OGX Petroleo & Gas Participacoes SA plans to begin production this week at its most promising field as controller Eike Batista seeks revenues to keep his Brazilian oil company afloat, said a person briefed on the matter.
OGX, which filed for bankruptcy protection in October, has all the licenses needed to start operating the Tubarao Martelo offshore field after receiving permits from government environmental agency Ibama on Nov. 29, the person said, asking not to be identified because the plan hasn’t been made public. Ibama confirmed in a statement to Bloomberg News today that the remaining license was issued to OGX last week.
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 became the first Brazilian oil producer to seek creditor protection when it filed for a so-called judicial recovery in a Rio court.
In an e-mailed response to questions today, OGX reiterated its target of starting production at the field in the fourth quarter. Last month, Malaysia’s Petroliam Nasional Bhd. canceled a contract to buy a 40 percent stake in two offshore exploration blocks that include Martelo.
OGX was counting on $850 million from the Petronas sale to develop the field. The company, which expects to run out of cash in the last week of December, needs about $250 million to sustain operations through April, it said in an Oct. 23 presentation to Rothschild, the adviser hired by its bondholders.
Batista founded OGX in 2007 and it became the pillar of his group of commodities and logistics companies. OGX’s initial success finding oil in shallow waters off the coast of Rio sparked a stock market rally that made it more valuable than established producers including Repsol SA, transforming the entrepreneur into Brazil’s richest man.
When OGX moved from exploration to production, it encountered more complicated and compartmentalized geology than expected. The company closed the third quarter with $85 million in cash. Its stocks and bonds lost more than 90 percent of their value this year with notes due 2018 trading at 8 cents on the dollar.