Billionaire Batista Has Five Potential Offers for Offshore OGX Oil Assets

Billionaire Eike Batista said he received five potential offers for stakes in Brazilian oil fields controlled by his OGX Petroleo e Gas Participacoes SA (OGXP3) as crude prices trade near their highest in 29 months.

Batista said yesterday in an interview that the offers didn’t come from Chinese companies, without naming the potential bidders. In September, he said that China’s Cnooc Ltd. and China Petrochemical Corp. were among those interested.

OGX, whose market value is 61.6 billion reais ($37.1 billion) and Batista’s main source of wealth, has a total of 6.7 billion barrels of potential reserves, according to a 2009 report by consulting firm DeGolyer & MacNaughton. The company doesn’t need to sell the Campos stakes since it has $3 billion of cash and field development costs are low, Batista said during the interview at Bloomberg News headquarters in New York

“We have 5 potential offers, including from oil companies, we will decide what suits us best but theoretically you don’t need to sell,” he said.

Batista said in August he would sell as much as 30 percent of seven blocks in the Campos basin, holding up to 3.69 billion barrels of crude, to raise cash for further exploration. The fields are located in shallow water off the coast of Brazil.

The world is “definitely” running out of oil and people should get accustomed to prices at $100 per barrel as accessing new reserves becomes more complex and emerging markets like China and Brazil drive increased demand for crude, he said.

$22 Per Barrel
OGX, based in Rio de Janeiro, needs oil prices of at least $22 per barrel for the company to be profitable, Batista said. The company, which has about 90 percent of its exploration areas in shallow waters, said it can have the same productivity in these wells as in the deep waters of the so called pre-salt areas, site of the largest oilfield discovery since 1976.

“It’s extremely high productivity, which means lower” investments required to extract the oil, he said. “It’s a bonanza, these are bonanza assets.”

OGX plans first crude output at its Waimea field in the third quarter. The company aims to produce 20,000 barrels a day by year’s-end, total output of 730,000 barrels a day by 2015 and 1.38 million by 2019.

OGX plans to add three wells to Waimea in 2012 and higher- than-expected production means it will use fewer wells to supply offshore platforms, Production Director Reinaldo Beloitti said in an interview at company headquarters on Feb. 24.

100 Percent Success
OGX has had a 100 percent success rate at Campos, where the company operates five exploration blocks and has minority stakes in another two. The company expects consulting firm DeGolyer & MacNaughton to complete a new certification of the company’s reserves by the end of this month. In 2009 DeGolyer & MacNaughton put OGX’s potential reserves at 6.7 billion barrels.

BTG Pactual said in a report on Feb. 10 that the data on Waimea was “very encouraging” after the company released test results the previous day. OGX said in a statement that the well’s data was similar to that “obtained in the best wells in the country.”

Batista, 54, is the richest person in Brazil and the eighth in the world with assets worth $30 billion, according to Forbes magazine’s annual global ranking of billionaires. The billionaire sold a stake of OGX, which doesn’t yet produce any oil, in June 2008.

Crude futures have surged about 10.5 percent since Jan. 14, when the president of Tunisia was ousted in the first wave of the unrest that has rocked the Middle East and North Africa, including Saudi Arabia’s neighbors Yemen, Oman and Bahrain.

Prices touched a 29-month high of $106.95 a barrel in intraday trading March 7.