OGX Could Get Kicked Out of BS-4 Block

QGEP Participações S.A. announces that its wholly owned subsidiary Queiroz Galvão Exploração e Produção S.A. (“QGEP”) received from the Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (ANP) the Notice nº 1845/2013/SDP, dated December 23, 2013, informing that certain measures have been taken in relation, among others, to Block BS-4 in the Santos Basin, offshore Brazil.

The Notice stated that the Board of ANP, in the meeting held in December 18, 2013, has determined that the Superintendence of Development and Production (SDP) notifies OGX Petróleo e Gás S.A. (“OGX”) that it has 15 days from the date of notification to:

“Certify its status as a non-defaulting Party within the Concession Agreement of Block BS-4, contesting, if it deems possible, the allegations brought forward by the consortium members QGEP and Barra Energia, under penalty of compulsory transfer or, subsequently, termination of the Agreement in relation to its participating interests in the Block”

The ANP also informed in the Notice that OGX has already been notified of such decision.

QGEP has clarified that OGX failed to contribute approximately R$73 million up to date and related to its share in the Block

Block BS-4 encompasses the post salt oil fields of Atlanta and Oliva and is located 185 km off the coast of Brazil, in the Santos Basin. The first horizontal well of the Early Production System (EPS) of the Atlanta Field is underway and its conclusion, including the production test, is expected in January of 2014, when the drilling of a second well will begin.

QGEP is the operator of the Block with a 30% ownership; other consortium members include OGX Petróleo e Gás S.A. (40%) and Barra Energia do Brasil Petróleo e Gás Ltda. (30%).

[mappress]
December 30, 2013