Batista’s OGX Cash Plummets 72% to $326 Million Amid Record Loss

OGX Petroleo (OGXP3) & Gas Participacoes SA, the oil unit of former billionaire Eike Batista, said its cash reserves plunged 72 percent as writedowns drove its second quarter loss to a record 4.7 billion reais ($2.03 billion).

The company had cash of $326 million at the end of the quarter, almost equal to its capital spending of $316 million in the period, Rio de Janeiro-based OGX said yesterday in a statement. Pump failures at its only crude producing field forced it to shut wells in the quarter, it said.

OGX is selling assets and cutting costs to help pay interest on its $3.6 billion in international bonds and finance its projects. Its net loss widened from 390 million reais a year earlier after it slashed 3.6 billion reais from the value of four oil fields in the Campos Basin, three of which it plans to return to Brazil’s oil regulator after unsuccessful exploration, OGX said.

“OGX is currently focusing its efforts on adapting its operations and developing a new business plan that will allow the resized company to pursue its focused exploration and production aims,” Chief Executive Officer Luiz Carneiro said in the statement.

The company may halt output at the fourth field next year after missing targets, OGX said. Banco Itau SA was expecting OGX to lose 1.3 billion reais, it said in a July 24 report.

OGX also said yesterday it hired Blackstone Group LP (BX), the world’s largest private-equity firm, as financial adviser to review its capital structure. The company plans to reduce its offshore drilling fleet to two units from three by the end of the year to help cut costs, it said.

Mubadala Development Co., the Abu Dhabi sovereign-wealth fund, is in talks to buy some of Batista’s assets for about $1 billion, two people with direct knowledge of the matter said earlier this week.

To contact the reporters on this story: Peter Millard in Rio de Janeiro at pmillard1@bloomberg.net; Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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