OGX reports 27% drop in oil offshore production in March
BY ROGERIO JELMAYER
SAO PAULO -- Compounding the problems of billionaire Eike Batista, his oil company, OGX Petroleo e Gas Participacoes said it' s now facing operating problems at its only producing oil field, which led to a slump in production in March.
OGX had problems with electrical submersible pumps in two wells at the Tubarao Azul field, the company said in a statement late. Production in March fell to an average of 8,300 boepd in March, down nearly 27% from 11,300 bbl in February.
When the oil company reported in mid-2012 that production from the oil field was well below expectations, it triggered a crisis of confidence across Mr. Batista' s industrial empire. Shares in his publicly traded companies, all startups that raised billions of dollars in capital in recent years, have been on a rollercoaster ride ever since.
"The last thing OGX needed at this point was to be faced with operational problems" analysts at Credit Suisse wrote in a report. "Uncertainty was already high."
There are questions about production performance of the existing wells, amount of future oil recoverable in the upcoming OSX-2 field, the money to be raised from an eventual sale of a stake in the Tubarao Martelo field and the group' s financial position in the short and long term, it said.
"And now the market is faced with yet another risk, that operations don' t run smoothly" Credit Suisse said.
Operational issues caused overheating and damage to the centrifugal submersible pump (CSP), at one well, resulting in a 15 day stoppage in March, repairs began in mid-April and should be completed in mid-May, OGX said.
Unstable electrical generation at a second well led to an 11 day stoppage in March, work to fix this CSP will start after the problems at the first well have been resolved, it said.
"Production at both wells will remain interrupted until the CSP overhauls are completed" OGX said.
Unstable electrical generation also led to a halt at a third well, with production stopped for two days in March for safety reasons, it said. The well returned to its normal production after energy generation was restored, it said.
Dow Jones Newswires