ogx 3q earnings presentation
DESCRIPTION
TRANSCRIPT
Q3 RESULTSPRESENTATIONRio de Janeiro | November 9, 2012
COMPANY STRATEGY
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COMPANY STRATEGY
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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$150.7 million booked in Q3 2012 from the sale of ~800,000 barrels
Economies of scale will dilute costs per barrel
RESULTS SUMMARY
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FINANCIAL HIGHLIGHTS
KEY FINANCIAL METRICS 3Q 2012 YTD 2012
Revenues (R$ 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$6.30 per share
Note:
1 Considers OGX Campos
2 Refers to the cargo booked as revenues (delivered on July, 26, 2012)
3 Production volume from January 31, 2012 to September 30, 2012
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FINANCIAL HIGHLIGHTS
Note:
¹ Considers average exchange rate equivalent to: BRL 1.77/USD (1Q12); BRL 1.96/USD (2Q12); BRL 2.03/USD (3Q12)
² Considers end of period exchange rate equivalent to: BRL 1.88/USD (4Q11); BRL1.82/USD (1Q12); BRL 2.02/USD (2Q12); BRL 2.03/USD (3Q12)
³ Final stage of GTU assembly and two additional onshore rigs
Capex
SG&A/G&G
Cash Spending – Accrual Basis (US$ 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
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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
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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
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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
2013 OUTLOOK
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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$1.2 billion
Campos Basin:
• Connection of the third production well in the Tubarão Azul Field
• Drilling important prospects in blocks BM-C-37 and BM-C-38 in the Campos Basin
Parnaíba Basin:
• Beginning of GTU commissioning and gas production
• Continuation of the exploration and wildcat campaigns
Santos Basin:
• Results of tests and drilling in the Santos Basin
• Continuation of the exploration and wildcat campaigns
Espírito Santo Basin:
• Continuation of the exploration and wildcat campaigns
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UPCOMING EVENTS
CAMPOS BASIN PARNAÍBA BASIN
SANTOS BASIN ESPÍRITO SANTO BASIN
APPENDIX
FINANCIAL STATEMENTS
14Note:
¹ This balance does not include parts of COGS related to depreciation, amortization and royalties that are disclosed in specific lines of the table above
R$ ('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)
FINANCIAL STATEMENTS
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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
FINANCIAL STATEMENTS
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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)