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
discovered. 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
y p y g y, g p p g
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
assumptions,
subject to significant uncertainties and contingencies that are beyond the control of OGX, there can be no assurance that the projections or
conclusions derived therefrom 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
OGX. evaluation, risks,
decision.
2
3. 2010 Highlights and Subsequent Events
Largest private sector exploratory campaign in Brazil
A total of 43 wells drilled in 18 months with an overall success rate of over 90% in the shallow waters of the
Campos and Santos b
d basins and in the onshore Parnaíba Basin
d h h íb
18 wells drilled in 2010 in the Campos Basin with a success rate of 100%
Opening of a new exploratory frontier in the onshore Parnaíba Basin, with estimated potential resources of
p g p y , p
15trillion cubic feet (Tcf) of gas
Drill‐stem tests confirmed the high production potential of several discoveries made
Commencement of production in record time
Commencement of production expected in 3Q11 in the Waimea accumulation in the Campos Basin
First horizontal well (OGX‐26) drilled and tested confirming the high productivity of OGX carbonate reservoirs of the
Albi geological age
Albian l i l
All critical equipment for the initial production has been secured
Equipment
Nine drilling rigs contracted (7 offshore and 2 onshore)
Arrival of the FPSO OSX‐1 expected by mid 2011
Portfolio
Beginning of a new exploratory cycle with the acquisition of 5 blocks in 3 onshore basins in Colombia
Campos basin farm‐out process ongoing 3
5. 2010 Financial Results
Net Financial Results: Impact of interest income and
Main Accounts - IFRS
the positive impact of marking‐to‐market the fair value
Financial Statements
of financial instruments offset by losses on hedging R$ (‘000) 2010 2009 Δ
Exploration Expenses: Primarily related to expenses Net Financial Result 258,506 264,373 (5,867)
Financial Income 694,411 872,741 (178,330)
for seismic activities in the Parnaíba and Espírito Santo
p
Financial Loss (435,905) (608,368) 172,463
basins Exploration Expenses (97,841) (97,914) 73
G&A Expenses (319,072) (229,480) (89,592)
General and Administrative Expenses: Increase in the G&A (173,038) (108,396) (64,642)
Stock option plan ‐ Company
Stock option plan Company (19,561)
(19 561) (9,629)
(9 629) (9,932)
(9 932)
number of employees f
b f l from 147 to 213 b
between 2009
Stock option plan ‐ Controlling Shareholder (126,473) (111,455) (15,018)
and 2010 and the impact of the accounting treatment Tax and Social Contribution 22,882 (37,605) 60,487
Minority Interest (12,048)
‐ (12,048)
for stock options granted by the controlling
Net Result
Net Result (123,477)
(123 477) (100,626)
(100 626) (22,851)
(22 851)
shareholder. This adjustment does not result in the
dilution of shareholder interest and does not impact Balance Sheet
2010 2009 Δ
R$ (‘000)
the Company’s cash position
Intangible
I t ibl 4,589,418
4 589 418 2,099,559
2 099 559 2,489,859
2 489 859
Net Result: Negative result higher than 2009 mainly Exploratory drilling and studies 2,948,754 469,474 2,479,280
Mobilization of rigs 148,941 138,362 10,579
due to increase in General and Administrative
Signature Bonus on exploratory blocks 1,491,723 1,491,723 ‐
Expenses
p Cash and cash equivalents
Cash and cash equivalents 4,788,166
4 788 166 7,337,900
7 337 900 (2,549,734)
(2 549 734)
Intangibles: Increase due to intensified drilling
campaign and rig mobilization for the exploratory 5
i
6. 2010 Financial Results
R$ billion Cash Position Evolution US$ billion
6.0 4.0
Solid cash position of R$4.8 billion, or US$2.9 billion, to
5.0
support the exploratory commitments and the beginning of
4.0 3.0
production
3.0
30
Foreign exchange hedge position of approximately US$ 1.7 2.0 2.0
billion, representing approximately 14 months of financial 1.0
commitments denominated in US$
commitments denominated in US$ 0.0
00 1.0
10
3Q10 Oct Nov Dec
Cash in R$ Cash in US$
Allocation by Institution
y
Safra; 5% BTG Pactual; 6%
CS; 5%
Santander;
11% Others (*); 5%
Average cumulative gross return equivalent to approximately
ABC; 3%
105% of the Interbank Deposit Rate (CDI), generating R$ Votorantim;
15%
585.4 million of interest income for the period Société; 3%
Bradesco; 22% Itau
Cash invested in fixed income instruments with some of the
Cash invested in fixed income instruments with some of the Unibanco;
Unibanco;
24%
most solid financial institutions in Brazil
(*) HSBC (1.8%), LFT (1.5%) and BNP (1.0%)
6
8. Campos Basin
Summary
7 shallow water blocks in South
Campos (lower cost & faster
C (l &f
execution)
31 drilled wells: 28 concluded
and 3 in progress
and 3 in progress
100% success ratio and multi‐
layer discoveries
Focus on the appraisal campaign
with vertical and horizontal
drilling
Several drill stem tests
Several drill‐stem tests
confirming reservoirs high
productivity
1st oil at Waimea (OGX‐26) on
oil at Waimea (OGX 26) on
track
Waimea project
FPSO OSX‐1 and submersible
equipment secured
OGX wells
OGX ll
• Previously drilled wells
Multi‐billion barrel discoveries and 100% hit ratio in the shallow waters of Campos with high
productivity reservoirs among the best in Brazil (40k bbl/d/well)
8
9. OGX‐26: First Production Well
OGX will begin production by 3Q11 with an
extended well test (EWT) in the Waimea
extended well test (EWT) in the Waimea
accumulation (OGX‐26) producing up to 20,000
barrels per day
OGX‐26 is located in the shallow waters in the
OGX 26 i l t d i th h ll t i th
Campos Basin (134m) and 84 km off the coast
One of the best drill‐stem tests ever performed in
Brazil that confirmed excellent productivity index
(PI) of 100 m3/day/kgf/cm2
Production potential of 40,000 barrels per day in
definitive development phase
Oil gravity of 20⁰ API
State‐of‐the‐art drilling technology: 1,000 meters of
horizontal extension
The results obtained in the drilling of this well validate the geological model and confirm the
Th l b i d i h d illi f hi ll lid h l i l d l d fi h
relevance of the carbonate province discovered by OGX in the southern part of the Campos basin
9
10. Campos Basin: OGX‐26 – Defined Production Concept
and Equipment Secured
and Equipment Secured
Production Concept Critical Equipment and Services Status
Equipment
Horizontal Well (OGX‐26) already drilled and successfully tested
Wet Christmas Tree (WCT): Already installed
Well completed and wet christmas tree installed
Buoy anchor system and flexible lines already delivered Umbilical Terminal Assembly (UTA): Contracted
Extended Well Test (EWT) approved by ANP (National Petroleum Hydraulic Power Unit (HPU): Delivery scheduled
Agency) for April, 2011
FPSO (OSX‐1) arrival expected by mid‐2011 Flexible Lines: Contracted with Wellstream
All critical equipment and services already secured
Electrical Submersible Pump (ESP): Contracted
with Baker
Services
Installation Vessel – Anchor System, Flexible Lines and
Umbilicals: Contracted with WS and Aker
Mud line and Subsurface analysis for FPSO Mooring
and WHP piles: Contracted with FUGRO – already
and WHP piles: Contracted with FUGRO already
completed
Waimea Area Survey: Contracted with FUGRO
EWT will have a wet christmas tree and flexible lines directly connected to the FPSO OSX‐1
and oil flow rate of up to 20,000 barrels per day
10
11. Santos Basin: Intensification of the Drilling Campaign
Important discoveries identifying liquid hydrocarbons and gas
Relevant discoveries in three wells drilled in 2010:
OGX‐30
OGX‐11 (Natal): 75m net pay in the sandstone reservoirs in the
Santonian section OGX‐17A
OGX‐24
OGX‐17 (Belém): 43m net pay in the carbonate reservoirs of OGX‐12
the Albian section
OGX‐19 (Aracajú): 40m net pay in the sandstone reservoirs in
the Santonian section
OGX‐30 (Salvador): Drilling still in progress
OGX‐11
OGX‐23
Santos Basin success rate of approximately 60%
MRK‐2B
OGX‐19A
Increase participation to 100% in BM‐S‐29 (former‐JV
with Maersk)
Discovery Evaluation Plan (PAD) of the Belém Wells drilled by OGX
accumulation submitted to ANP
Commencement of the second exploratory phase in
3 blocks (BM‐S‐57, BM‐S‐58 and BM‐S‐59).
11
12. Parnaíba Basin: Evidence of High Potential Gas Volumes
OGX‐34 OGX‐16
Highlights
Mapped 20 additional prospects in the region OGX‐22
Increased the expected number of wells to be drilled from 7 to 15 during the
p g
exploratory campaign
Estimated potential resources of approx. 15 trillion cubic feet (Tcf) and
production capacity of approx. 15 million cubic meters per day
B i i f th i l i ith fi t i l ll l d i
Beginning of the appraisal campaign with first appraisal well already in
progress (3‐OGX‐38‐MA)
License for 1,863 MW obtained by MPX to commercialize part of the
discoveries made
Wells drilled by OGX
y
Discoveries and Tests
OGX‐16 (Califórnia): First commercial gas discovery in OGX‐16 OGX‐22
Parnaíba. Drill‐stem test measured pressure of 1,900 psi and
flame of 15 meters
OGX‐22 (Fazenda São José): Relevant gas discovery in the
Devonian section. Drill‐stem test conducted in this section
measured pressure of 1,950 psi and flame of 20 meters
measured pressure of 1 950 psi and flame of 20 meters
Test conducted in well OGX‐22 indicated production
potential of up to 3.4 million m³ per day in Absolute Production potential of
Open Flow Absolute Open Flow of 1.0M 3.4M m3/day in Absolute
m3/day Open Flow
Pressure of 1,900 psi Pressure of 1,950 psi
OGX‐34 (Bom Jesus): Drilling still in progress Flames of approx. 15m high Flames of approx. 20m high
12
13. Important 2011 Milestones
Beginning of the drilling campaign in the Pará‐Maranhão Basin in the short‐term
New D&M report for the Campos and Parnaíba basins, evaluating contingent and prospective
resources
First oil at Waimea in 3Q11
Beginning of the drilling campaign in the Espírito Santo Basin in 2H11
Increase of appraisal campaign in the Campos and Santos basins
Intensive exploratory campaign in the Parnaíba Basin
Beginning of seismic campaign in Colombia
13
15. Consolidated Balance Sheet – R$´000
In accordance with IFRS
Assets 12/31/2010 12/31/2009 Liabilities 12/31/2010 12/31/2009
Current Assets
5,083,508
7,564,267 Current Liabilities
736,978
581,406
Cash and cash equivalents 4,080,107
6,633,787 Suppliers
446,907
151,262
Marketable Securities
708,059
704,113 Payable Taxes and Contribution 23,643 40,116
Recoverable taxes
279,334
209,076 Compensation and benefits 29,208 23,960
Financial derivative instruments ‐ ‐ Financial derivative instruments 225,794 300,757
Other 16,008
17,291 Other 11,426
65,311
Non‐current Assets
N tA t 4 905 026
4,905,026 2 205 830
2,205,830 Non‐current Liabilities
N t Li biliti 11 758
11,758 2 402
2,402
Inventory
223,793
85,354 Related parties 11,758
2,402
Deferred Taxes 45,640 ‐
Related Parties 18,551 ‐
Investments ‐ 1,000
,
Property, plant and equipment 27,624
19,917 Minoritory interest
24,653
‐
Intangible 4,589,418
2,099,559
Shareholders' Equity
9,215,145
9,186,289
Capital 8,806,451
8,799,004
Capital reserves
C it l 224 256
224,256 250 569
250,569
Retained earnings
420,518 248,171
Cumulative conversion adjustments (1,148)
‐
Accumulated profit (losses) (234,932)
(111,455)
Total Assets
Total Assets 9 988 534
9,988,534 9 770 097
9,770,097 Total Liabilities
Total Liabilities 9,988,534 9,770,097
15
16. Consolidated Income Statement – R$´000
In accordance with IFRS
2010 2009
Operating income (expenses)
Operating income (expenses)
Exploration expenses (97,841) (97,914)
General and administrative expenses
(319,072)
(229,480)
Financial income 694,411 872,741
Financial expenses
p
(
(435,905)
, ) (608,368)
( , )
Net earnings (losses) before income tax and
social contribution
(158,407) (63,021)
(‐) Income tax and social contribution
22,882
(37,605)
Net earnings (losses) before minority interest
(135,525) (100,626)
Minority interest
(12,048) ‐
Net earnings (losses) for the period
(123,477)
(100,626)
Number of shares at the end of the period *
3,233,161,600 3,232,004,100
Earnings (losses) per thousand shares R$
Earnings (losses) per thousand shares ‐ R$ 03819) (0 03113)
(0.03819)
(0 (0.03113)
16
