Brazil's OGX close to sale of oil field stake to Petronas


Brazil's OGX close to sale of oil field stake to Petronas


SAO PAULO -- Brazilian oil producer OGX could announce as early as Tuesday the sale of a 40% stake in oil field Tubarao Martelo for around $850 million to Malaysian state-run oil and gas firm Petroliam Nasional Bhd, according to a person familiar with the talks.

The person said the two companies aim to close the deal May 7, but it is still unclear whether they will be able to get it done in time, the person said. OGX would initially receive around $250 million from the sale and the rest over time, the person also said.

OGX declined to comment for this article. A spokesperson for Petronas couldn't be immediately reached.

Analysts say that fresh funding for OGX, controlled by billionaire entrepreneur Eike Batista, is seen as crucial to allowing the company to participate in the upcoming auction of licenses for oil and gas exploration blocks. Analysts believe the company must buy up new fields to be able to diversify its exploration portfolio.

OGX has fallen short of its crude-oil production goals since June of 2012. Disappointment with the company led investors to question Mr. Batista's firms ability to generate cash and fund their massive infrastructure projects. Many of Mr. Batista's interests, in areas such as oil, logistics and mining, are in the startup or pre-operational phase.

The concerns have hit shares of OGX hard: they are down 86.7% over the last 12 months. Nonetheless, they have recovered slightly in recent weeks following reports the firm may sell stakes in oil fields.

Tubarao Martelo--which means "Hammerhead Shark" in English--is located in the Campos Basin, Brazil's most prolific oil region today that lies in deep waters off the country's southeast coast. OGX has said it estimates the field has a recoverable volume of 285 MMbbl.

The field expected to start producing crude oil by the end of this year, according to OGX. At the end of last year, the firm said it is completing drilling operations on three production wells at the field, and the OSX-3 floating production and storage platform will arrive in the third quarter, OGX said.

OGX, meanwhile, is scheduled to report first quarter results Thursday.

Dow Jones Newswires

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