OGX to Keep Exxon Partnerships as It Sheds Nine Brazil Licenses
OGX Petroleo & Gas Participacoes SA (OGXP3), the worst performing oil stock in emerging markets, said it will return nine oilfield licenses in Brazil while retaining those it has in partnership with other producers.
OGX “concluded that it’s not recommendable, at the current time, to assume exploratory risk in new areas where it hasn’t formed ventures with other companies,” the Rio de Janeiro-based explorer said in a Brazilian regulatory filing today. In a government auction in May, OGX picked up the nine blocks plus four licenses with partners Exxon Mobil Corp. (XOM) of the U.S., France’s Total SA (FP) and Brazil’s QGEP Participacoes SA. (QGEP3)
Returning the assets is part of a business strategy revaluation after the company said July 1 it wouldn’t develop three fields. OGX also said at the time that it may shut its only oil-producing asset, the Tubarao Azul field, next year. OGX said Aug. 14 it hired Blackstone Group LP for “ongoing efforts to assess its capital structure.”
OGX has declined 83 percent this year, more than any other emerging-market oil company worth at least $100 million, according to data compiled by Bloomberg. The stock fell 7.4 percent to 75 centavos cents at 11:28 a.m. in Sao Paulo today.
Entrepreneur Eike Batista’s flagship company said it will have to pay a fine of about 3.4 million reais ($1.4 million) for returning the oil blocks. Brazil’s oil regulator, known as ANP, can now reassign the blocks to the second highest bidders. Batista’s company had promised investors OGX would pump 730,000 barrels a day by 2015.
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