1Q13 Earnings Presentation

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  • 1. 1Q13 RESULTSPRESENTATIONRio de Janeiro | May 10, 2013
  • 2. 1Q13 HIGHLIGHTS1
  • 3. 1Q13 HIGHLIGHTS AND SUBSEQUENT EVENTS3OGX delivered a sequential improvement in the first quarter: OGX posted higher net revenues and positive EBITDA: R$289 million and R$74 million, respectively Production volumes in Tubarão Azul Field up 5.1% on the previous quarter, totaling 954 thousand barrels of oil Efficient development of the Tubarão Martelo Field; six production wells drilled and lower completed Commercial gas production in the Gavião Real Field started in January 2013Important advances in exploration campaign: Four fields declared commercial: Tubarão Tigre, Tubarão Gato and Tubarão Areia in the Campos Basin; and Gavião BrancoField in the Parnaíba Basin New Discovery Evaluation Plans (PAD) submitted for other accumulations in the Campos and Santos basins First Cretaceous Sandstone discovery in the Campos Basin: Tulum Three gas discoveries in the Parnaíba Basin (Fazenda Chicote, São Raimundo and Fazenda Santa Isabel)Tubarão Azul operational issues: Production was affected by operational issues in March and AprilStrategic partnership with Petronas: Important strategic partnership with Petronas to jointly exploit the Tubarão Martelo Field and the Peró and Ingáaccumulations
  • 4. FINANCIAL & OPERATIONALHIGHLIGHTS2
  • 5. 5FINANCIAL HIGHLIGHTS: 1Q13 RESULTSNet Revenue rose 66% in 1Q13 and positive EBITDA for the first timeKEY FINANCIAL METRICS 1Q 2013 4Q 2012Net Revenue (R$ mm) 289 175EBITDA (R$ mm) 74 (38)Net Profit (Loss) (R$ mm) (805) (286)Realized oil price per barrel (US$) 103 104CAPEX (US$ mm) 289 550Cash Position (US$ mm) 1,148 1,655Production volume (kboepd) 10.9 10.2Net revenue of R$289 million bookedin 1Q13 from 5th and 6th cargos1.2 million barrels sold in 1Q13Net profit impacted by dry well andarea relinquishmentCash position of US$1.15 billion as ofMarch 31, 2013Average production volume of 10.9kboepd in 1Q13
  • 6. Disciplined cash management focused on maintaining flexibility for ongoing operations andadditional opportunities6Notes:¹ Considers average exchange rate equivalent to: BRL 1.77/USD (1Q12); BRL 1.96/USD (2Q12); BRL 2.03/USD (3Q12); BRL 2.06/USD (4Q12); BRL 2.00/USD (1Q13)² Considers end of period exchange rate equivalent to: BRL 2.04/USD (4Q12); BRL 2.01/USD (1Q13)³ Final stage of GTU assembly and two additional rigsCash Flow (US$ million)1,2Cash Expenditure – Accrual Basis (US$ million)1FINANCIAL HIGHLIGHTS: CASH POSITIONCapexSG&A/G&GAdditional Parnaíba Capex³653460 483550289567 9815638 5233734521588 6113221Q12 2Q12 3Q12 4Q12 1Q131,6551,148(28) (184)(295)4Q12 1Q13FinancingactivitiesOperatingactivitiesInvestingactivities– 47%OGX has the option to require controlling shareholder Eike Batista to purchase up toUS$1.0 billion of new common shares of OGX at a price of R$6.30 per share
  • 7. OPERATIONAL HIGHLIGHTS: 1Q13 PRODUCTION7Campos Basin: 954 thousand barrels of oil produced in 1Q13 at an average daily production of 10.9 kboepd 1.2 million barrels of oil sold in 1Q13, delivered in two different cargos 3rd production well in Tubarão Azul Field on-stream since January 4, 2013 Average daily cost of ~US$531 thousand per day in FPSO OSX-1 operation In March and April, production was affected by operational issuesParnaíba Basin: Average net gas production of 3.2 kboepd, 5.5 kboepd, 6.8 kboepd and 12.1 kboepd in January, February, March andApril 2013, respectively, in the Gavião Real Field Achieved total production of 4.0 M m³/d (~25 kboepd) in the Gavião Real Field after the fourth turbine at the Parnaíba IThermo Power Plant has been synchronized with the National System on April 5, 2013 Commenced the drilling of two additional development wells: GVR-17 and GVR-18, which should be completed andconnected soon to the production clusters
  • 8. 8OPERATIONAL HIGHLIGHTS: TUBARÃO AZUL FIELDAverage Monthly Production (kboepd) OGX-68HP well: 15 day stoppage during March due to operationalissues in the ESP Repairs commenced in mid-April – conclusionexpected for mid-May TBAZ-1HP well: 11 day stoppage during March due to unstableelectrical generation at OSX-1 and lower thanexpected flow rate at the well Repairs to begin after OGX-68HP well OGX-26HP well: 2 day stoppage at the well during March due tounstable electrical generation at OSX-1 Well production has been periodically stoppedsince the beginning of April to prevent damage tothe ESP - production is being monitoredEffectiveProduction DaysJan-13 Feb-13 Mar-13 Apr-13OGX-26HP 29 28 29 16OGX-68HP 29 28 16 -TBAZ-1HP 26 28 20 -Total 84 84 65 16Average peroffshore well(kboepd)4.9 3.8 3.9 3.413.211.38.31.8Operational Issues
  • 9. 9OPERATIONAL HIGHLIGHTS: TUBARÃO MARTELO FIELDTubarão Martelo Field Development Concluded the drilling and lower completion of 6 horizontalproduction wells (TBMT-2HP, TBMT-4HP, TBMT-6HP, OGX-44HP, TBMT-8H and TBMT-10H) FPSO OSX-3 scheduled to arrive by 3Q13 Tubarão Martelo Field scheduled to come on-stream by 4Q13Exploration wells drilledProduction wells drilledBM-C-39BM-C-40TUBARÃOMARTELO35DTBMT-10HTBMT-4HPTBMT-6HPTBMT-2HP 44HPTBMT-8H25Strategic Partnership with Petronas OGX recently entered into a strategic agreement withPetronas to sell a 40% stake in BM-C-39 and BM-C-40 blocks Sale price for OGX’ stake was of US$850 million The blocks encompass: Tubarão Martelo Field (2C resources of 212million barrels estimated by DeGolyer andMacNaughton in February 2012) Peró and Ingá accumulations Petronas has an option to purchase 5% of OGX’s capitalat a price of R$6.30 per share at any time until April2015
  • 10. 10OPERATIONAL HIGHLIGHTS: GAVIÃO REAL FIELD Four turbines synchronized as of April 5, 2013 Achieved total production of 4.0 M m³/d (~25 kboepd)in the Gavião Real Field Available production capacity of up to ~6 M m³/day;future available production capacity of up to 7.5 Mm³/day GTU EBITDA margin of approximately 73% leaves spacefor margin increase with full production ramp-up, inparticular in April and May, with the synchronization ofthe fourth and fifth turbinesAverage Monthly Production (kboepd)¹ ² Production advancing3.25.56.812.1Jan-13 Feb-13 Mar-13 Apr-13GTU Site ViewNotes:1 Average net production (OGX participation only) in the Gavião Real Field. Conversion factor considered: 6.29 kboe = 1 million cubic meters of natural gas2 January 2013 refers to a production period of 12 days, since the beginning of the synchronization of the first turbine in the TPP Parnaíba I
  • 11. OPERATIONAL HIGHLIGHTS: 1Q13 EXPLORATION11Campos Basin: Declaration of Commerciality of Tubarão Tigre, Tubarão Gato and Tubarão Areia fields with total estimated volume of oilin place of 823 million barrels of oil (P50) Submitted PAD for Vesúvio, Viedma, Tulum and Itacoatiara accumulations to ANP Decided to not continue the exploration of the Cozumel, Cancun, Tambora and Tupungato areasParnaíba Basin: Declaration of Commerciality of Bom Jesus accumulation (Gavião Branco Field) Three new discoveries in the basin:• OGX-107: 66 meters of net pay gas in Fazenda Chicote accumulation with drill-stem test indicating gas flow rateof 3.2 Mm³/d (AOF)• OGX-108: 24 meters of net pay gas in Fazenda Santa Isabel accumulation• OGX-110: 27 meters of net pay gas in São Raimundo accumulationEspírito Santo Basin: Commenced drilling PERN-3, Caju prospect, in the BM-ES-39 blockSantos Basin: Expected to commence in the coming days a drill-stem test at the OGX-94DA well (Curitiba accumulation PAD) Submitted PAD for Belém, Curitiba and Natal accumulations to ANP60% success rate in exploratory and appraisal program in 1Q13
  • 12. COMPANY OUTLOOK3
  • 13. 13UPCOMING EVENTSOther Key EventsEvents by Basin Update our resource evaluation report Arrival of FPSOs OSX-2 and OSX-3• Production expected to come on-stream by2013YE Commence drilling of the first development well in theAtlanta Field (BS-4 Block) in 2H13Campos Basin: Continue execution of PADs by drilling appraisal wellsand perform tests Continue to develop the Tubarão Martelo Field withPetronas by preparing for OSX-3’s arrival and concludestudies for OSX-2’s development areaParnaíba Basin: Continued exploration campaign with the drilling ofwildcat wellsSantos Basin: Perform tests as execution of the PADsEspírito Santo Basin: Continued exploration campaign with the drilling ofwildcat wells
  • 14. APPENDIX
  • 15. FINANCIAL STATEMENTS15Note:¹ This balance does not include parts of COGS related to depreciation, amortization and royalties that are disclosed in specific lines of the table aboveR$ (000)INCOME STATEMENT 1Q13 4Q12 ∆ 1Q13 1Q12 ∆Net revenue 289,391 174,707 114,684 289,391 - 289,391Cost of goods sold (COGS) ¹ (144,259) (100,203) (44,056) (144,259) - (144,259)Exploration expenses (27,851) (54,784) 26,933 (27,851) (89,202) 61,351Sales expenses (5,508) (5,831) 323 (5,508) - (5,508)General and administrative expenses (37,949) (52,121) 14,172 (37,949) (54,266) 16,317EBITDA 73,824 (38,232) 112,056 73,824 (143,468) 217,292Depreciation (part of COGS) (38,776) (17,173) (21,603) (38,776) (1,533) (37,243)Amortization (part of COGS) (5,202) (4,522) (680) (5,202) (1,757) (3,445)Stock option (20,566) (7,372) (13,194) (20,566) (35,334) 14,768Dry/subcommercial wells/areas (1,194,862) (231,238) (963,624) (1,194,862) (19,941) (1,174,921)Equity results (479) - (479) (479) - (479)EBIT (1,186,061) (298,537) (887,524) (1,186,061) (202,033) (984,028)Financial revenue 24,435 43,145 (18,710) 24,435 87,719 (63,284)Financial expense (127,485) (149,637) 22,152 (127,485) (94,769) (32,716)Net financial results (103,050) (106,492) 3,442 (103,050) (7,050) (96,000)Currency exchange 66,160 1,788 64,372 66,160 31,070 35,090Derivatives (5,704) (1,909) (3,795) (5,704) (5,461) (243)EBT (1,228,655) (405,150) (823,505) (1,228,655) (183,474) (1,045,181)(-) Income tax 424,068 119,444 304,624 424,068 38,672 385,396Net profit (loss) for the year- Pro forma (804,587) (285,706) (518,881) (804,587) (144,802) (659,785)OGX Campos Merger - - - - - -Net profit (loss) for the year- Book value (804,587) (285,706) (518,881) (804,587) (144,802) (659,785)Attributed to:Non controlling interests 5,818 (12,803) 18,621 5,818 (12,399) 18,217Controlling shareholders (810,405) (272,903) (537,502) (810,405) (132,403) (678,002)
  • 16. FINANCIAL STATEMENTS16R$ (000)BALANCE SHEET Mar 31, 2013 Dec 31, 2012 Mar 31, 2013 Dec 31, 2012ASSETS LIABILITIES AND EQUITYCurrent assets Current LiabilitiesCash and cash equivalents 2,311,016 3,381,326 Trade payables 522,944 925,513Escrow deposits 15,180 14,963 Taxes, contributions and profit sharing payable 28,617 22,894Taxes and contributions recoverable 28,879 - Salaries and payroll charges 70,297 58,921Derivative financial instruments 24,975 26,350 Loans and financings 761,346 84,534Oil inventories 77,107 118,027 Derivative financial instruments 2 1,416Other credits 106,225 94,686 Accounts payable to related parties 84,244 100,845Other accounts payable 23,576 20,0962,563,382 3,635,3521,491,026 1,214,219Noncurrent LiabilitiesLoans and financings 7,229,748 7,960,166Provisions 218,250 210,887Noncurrent AssetsInventories 231,895 206,511 7,447,998 8,171,053Taxes and contributions recoverable 199,080 215,311 Shareholders’ EquityDeferred income taxes and social contributions 1,216,497 791,893 Capital stock 8,821,155 8,821,155Credits with related parties 180,514 179,454 Capital reserves 191,013 178,793Earnings reserves - -Investments 12,490 - Currency translation adjustments 38,583 42,571Retained earnings (deficit) (2,142,076) (1,343,306)Fixed assets 9,756,663 10,027,389Portion attributed to controlling shareholders 6,908,675 7,699,213Intangible assets 1,713,223 2,060,438 Portion attributed to non-controlling interests 26,045 31,86313,310,362 13,480,996 6,934,721 7,731,076Total Assets 15,873,744 17,116,348 Total Shareholders’ Equity 15,873,744 17,116,348
  • 17. FINANCIAL STATEMENTS17R$ (000)FIXED ASSETSBalance as of December 31, 2012 10,027,389(+) CAPEXCampos Basin 422,764Santos Basin 10,969Parnaíba Basin 49,688Espirito Santo Basin 6,947Pará Maranhão Basin 3,974Colombian Basins 0Corporate 83,854578,196(+) Borrowing costs 44,477(+) Asset retirement obligation -(-) Gross margin EWT -(-) Disposals -(-) Depreciation (37,189)(-) Write off Dry/Subcommercial wells (856,210)Balance as of March 31, 2013 9,756,663R$ (000)LOANS AND FINANCINGBalance as of December 31, 2012 (8,044,700)(-) New fundings -(-) Accrued interests (163,884)(-) Currency exchange 109,169(+) Interest paid 112,658(+) Funding costs -(-) Amortization of funding costs (4,337)Balance as of March 31, 2013 (7,991,094)