Billionaire Batista’s Alter-Ego Searching for Oil, GasJuan Pablo Spinetto and Rodrigo Orihuela
Rodolfo Landim, who in 2007 helped Eike Batista set up an oil business before falling out with the billionaire, is competing with his ex-boss to extract crude and gas from northeastern Brazil.
Ouro Preto Oil & Gas SA, a company Landim founded in 2010 after leaving Batista’s EBX Group Co., bought exploration licenses for three blocks in Brazil’s north corner near French Guiana. The firm, backed by Turim Investimentos and billionaire investor Julio Bozano, has about 25 employees, among them former executives from EBX and Petroleo Brasileiro SA, the world’s biggest oil producer in deep waters.
Landim, who explored the area as a Petrobras executive in the 1980s and the 1990s, said Ouro Preto expects to find oil and gas in northeastern Brazil where Batista’s OGX Petroleo & Gas Participacoes SA has increased natural gas output eightfold this year. Brazilian oil startups including OGX have disappointed investors by missing output and reserves targets. HRT Participacoes em Petroleo SA, which was listed in 2010, plunged to a record yesterday after abandoning two wells in Brazil and Namibia, its main areas of exploration.
“These recent stories don’t help but they’re not an impediment,” Landim said yesterday from his office overlooking Rio de Janeiro’s iconic Sugar Loaf mountain. “There will always be funding for good projects. If we discover oil as we are expecting, the resources will appear.”
OGX slid 85 percent since its IPO in 2008 through yesterday after failing to meet output targets and HRT slumped 88 percent from late 2010, when it sold shares to the public. QGEP Participacoes SA, the most recent Brazilian oil company to sell shares in a public offering, declined 34 percent since its Feb. 2011 IPO.
While OGX rose 2.9 percent to 1.79 reais at the close in Sao Paulo today, QGEP rose 1.8 percent to 12.75 reais.
Ouro Preto, or black gold in Portuguese, agreed to pay 14.8 million reais ($7.3 million) for its two onshore blocks in the Parnaiba basin and an additional block in shallow waters of the Barreirinhas basin, according to ANP, Brazil’s oil regulator. The company, which at the auction lost bids to explore 10 other blocks, will spend at least 52.8 million reais exploring the areas, ANP said.
Ouro Preto, controlled by Landim and his managing team, has enough cash to hunt for hydrocarbons in its blocks, Landim said. The start up is considering competing in auctions for acreage in Brazil and buying into stakes in blocks won by other companies, he said.
“We want to use all the gray hair we have here to structure a new oil company and create value,” Landim, 56, said. “We are looking at everything.”
Landim, who left OGX in 2009, sued Batista a year later, claiming the billionaire agreed to cede him 1 percent of his holding in EBX in exchange for helping him to set up his business. The case continues in court, Landim said, adding that he sold all his shares in OGX. He declined to discuss specifics of the dispute.
“It’s a discussion I have with him about something I think he owes me. Period. I don’t like to talk about this.”
Batista’s lawyer Sergio Bermudes said by phone that the claims don’t have merit and he is confident the courts will decide in favor of the billionaire. EBX’s press office referred questions to Bermudes, declining to comment for this story.
The bet on Parnaiba, in the Maranhao state, seeks to tap the country’s increasing need for natural gas to supply power plants, Landim said. Brazil’s reliance on hydroplants for about 80 percent of its electricity leaves the country vulnerable to blackouts during the dry season and the government sees increasing natural gas supply as a solution to water dependency.
Parnaiba is an area that Landim knows well. A 27-year veteran of state-controlled Petrobras, he oversaw the company’s reservoirs in Brazil’s northeast. Landim also explored Parnaiba during his time at OGX, which he helped found and headed during its pre-operational stage.
OGX got gas output at its Gaviao Real field in Parnaiba to the equivalent of 25,000 barrels a day this month, up from 3,000 in January, the company said May 10. OGX increased its exploration acreage by 50 percent in the May 14 bid round, and Ouro Preto bid and lost at one of the four Parnaiba blocks OGX won. OGX’s success at Parnaiba compares with failures at Campos, where peak production at its first field was only a fraction of what it promised investors.
Landim is likely to receive the support of investors including pension funds and private equity firms in case he decides to scale up operations, said Alvaro Teixeira, an oil consultant and former exploration and production director at Petrobras.
“He won’t have problems getting financing to expand the company,” he said in an interview in Rio. “He’s a really competent guy and respected in the market.”
The fact that OGX didn’t perform as initially expected gives Landim experience that he can apply to his new venture, said Adriano Pires, the head of the Brazilian Center for Infrastructure, a consulting firm in Rio de Janeiro.
“The bad things that happened at OGX help him as a lesson to him,” he said in a telephone interview. “Onshore and shallow-water areas, especially in gas, should be Ouro Preto’s niche.”