ogx 3q earnings presentation

17
Q3 RESULTS PRESENTATION Rio de Janeiro | November 9, 2012

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Page 1: OGX 3Q Earnings Presentation

Q3 RESULTSPRESENTATIONRio de Janeiro | November 9, 2012

Page 2: OGX 3Q Earnings Presentation

COMPANY STRATEGY

1

Page 3: OGX 3Q Earnings Presentation

COMPANY STRATEGY

3

OGX is Brazil’s largest private oil and natural gas exploration company focused on accessing Brazil’s substantial, untapped reserves

• World class portfolio consisting of 32 prime shallow water and onshore blocks

28 exploratory blocks in 5 Brazilian sedimentary basins

4 onshore exploratory blocks in 2 Colombian sedimentary basins

• Executing the largest and most successful private sector exploratory campaign in Brazil

Overall exploratory success rate of 80% in 2012

More than 100 wells spud since the beginning of its exploratory campaign in Sep. 2009

• Proven production capability

Quickly move from exploration to production – 2 years and 3 months in Campos Basin

Fully established operations that utilize low cost and off-the-shelf technology

• Sound, flexible financial profile supports exploration and production strategy

Cash position to support exploration commitments, development and production ramp-up

First revenues of R$150.7 million booked in Q3 2012 from the sale of ~800,000 barrels

Economies of scale will dilute costs per barrel

Page 4: OGX 3Q Earnings Presentation

RESULTS SUMMARY

2

Page 5: OGX 3Q Earnings Presentation

5

FINANCIAL HIGHLIGHTS

KEY FINANCIAL METRICS 3Q 2012 YTD 2012

Revenues (R$ mm) 150.7 150.7

EBITDA – Pro forma¹ (R$ mm) (51.6) (305.1)

Net Profit (Loss) (R$ mm) (343.6) (887.1)

Realized Oil Price per Barrel (US$)² 95 95

Capex (R$ mm) (1,115) (3,186)

Production Volume (kboepd) 9.3 9.7 ³

First revenues of R$150.7 million

booked from sale of ~800,000

barrels

Strong cash position of R$5.1 billion

(US$2.5 billion) as of September 30,

2012

OGX has the option to require

controlling shareholder, Eike Batista,

to purchase up to US$1.0 billion of

new common shares of OGX at a

price of R$6.30 per share

Note:

1 Considers OGX Campos

2 Refers to the cargo booked as revenues (delivered on July, 26, 2012)

3 Production volume from January 31, 2012 to September 30, 2012

Page 6: OGX 3Q Earnings Presentation

6

FINANCIAL HIGHLIGHTS

Note:

¹ Considers average exchange rate equivalent to: BRL 1.77/USD (1Q12); BRL 1.96/USD (2Q12); BRL 2.03/USD (3Q12)

² Considers end of period exchange rate equivalent to: BRL 1.88/USD (4Q11); BRL1.82/USD (1Q12); BRL 2.02/USD (2Q12); BRL 2.03/USD (3Q12)

³ Final stage of GTU assembly and two additional onshore rigs

Capex

SG&A/G&G

Cash Spending – Accrual Basis (US$ million)1

2,862

3,608

2,939

2,492

1,800 - 1,900

1,500

268

203

(157) (597)

(474) (463)

(65) (585)

Cash Flow Statement (US$ million)

Cash Flow (US$ million)1,2

4Q11 1Q12 2Q12 3Q12 4Q12E

Financing activities

Operating activities

Investing activities

734

521

588

Capex Parnaíba³

Page 7: OGX 3Q Earnings Presentation

7

FPSO OSX-1 FINANCIAL RESULTS

Total Net Revenue of R$ 493.8 million and Total

EBITDA of R$ 174.7 million, reflecting the asset’s

high value

Economies of scale will dilute costs per barrel

Note:

1 Sales occurred during the Extended Well Test and before the declaration of commerciality – not accounted in Results and recorded as a reduction of “Fixed Assets”

2 Sale occurred after the Extended Well Test and declaration of commerciality – recorded as net revenues

3 Sale occurred after the Extended Well Test and declaration of commerciality – recorded as net revenues. Net figure of expenses associated with the sale of freight costs

Pro Forma EBITDA Reconciliation

Daily Cost (USD '000) 1st cargo 2nd cargo 3rd cargo 4th cargo Average

Leasing (268) (262) (268) (259) (264)

OSX Services (155) (143) (143) (139) (144)

Logistics (134) (147) (141) (113) (131)

Others (10) 1 (6) (9) (7)

Total (567) (551) (557) (520) (546)

Delivered cargos 1st ¹ 2nd ¹ 3rd ² 4th ³ Total

Delivery Date 03/28/2012 4/21/2012 07/26/2012 10/15/2012

Operation Period 51 days 27 days 98 days 80 days

Production related to the shipments

- in barrels (bbls)547,376 246,809 789,774 809,495 2,393,454

R$ ('000)

Net Revenue 118,003 55,996 150,686 169,145 493,830

Sales Taxes - - - - -

Royalties (10,687) (4,938) (14,842) (15,772) (46,239)

Leasing (24,078) (13,222) (52,708) (41,998) (132,006)

OSX Services (13,944) (7,236) (28,071) (22,499) (71,750)

Logistics (12,005) (7,410) (27,795) (18,405) (65,615)

Others (871) 36 (1,183) (1,529) (3,547)

EBITDA 56,418 23,226 26,087 68,942 174,673

% EBITDA / Net Revenue 47.81% 41.48% 17.31% 40.76% 35.37%

EBITDA / barrel - (R$/barrel) 103.07 94.11 33.03 85.17 72.98

Page 8: OGX 3Q Earnings Presentation

8

OPERATIONAL HIGHLIGHTS

Production

Production advancing on schedule

Campos Basin:

Total production of 856,800 boe in the quarter

Avg. daily production of 9.3 kboepd

3rd production well in Tubarão Azul Field under completion and expected to come on-stream in the coming weeks

Produced more than 2.5 million barrels of oil and delivered four shipments

Parnaíba Basin:

Drilling of 16 production wells concluded

Operating License authorizing production of natural gas obtained

Exploration

80% success rate in exploratory and appraisal program in 2012

Campos Basin:

Commenced drilling the wildcat well of Cozumel prospect

Parnaíba Basin:

Approved by ANP the Discovery Evaluation Plan for Bom Jesus accumulation

Drilling of two additional appraisal wells concluded, both contained discoveries of hydrocarbons in Bom Jesus accumulation

Started drilling five exploratory wildcat wells

Santos Basin:

Oil discovery in the Curitiba prospect (32 meters of net pay)

Not continuing development of the BM-S-29 exploratory block

Other Basins:

Plan to resume exploration campaign in Espírito Santo Basin before end of exploration period in October 2014

Participation in 2012 ANH round for Colombia basins and plans to begin drilling the first exploration well in 2013

Page 9: OGX 3Q Earnings Presentation

9

OPERATIONAL HIGHLIGHTS

Tubarão Azul Field Development

Average Monthly Production (kboepd)

Tubarão Martelo Field Development

Concluding the drilling and completion of 3 horizontal production

wells (TBMT-2HP, TBMT-4HP and TBMT-6HP)

FPSO OSX-3 scheduled to arrive by 3Q13

Tubarão Martelo Field is scheduled to come on-stream by 4Q13

Exploration wells drilled

Production wells drilled

11.610.3

9.1 9.0 9.2

7.0

10.6 10.4 10.3

Effective

Production DaysFeb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12

OGX-26HP 29 31 30 29 20 - 27 30 31

OGX-68HP - - - 17 30 31 31 30 31

Total 29 31 30 46 50 31 58 60 62

Average per well

(kboepd)¹11.6 10.3 9.1 6.1 5.5 7.0 5.7 5.2 5.2

Average Monthly Production(kboepd)

Note:¹ Considers the total volume produced divided by the effective days of production

BM-C-39

BM-C-40

TUBARÃO

MARTELO

Exploration wells drilled

Production wells drilled

BM-C-41

TUBARÃO

AZUL

Page 10: OGX 3Q Earnings Presentation

2013 OUTLOOK

3

Page 11: OGX 3Q Earnings Presentation

11

2013 OUTLOOK

Exploratory wells to be drilled

• Santos Basin: 1 well until the concession for exploration ends in

March 2013

• Parnaíba Basin: 10 wells

• Espírito Santo Basin: 3 wells, together with Perenco, the operator

of the blocks

TOTAL PRODUCTION

[XXX]

CAPEX

2012 annual estimate:

$1.2 billion

2012/2013 planned wells

Viedma

Cozumel

Cancun

Drilled Wells

Cotopaxi

Tulum

Prospect Block

Total Estimated

Recoverable Volume

(PMean)

Working Interest

OGX Estimated

Recoverable Volume

(PMean)

Spud date

Cozumel BM-C-37 209-270 mmboe 70% 146-189 mmboe 4Q12

Tulum BM-C-37 194-280 mmboe 70% 136-196 mmboe 4Q12

Cancun BM-C-37 184-294 mmboe 70% 129-206 mmboe 1Q13

Viedma BM-C-38 245-313 mmboe 70% 172-219 mmboe 1Q13

Cotopaxi BM-C-38 30-40 mmboe 70% 21-28 mmboe 1Q13

Total - 861-1,196 mm boe 70% 603-837 mm boe -

2013 Capex Breakdown

Development

80%

Exploration

20%

2013 Annual estimate:

US$1.2 billion

Page 12: OGX 3Q Earnings Presentation

Campos Basin:

• Connection of the third production well in the Tubarão Azul Field

• Drilling important prospects in blocks BM-C-37 and BM-C-38 in the Campos Basin

Parnaíba Basin:

• Beginning of GTU commissioning and gas production

• Continuation of the exploration and wildcat campaigns

Santos Basin:

• Results of tests and drilling in the Santos Basin

• Continuation of the exploration and wildcat campaigns

Espírito Santo Basin:

• Continuation of the exploration and wildcat campaigns

12

UPCOMING EVENTS

CAMPOS BASIN PARNAÍBA BASIN

SANTOS BASIN ESPÍRITO SANTO BASIN

Page 13: OGX 3Q Earnings Presentation

APPENDIX

Page 14: OGX 3Q Earnings Presentation

FINANCIAL STATEMENTS

14Note:

¹ This balance does not include parts of COGS related to depreciation, amortization and royalties that are disclosed in specific lines of the table above

R$ ('000)

INCOME STATEMENT 9M12 9M11 ∆ 3Q12 3Q11 ∆

Net revenue 150,686 - 150,686 150,686 - 150,686

Cost of goods sold (COGS) ¹ (124,599) - (124,599) (124,599) - (124,599)

Exploration expenses (172,567) (125,157) (47,410) (36,231) (50,175) 13,944

General and administrative expenses (158,611) (179,653) 21,042 (41,462) (71,820) 30,358

EBITDA (305,091) (304,810) (281) (51,606) (121,995) 70,389

Depreciation (part of COGS) (14,665) (3,039) (11,626) (11,574) (1,210) (10,364)

Amortization (part of COGS) (7,337) (4,170) (3,167) (3,798) (1,692) (2,106)

Stock option (47,291) (22,477) (24,814) (41,701) (4,131) (37,570)

Dry/subcommercial wells/areas (460,235) - (460,235) (294,712) - (294,712)

EBIT (834,619) (334,496) (500,123) (403,391) (129,028) (274,363)

Financial revenue 222,237 345,749 (123,512) 60,146 102,823 (42,677)

Financial expense (329,153) (133,170) (195,983) (127,305) (101,589) (25,716)

Net financial results (106,916) 212,579 (319,495) (67,159) 1,234 (68,393)

Currency exchange (366,080) (4,191) (361,889) (26,764) (12,723) (14,041)

Derivatives 18,294 (81,815) 100,109 (4,205) 150,318 (154,523)

EBT (1,289,321) (207,923) (1,081,398) (501,519) 9,801 (511,320)

(-) Income tax 389,151 30,625 358,526 157,900 (35,779) 193,679

Net profit (loss) for the year- Pro forma (900,170) (177,298) (722,872) (343,619) (25,978) (317,641)

OGX Campos Merger 13,102 - 13,102 - - -

Net profit (loss) for the year- Book value (887,068) (177,298) (709,770) (343,619) (25,978) (317,641)

Attributed to:

Non controlling interests (21,306) (17,167) (4,139) (288) (8,488) 8,200

Controlling shareholders (865,762) (160,131) (705,631) (343,331) (17,490) (325,841)

Page 15: OGX 3Q Earnings Presentation

FINANCIAL STATEMENTS

15

R$ ('000)

BALANCE SHEET Sep 30, 2012 Dec 31, 2011 Sep 30, 2012 Dec 31, 2011

ASSETS LIABILITIES AND EQUITY

Current assets Current Liabilities

Cash and cash equivalents 5,058,579 5,367,451 Trade payables 755,296 431,931

Marketable securities 3,443 52,290 Taxes, contributions and profit sharing payable 15,830 26,070

Escrow deposits 14,758 39,039 Salaries and payroll charges 44,701 54,507

Taxes and contributions recoverable 65,464 78,137 Loans and financings 138,738 22,301

Derivative financial instruments 25,295 8,879 Accounts payable to related parties 109,055 96,692

Oil inventories 105,448 - Other accounts payable 16,299 87,807

Other credits 130,187 27,934

1,079,919 719,308

5,403,174 5,573,730 Noncurrent Liabilities

Loans and financings 7,908,034 4,750,113

Provisions 155,217 11,743

8,063,251 4,761,856

Noncurrent Assets Shareholders’ Equity

Inventories 230,827 390,071 Capital stock 8,821,134 8,810,307

Taxes and contributions recoverable 154,321 278,810 Capital reserves 185,242 274,109

Deferred income taxes and social contributions 673,306 282,693 Earnings reserves 97,737 -

Credits with related parties 176,278 139,386 Currency translation adjustments 42,086 19,588

Retained earnings (deficit) (1,168,308) (289,444)

Fixed assets 9,019,065 6,172,783

Portion attributed to controlling shareholders 7,977,891 8,814,560

Intangible assets 1,508,756 1,512,724 Portion attributed to non-controlling interests 44,666 54,473

11,762,553 8,776,467 8,022,557 8,869,033

Total Assets 17,165,727 14,350,197 Total Shareholders’ Equity 17,165,727 14,350,197

Page 16: OGX 3Q Earnings Presentation

FINANCIAL STATEMENTS

16

R$ ('000)

FIXED ASSETS

Balance as of December 31, 2011: 6,172,783

(+) CAPEX

Campos Basin 2,073,746

Santos Basin 513,091

Parnaíba Basin 374,966

Espirito Santo Basin 47,842

Pará Maranhão Basin 45,910

Corporate 130,483

3,186,038

(+) Borrowing costs 123,261

(+) Asset retirement obligation 103,047

(-) Gross margin EWT (79,644)

(-) Disposals (98)

(-) Depreciation (26,087)

(-) Write off Dry/Subcommercial wells (460,235)

Balance as of September 30, 2012 9,019,065

R$ ('000)

LOANS AND FINANCING

Balance as of December 31, 2011: (4,772,414)

(-) New fundings (2,537,689)

(-) Accrued interests (403,775)

(-) Currency exchange (695,957)

(+) Interest paid 336,315

(+) Funding costs 39,032

(-) Amortization of funding costs (12,284)

Balance as of September 30, 2012 (8,046,772)

Page 17: OGX 3Q Earnings Presentation