2012 Fourth Quarter and Full-Year Results

2012 Fourth Quarter and Full-Year Results

RIO DE JANEIRO--(BUSINESS WIRE)-- OGX Petróleo e Gás Participações S.A. (Bovespa: OGXP3), Brazil's largest private oil and natural gas exploration company, announces its fourth quarter and full year results for 2012.

GTU plant view

Luiz Carneiro, Chief Executive Officer of OGX, commented:

"2012 was a year of both significant achievements and major challenges for OGX. Only four years after its creation, OGX hit a historical milestone in 2012 as it initiated oil production in the Tubarão Azul Field, in the Campos basin. Over the course of the year, we achieved total delivery of 2.4 million barrels from Tubarão Azul, posting revenues for the first time of R$325 million. Building on this in early 2013, we continue to develop with great efficiency the Tubarão Martelo Field, also in the Campos Basin, where we have already drilled and made the lower completion of six production wells, and we also began commercial gas production in the Gavião Real Field, in the Parnaíba Basin, in January 2013.

Alongside these great successes, OGX faced some important challenges. Production levels in the first two producing wells in Tubarão Azul (OGX-26HP and OGX-68HP) stabilized in 2012 at a rate of 5,000 barrels of oil equivalent per day. In January 2013, we connected our third production well in Tubarão Azul, TBAZ-1HP. After roughly three months of production, TBAZ-1HP has not stabilized yet, while the first two wells are jointly producing slightly below an average of 10,000 barrels of oil equivalent per day. We remain absolutely focused on optimizing the total recoverable volume of the field in accordance with industry best practices, but also acknowledge that our estimated volume of recoverable barrels in the field should be reduced.

In parallel to the development of our fields, we made further advances in our exploration campaign, resulting in important oil discoveries such as Tulum and Viedma, also in the Campos Basin. We recently declared three more fields commercial: Tubarão Tigre and Tubarão Gato in the Pipeline accumulation and Tubarão Areia in the Fuji-Illimani accumulation, and we continue our studies on how to best develop them. We also submitted new Discovery Evaluation Plans (PAD) for other accumulations in the Campos and Santos basins, aiming to retain these areas for additional studies and analysis. In our onshore activities, we declared commercial the Bom Jesus accumulation (Gavião Branco Field), in the Parnaíba Basin. Furthermore, we acquired a stake in Block BS-4, in Santos Basin, demonstrating our awareness of accretive business opportunities in Brazil, which we believe will contribute to the growth of our portfolio in the near future.

With a strong portfolio of assets, planned capex of US$1.3 billion in 2013, a team of experienced and energetic professionals and opportunities to reshuffle our base through asset divestment, acquisition of new assets and strong partnerships, OGX is fully prepared to address the challenges ahead as we continue to develop our business."

OPERATIONAL HIGHLIGHTS

Production:

OGX's production activities are progressing:

• Attained total production volume of 3.2 million barrels of oil in the Tubarão Azul Field (Campos Basin) in 2012 (907 thousand barrels of oil in 4Q12, 9.6% higher than the previous quarter)

• Sale of 2.4 million barrels of oil in 2012, distributed in four different cargos

• Sale of 1.2 million barrels of oil in 2013, distributed in two cargos

• Third production well in the Tubarão Azul Field (Campos Basin), TBAZ-1HP, was connected to FPSO OSX-1 and commenced production on January 4, 2013

• Drilled and made the lower completion of six production wells in the Tubarão Martelo Field (Campos Basin). The first well is projected to come on-stream late 2013 after the arrival of FPSO OSX-3

• Final stage of reservoir engineering for FPSO OSX-2 installation, with delivery scheduled for 2H13

• Concluded the drilling and completion of all 16 production wells planned for the Gavião Real Field (Parnaíba Basin), which are now in the process of connecting to the Gas Treatment Unit (GTU)

• Achieved first gas production at the end of November 2012 with the commissioning of the Gas Treatment Unit (GTU) in the Gavião Real Field

• Average net gas production of 3.2 kboepd and 5.5 kboepd in January and February 2013, respectively, in the Gavião Real Field

Exploration:

OGX continued its successful exploratory campaign in the fourth quarter.

• Presented Declaration of Commerciality for the Pipeline, Fuji and Illimani accumulations to the National Petroleum, Natural Gas and Biofuels Agency (ANP). The fields will be named Tubarão Gato, Tubarão Tigre and Tubarão Areia, with total estimated volume of oil in place of 823 million barrels of oil (P50)

• Presented Declaration of Commerciality for the Gavião Branco Field (formerly the Bom Jesus accumulation) to the ANP. OGX estimates a total volume in place between 0.2 and 0.5 Tcf of gas for this field

• Submission of Discovery Evaluation Plans (PADs) to the ANP for Vesúvio, Viedma, Tulum and Itacoatiara accumulations in the Campos Basin and for Curitiba, Belém and Natal accumulations in the Santos Basin

• Submitted the winning bid for a block in the Lower Magdalena Valley Basin upon participating in Colombia's National Agency of Hydrocarbonates (ANH) auction

• Obtained Operator A qualification from the ANP, allowing OGX to operate blocks in deep waters and ultra-deep waters, in addition to shallow waters and onshore

Other:

• Agreement with Petrobras to acquire a 40% participating interest in Block BS-4, located in the Santos Basin in November 2012

• Eike Batista, controlling shareholder of OGX, granted the Company in October 2012 an option to require him to purchase up to US$1.0 billion of new common shares of OGX at a price of R$6.30 per share, conditional upon the Company's additional capital requirement and the absence of more favorable alternatives

• Issuance of Senior Unsecured Notes with a ten year term for US$1.063 billion in March 2012

• Secured R$600 million bridge loan through its subsidiary OGX Maranhão for the development of the Gavião Real and Gavião Azul fields in January 2012

• New senior management team with extensive experience put in place under Luiz Carneiro, who joined OGX in June, 2012, as the company turns the corner from explorer to producer

SHORT TERM OUTLOOK

Drilling of exploratory wells and current field development

With the end of the exploration concession periods for the Campos and Santos Basins, the Company aims to obtain an extension for the areas which we believe have great potential.

The following table provides details of the areas which we have declared commercial (the Pipeline, Fuji and Illimani accumulations), as well as those for which we have submitted PADs (Vesúvio, Viedma, Tulum and Itacoatiara accumulations in the Campos Basin, and Curitiba, Belém and Natal accumulations in the Santos Basin):

In addition to the areas in the Campos and Santos Basins comprised in the submitted PADs, OGX will also:

• Drill two prospects in the Espírito Santo Basin in 2013, together with Perenco, the operator of the blocks, and ten wells in the Parnaíba Basin

• Continue to develop the Tubarão Martelo field preparing for OSX-3's arrival and conclude studies for OSX-2's development area

• Start drilling the first development well in the Atlanta Field (BS-4 Block) in 2H13 using Ocean Star rig from OGX fleet

Capex

After acquiring a stake in Block BS-4, we revised our 2013 capex budget from US$1.2 billion to US$1.3 billion to account for the development of the post-salt field, Atlanta, which is scheduled to commence with the drilling of the first production well in the second half of the year. As the Company gradually reaches the end of its exploration campaign in the Campos and Santos basins, we are downsizing our rig fleet, which reflects a reduction of our 2013 capex, compared with the previous year.

Upcoming Events

OGX has several important events planned for the coming months, including:

• Ramp up gas production with the synchronization of the fourth TPP turbine in the Parnaíba Basin

• Commence the execution of the PADs by drilling appraisal wells and performing tests in the Campos and Santos basins

• Continue the exploration and wildcat campaigns in the Parnaíba and Espírito Santo basins

• Update our resource evaluation report

• Receive the FPSOs OSX-2 and OSX-3 expected to arrive in the 3Q13 and first production wells expected to come on-stream by the end of the year

OPERATIONS REVIEW

PRODUCTION

CAMPOS BASIN

• Total production volume of 3.2 million boe in the Tubarão Azul Field in 2012 (907 thousands boe in 4Q12, 9.6% higher than the previous quarter)

• Sale of 2.4 million barrels of oil in 2012, distributed in four cargos

  • 547 thousand barrels of oil to Shell, in March 2012

  • 247 thousand barrels of oil to Shell, in April 2012

  • 790 thousand barrels of oil to Shell, in July 2012

  • 809 thousand barrels of oil to Reliance, in October 2012

• Sale of 1.2 million barrels of oil in 2013, distributed in two cargos

  • 779 thousand barrels of oil to ENAP, in January 2013

  • 425 thousand barrels of oil to BP, in February 2013

• Connection start-up of the third production well in the Tubarão Azul Field, TBAZ-1HP

• Drilling and lower completion of six production wells in the Tubarão Martelo Field

• Final stage of reservoir engineering for FPSO OSX-2 installation, with delivery scheduled for 3Q13

Tubarão Azul Field Development

Since commencing production on January 31 2012, the Tubarão Azul Field has produced more than 3.9 million barrels of oil and delivered six shipments. Average daily production in the thirteen months of production from January 31, 2012 to February 28, 2013 was 10.2 kboepd, and, in the fourth quarter, average daily production in the first two production wells, OGX-26HP and OGX-68HP, was 10.2 kboepd, in line with expectations and with stable flows rates of above 5.0 kboepd on average per well.

After the first three months of operation, TBAZ-1HP well, the third well connected to FPSO OSX-1, has not stabilized yet, while the first two wells are jointly producing at an average of approximately 10,000 barrels of oil equivalent per day, showing no interference from the TBAZ-1HP well. Based on this result, we believe that the area where TBAZ-1HP is producing demonstrates a higher geological compartmentalization reflected in a lower flow rate compared to the other section of the reservoir. OGX's technical team is analyzing the reservoir behavior with the data obtained on the TBAZ-1HP's area to define the next steps on the development of this field.

The Company continues to seek best industry practices in order to optimize the total recoverable volume of the field.

In 2012, we produced 3.2 million barrels of oil and delivered 2.4 million barrels of oil, distributed in four different cargos, with the last shipment of approximately 809 thousand barrels delivered on October 15, 2012 to Reliance Industries Ltd., one of the world's largest refineries and India's largest private company, resulting in sales revenues of R$175 million in 4Q12.

During 2013, we delivered the fifth and the sixth shipments of approximately 779 thousand barrels and 425 thousand barrels, respectively, the first to ENAP (Chile) on January 5, and the last to BP on February 7.

The table below shows the pro-forma OSX-1 EBITDA after the delivery of the six shipments. The table demonstrates that OGX has succeeded in improving its pro-forma EBITDA margin while reducing logistics costs: