OGX Completes First Production Well at Waikiki Accumulation, Campos Basin, Brazil

OGX Petróleo e Gás Participações S.A., the Brazilian oil and gas company responsible for the largest private-sector exploratory campaign in Brazil, today announced the conclusion of drilling at the horizontal well OGX-9-44HP-RJS (“Waikiki Horizontal”) and through a drill-stem test (DST), the identification of excellent production conditions.

This result confirms the Company’s initial expectations regarding the Waikiki accumulation and offers further concrete evidence of the development potential for this area. The well is located in block BM-C-39 in the Campos Basin, and should be part of OGX’s second production project in the basin.

“The information obtained through this well strengthens our understanding of this part of the Campos Basin and will allow us to accelerate the process for the declaration of commerciality for this area, ensuring the full implementation of our business plan,” commented Paulo Mendonça, General Executive Officer and Exploration Officer for OGX.

The drilling of horizontal well OGX-9-44HP-RJS followed the same concept previously utilized by the Company and involved the drilling of a directional well (OGX-41D) to a depth of 2,340 meters in order to enable a horizontal entrance into the targeted reservoir. This approach resulted in a well with a 1,063 meter long horizontal extension into the carbonate reservoirs of the Albo-Cenomanian section of the Waikiki accumulation, which was originally discovered through the drilling of the 1-OGX-25-RJS well on December 8, 2010.

Following the conclusion of the drilling process, a drill-stem test was performed, which confirmed a production potential of 40,000 barrels of oil per day with an oil gravity of approximately 23° API. The tests performed in the Peró and Ingá accumulations, in block BM-C-40, adjacent to block BM-C-39, have shown oil of approximately 26° to 28° API, revealing a province of oil lighter than the one seen in the southern blocks. A complex process of selective acidification – a technology similar to the one used with great success in the Waimea accumulation at OGX-26HP – was used in eight well intervals, permitting better stimulation of the 1,063 meter horizontal well extension, thereby maximizing the oil flow.

“The quality and homogeneity of the limestone reservoir seen in this region will enable very efficient drainage of producer wells limited to a flow rate of 15,000 to 20,000 barrels per day of oil, as announced in our business plan, optimizing oil recovery.”

ABOUT OGX

OGX Petróleo e Gás SA is focused on oil and natural gas exploration and production and is conducting the largest private-sector exploratory campaign in Brazil. OGX has a diversified, high-potential portfolio, comprised of 29 exploratory blocks in the Campos, Santos, Espírito Santo, Pará-Maranhão and Parnaíba Basins in Brazil, and 5 exploratory blocks in Colombia, in the Middle Magdalena Valley, the Lower Magdalena Valley and the Cesar-Ranchería basins. The total extension area is of approximately 7,000 km² in sea and approximately 34,000 km² on land, with 21,500 km² in Brazil and 12,500 km² in Colombia. OGX relies upon an experienced management team and holds a solid cash position, with approximately US$ 5.1 billion in cash (pro-forma as of March, 2011) to fund its E&P investments and new opportunities. In June 2008, the company went public raising R$ 6.7 billion, which at the time was the largest amount ever raised in a Brazilian primary IPO. OGX is a member of the EBX Group, an industrial group founded and under the leadership of Brazilian entrepreneur Eike F. Batista, who has a proven track record in developing new ventures in the natural resources and infrastructure sectors.

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Source: OGX, June 20, 2011;