all the accumulations and also to declare their commerciality. On page 9…
  4. You can see that this intense exploratory campaign in the Campos Basin, with the drilling of 31 wells in 2011, which included 5 wildcat, 21 appraisal and 5 horizontal production wells, brought very important results with a success rate of approximately 90%. In total, we have already drilled almost 60 wells in this basin. The appraisals confirmed significant accumulations in Waimea, Waikiki, Pipeline, Illimani, Fuji, Ingá, Osorno, Tambora, and Peró.In 2012, we will continue our appraisal campaign and intensify drilling in the BM-C-37 and BM-C-38 blocks, where we recently increased our stake to 70%. We expect to confirm the existence of the accumulations and test potential undiscovered prospects. Now moving to page 10, we will discuss the Santos Basin results…
  5. In the Santos Basin, we highlight not only the successful exploratory campaign but also the beginning of the appraisal campaign with more than 70% hit ratio on 11 wells drilled that will help us to delineate the existing discoveries and how to monetize our resources there.In 2011 we discovered through OGX-30 well, Salvador accumulation, a new play in fractured carbonates in the Albian age. A significant gas column and a large structured area were identified.Besides that, we tested the Natal andMaceió accumulations obtaining very significant results in the sandstone reservoirs of the santonian age and confirming the presence of gas and condensate. These liquids, which correspond to 20 – 25% of the resources volumes, will help us to have better economics in these projects.OGX-63 well, was of great importance not only for having confirmed the presence of Albian carbonate reservoirs, but also identified the same kind of microbiolite reservoirs only yet seen in the ultra-deep waters of the Santos Basin.Our plan is to mobilize Ocean Star rig, which has a more appropriate configuration for a well of this type, to the Fortaleza accumulation and test it by the middle of the year.On page 11, we show more information of this specific accumulation…
  6. …we are very pleased to announce the results achieved in our first production in Campos.Our team has demonstrated strong operational performance and all of our equipment is working effectively on the FPSO OSX-1 and at the OGX-26HP well.The team has tested flow rates between 10kbpd to 18 kbpd in order to analyze the behavior of the reservoir and establish the optimum production flow. It is important to highlight that we are treating it as our only child and we are being as much conservative as possible in order to avoid damaging the reservoir and optimize oil recovery.During February we achieved an average flow rate of 11.1 kbpd, and going forward, we have decided to stabilize this well in levels between 10k to 13k bpd in the coming months, before introducing water injection.After we obtain conclusive data about the reservoir, we will declare Waimea’s commerciality, which is expected to take place during the second quarter.
  7. On page 18, looking ahead in the Campos Basin, once we have submitted the Waimea Development Plan to the ANP and it is approved, we expect to put two additional horizontal wells in production by the middle of the year and possibly a 4th producer well that is currently being engineered. We expect to achieve production levels of around 40k to 50k bpd by the end of 2012.We are very proud to be a private Brazilian company to produce offshore oil in Brazil, and look forward to continuing our development of the Campos Basin through the intensification of our program in Waimea during 2012 and in the Waikiki field in 2013.Turning to page 19, we illustrate the details of these FPSO projects in Asia.
  8. Construction of both FPSOs OSX-2 and 3 are well advanced. Both SBM and Modec have been performing the projects on schedule and we have approximately 30% of the vessels concluded.In order to expedite production ramp-up, we have adapted the project to be able to connect 4 sub-sea wells to each of the FPSOs OSX-2 and OSX-3Therefore, providing more flexibility for the WHPs delivery scheduleIn total, we should have 11 to 12 producers by the end of 2013, which should sustain our production target of approximately 150 kbpdOn page 20, we discuss the Parnaíba Basin development highlights.
  9. We also had a significant achievements in the Parnaíba Basin, including the drilling of 6 production wells.We tested the first gas production well, GVR-1, in September 2011, and identified dry gas and an excellent production potential of 5.0 m3/day at absolute open flow.We estimate that the fields will have a production capacity of approximately 6 million m3/day in 2013.Last November, we signed the EPC contract for the design, construction and installation of the gas treatment and collection facility which was awarded to Valerus-Geogas consortium. The preliminary and installation environmental licenses were obtained and with the licenses in hand we started implementing the construction of the Gas Treatment Unit. In additional, MPX already has EPC contracts for the implementation of the MPX Parnaíba Thermoelectric Complex, and turbines already contracted with GE.On page 21, we show a timeline that presents how many steps we have accomplish to move towards the beginning of production in this region.
  10. Prior to the granting of environmental permits we started the long lead items purchase and the system pre-assembling in several yards along Brazil and US. The project is in schedule and we expect to obtain the operation permit on time for initial production by the 2nd half of this year. The effective commercial production and cash flow generation is planned for beginning of 2013
  11. On pages 22 and 23, we present more images of the system execution in the Parnaíba Basin.We have cleared the land and are opening the area for our right-of-way for the pipeline that will be laid down in order to transport the gas. Also, we have broken ground for our gas treatment facility, from which we will supply natural gas for the MPX Parnaíba Thermoelectric Complex.I would now like to hand the call back to Paulo Mendonça for closing remarks before we open it up for questions. Mr Mendonça...
  12. Thank you, Abi.So, we are already working hard to make sure that 2012 is another year of exciting developments for OGX. Our continued exploration and appraisal campaign, intense development of our basins, including the Waimea production ramp-up, are achievements that we will work for to generate further value for our stakeholders.After declaring commerciality and submitting our Development Plan for Waimea, we expect to connect two additional horizontal production wells by the middle of the year and possibly a 4th producer connected to OSX-1We are very keen in resume drilling in OGX-63 well, seeking to collect hydrocarbon samples and test, at least, our Albian discovery.Also, we will continue the drilling of development wells in Parnaíba and begin our drilling campaign in Colombia by this year.Finally, we look forward to participating in the next Colombian bidding round, as well as the potential new ANP bidding round in Brazil.I would now like to pass the call back to the operator, so that we can open the call for questions. Operator….