OGX Starts Pumping Oil at Most Promising Field in Brazil

OGX Petroleo & Gas Participacoes (OGXP3), the world’s worst performing oil producer this year, started production at its most promising Brazilian field after failures at four other offshore areas eroded cash reserves.

“Production started yesterday at the Tubarao Martelo field,” Rio de Janeiro-based OGX said in a regulatory filing today. The company started pumping crude from a single well in the Campos basin field after receiving an environmental license Nov. 29, according to the filing. No further details were given.

Tubarao Martelo, which may hold as much as 108.5 million barrels, including proven, probable and possible reserves, is OGX’s latest attempt to produce crude after abandoning projects it had previously declared commercial. OGX, which is controlled be founder Eike Batista, became the first Brazilian oil producer to seek creditor protection when it filed for a so-called judicial recovery in a Rio court in October.

OGX expects to run out of cash in the last week of December and needs about $250 million to sustain operations through April, it said in an Oct. 23 presentation to Rothschild, the adviser hired by its bondholders. Last month, Malaysia’s Petroliam Nasional Bhd. canceled a contract to buy a 40 percent stake in two offshore exploration blocks that include Martelo, after estimates were slashed.

The oil is being produced with a platform called OSX-3, which belongs to Batista’s shipbuilder, OSX Brasil SA. (OSXB3)

OGX stock dropped 95 percent this year, more than any other of the world’s 415 oil companies worth at least $250 million. The stock surged 16 percent to 22 centavos at 10:43 a.m. today in Sao Paulo.

To contact the reporter on this story: Rodrigo Orihuela in Rio de Janeiro at rorihuela@bloomberg.net

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

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