Earnings Release
RESULTS FOR THE SECOND QUARTER OF 2014
Rio de Janeiro, August 14, 2014 – Óleo e Gás Participações S.A. – under court-supervised reorganization
(Bovespa: OGXP3) announces today its results for the second quarter of 2014.
MANAGEMENT MESSAGE
The most important event in the second quarter was the approval of the Reorganization Plan of OGPar
and its subsidiaries OGX Petróleo e Gás S.A., OGX International and OGX Austria, by the vast majority of
creditors at the Creditors’ Meeting held on June 3, 2014 and subsequently ratified by the 4th Business
District Court of Rio de Janeiro.
The operating performance in the second quarter shows that the Company has succeeded in concentrating
its efforts on Tubarão Martelo and Tubarão Azul field operations, represented by the operating cash flow
of R$49 million, excluding expenses with the restructuring process of approximately R$29 million.
Production from the Tubarão Martelo field totaled 869,000 barrels in the second quarter, reaching an
average daily production of 9,500 barrels. Since its production start-up in December 2013, the Tubarão
Martelo field produced 2.2 million barrels of oil. Production in the field’s third well began in July.
The Tubarão Azul field produced an average of 4,000 barrels of oil per day in 2Q14, with total production
reaching 367,000 barrels of oil in the same period. In 1H14, the production in this field totaled 613,000
barrels.
The factors mentioned above contributed to OGpar’s sales revenue of R$293 million in 2Q14, supported
mainly by the Tubarão Martelo production. In 1H14, sales revenue totaled R$514 million, with 2.4 million
barrels of oil sold.
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Earnings Release
OPERATING PERFORMANCE
PRODUCTION
PRODUCTION — CAMPOS BASIN
Tubarão Azul Field
Production in the Tubarão Azul field totaled 367,000 barrels of oil in 2Q14, with an average daily
production of 4,000 barrels. Total production declined in 2Q14 over 2Q13, due to the lower number of
producing wells.
Total Production (thousand bopd)
536
367
246
2Q13
1Q14
2Q14
* After the field remained closed for several months in 2013, due to operational problems caused by the centrifugal submersible
pump (“BCS”), production resumed in the Tubarão Azul field through the OGX-26HP well due to the signature of an agreement, in
February 2014, to conduct tests with the use of FPSO OSX-1, which resulted in the adjustment to the daily charter rate of this
FPSO.
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Earnings Release
The following table presents pro-forma EBITDA from the Tubarão Azul field in 1H14 over 1H13, in
thousand Reais. Leasing costs from FPSO and O&M were revised and reduced significantly in 1Q14 to
US$35,000/day and US$85,000/day, respectively. These figures remained stable in 2Q14.
FPSO OSX 1
2014
Days of operation
Offloadings - in barrels (bbls)
Unit price - R$ / bbls
2013
148
218
604.785
1.952.115
210,5
Sales revenue (net of freight)
127.324
404.982
-
-
Royalties
(13.093)
(38.343)
Leasing
(14.919)
(118.089)
O&M
(37.166)
(61.050)
Logistics
(28.072)
(21.582)
-
(5.508)
(1.961)
(6.872)
Sales taxes
Freight Cost on Sales
Others
EBITDA PRO FORMA
32.114
153.538
% EBITDA / Gross revenue
25,22%
37,91%
EBITDA / barrel - (R$/barrel)
53,10
78,65
The following table breaks down the daily costs associated with the operation of the Tubarão Azul field
FPSO OSX-1 related to the oil cargo delivered in 1H14 and 1H13. These costs were impacted by the
inventory constituted in 2013, with higher daily leasing and O&M rates than current ones, and sold in
2014.
Daily Cost
(USD '000)
2014
Leasing
O&M
Logistics
Others
TOTAL
2013
(44)
(262)
(116)
(135)
(75)
(48)
(7)
(15)
(242)
(460)
Development of the Tubarão Martelo field
Since its operational start-up in December 2013, the field produced 2.2 million barrels of oil, with an
output of 869,000 barrels in 2Q14, equivalent to an average daily production of 9,500 bopd in the quarter
and average daily production per well of 4,800 bopd.
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Earnings Release
Total Production (thousand bopd)
967
869
1Q14
2Q14
331
4Q13
The following table presents pro-forma EBITDA from the Tubarão Martelo field in 1H14, in thousand
Reais. On March 13, 2014, the OSX Group published a Material Fact confirming the end of the
negotiations for the restructuring of the financing of the OSX 3 Leasing BV and announced that it had
reached “in principle” an agreement on the terms of the proposed restructuring, including the fixing of
the charter rate of OSX 3, which was revised and reduced from approximately US$439,000 to
US$250,000.
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Earnings Release
FPSO OSX 3
2014
Days of operation
175
Offloadings - in barrels (bbls)
1,787,918
Unit price - R$ / bbls
216
Sales revenue (net of freight)
386,468
-
Sales taxes
Royalties
(45,773)
Leasing
(89,729)
O&M
(48,878)
Logistics
(57,596)
(3,783)
Others
EBITDA PRO FORMA
140,709
% EBITDA / Gross revenue
36.41%
EBITDA / barrel - (R$/barrel)
78.70
The following table breaks down the daily costs associated with the operation of the Tubarão Martelo field
related to the oil cargos delivered by the Company in 1H14:
Daily Cost
(USD '000)
2014
Leasing
(214)
O&M
(127)
Logistics
(142)
Others
TOTAL
(9)
(492)
The Company started production in Tubarão Martelo’s third well on July 3, 2014 through the horizontal
well TBMT-2HP.
PRODUCTION – SANTOS BASIN
Development of the Atlanta and Oliva fields (“BS-4”)
As disclosed in 1Q14, the two first horizontal producing wells in the Atlanta field (7-ATL-2HP-RJS and 7ATL-3H-RJS) have already been drilled and tested, both showing results above expected. Test results
indicate that each of these wells should reach production rates close to the upper limit of expected
production of between 6,000 and 12,000 barrels of oil per day, under normal operating conditions.
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Earnings Release
Successful tests of this second well consisted of the electrical submersible pump being placed on the
ocean floor, rather than at the reservoir level, which may provide significant operational cost reduction.
A bidding process for the construction of a Floating Production Storage and Offloading (FPSO) facility is
under way. It is expected to be concluded in 3Q14 and considers two scenarios and different production
capacities: Early Production System (EPS), which allows a faster start of production in the field, or
Definitive System (DS). According to the operator, first oil at Atlanta is expected in late 2015 or early
2016.
According to the Material Fact disclosed by the operator in May 2014, Atlanta’s reserves certified as
proven (1P reserves) and probable (2P reserves) total 147 million and 191 million barrels of oil,
respectively.
Sale of OGX Maranhão (current Parnaíba Gás Natural S.A. – PGN)
Due to the agreements entered into on October 30, 2013, with Cambuhy Investimentos Ltda.
(“Cambuhy”), Eneva S.A. and DD Brazil Holdings S.a.r.l. (“E.ON”), the interest of OGX P&G in PGN was
reduced from 66.66% to 36.36%. These agreements envisaged the payment of R$145 million related to
shared costs refund from PGN to OGX P&G, R$60 million of which has already been received as per
contractual conditions. The Company also commited to sell its remaining interest in PGN for R$200 million
+ IPCA. Said payment is subject to certain conditions precedent, including the final decision on the
reorganization. On August 6, 2014 the competitive bidding process envisaged in the Reorganization Plan
was executed and Cambuhy presented the minimum bid of R$200 million. Associated with these
agreements, MPX Energia Gmbh agreed to purchase from OGX Netherlands BV, an indirect subsidiary of
OGPar, the entire interest held by this company in Parnaíba BV for US$3 million. MPX Energia Gmbh also
agreed to make a capital inflow of US$22 million in Parnaíba B.V., to enable the company to settle its debt
in the same amount with OGX Netherlands B.V.
EXPLORATION
EQUATORIAL MARGIN EXPLORATION PORTFOLIO (BLOCKS ACQUIRED DURING THE 11 th
BIDDING ROUND)
The exploratory campaign continued in the region’s non-operational blocks located in ultra-deepwater in
the Ceará and Potiguar basins (CE-M-603 and POT-M-762 -50% OGpar; CE-M-661 - 30% OGpar; POT-M475 – 65% OGpar). At the moment, the operators are conducting bidding processes for the acquisition of
3D seismic data under the Minimum Exploratory Program of the concession agreements. The drilling
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Earnings Release
campaign that aims to evaluate the exploratory potential of these blocks is scheduled to start in late
2016.
COLOMBIA
On April 25, 2014, the Company received an offer for its blocks located in the Cesar Ranchería Basin (CR2, CR-3 and CR-4) and Low Magdalena Valley Basin (VIM-5 and VIM-19), which included a payment of
US$30 million to OGpar for the assets, releasing from all regulatory obligations and pledging US$14
million as collateral for credit letters required by the National Hydrocarbons Agency (ANH - the Colombian
regulatory agency corresponding to ANP in Brazil). However, according to the Material Fact disclosed by
the Company on July 11, 2014, the transaction was not approved by the ANH, which unilaterally decided
to cancel the technical assessment agreements related to the blocks in the Cesar Ranchería Basin, as well
as to execute the Standby Letters offered as collateral and issued by the guarantor bank at the amount of
approximately US$24 million.
The blocks located in Cesar Ranchería present extreme difficulties in executing any exploratory work, as it
is an area characterized by social and environmental complexities, including the presence of indigenous
communities and environmental protection areas. Furthermore, the economic analysis of the area
revealed an inappropriate risk to return profile. For this reason the Company is studying measures to
reduce the applicable penalties.
Additionally, OGpar and the offeror signed a new agreement on July 10, 2014, maintaining the proposal of
US$30 million, aiming to file a new proposal with the ANH regarding the transfer and sale of the assets
located only in Low Magdalena Valley, under the "VIM-5" and "VIM-19" agreements. The conclusion of this
transaction is subject to certain conditions, including the approval by the ANH, and the definitive
documentation of the transaction. At this time, there is no assurance that the transaction will be
consummated.
PEOPLE MANAGEMENT
OGpar closed 2Q14 with 157 employees and 779 third-party service providers responsible for conducting
all administrative, exploration and oil production activities, a decrease of approximately 27% in relation to
the previous quarter. The 2Q14 figures mentioned above do not include the employees of Parnaíba Gás
Natural S.A.
FINANCIAL PERFORMANCE
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Earnings Release
The financial and operational data below is presented on a consolidated basis, in accordance with the
International Financial Reporting Standards (IRFS) issued by the International Accounting Standards
Board – IASB and in Reais (R$), except where otherwise indicated.
YTD June 2014
YTD June 2013
(resubmitted)
Net revenue (R$ million)
514
406
EBITDA (R$ million)
108
27
Net Profit (Loss) (R$ million)
516
(5,527)
CAPEX (R$ million)
549
1.231
Cash (US$ million)
22
326
Key metrics
Sales Revenue
The Company’s sales revenue was of R$514 million in 1H14, corresponding to the sale of 2.4 million
barrels of oil.
Tubarão Azul
Tubarão Martelo
TOTAL
R$
thousand
127,324
386,468
513,792
Bbls
thousand
605
1,788
2,393
R$/bbls
US$ / bbls *
211
216
96
98
(*) Converted at the quarter’s closing rate (2.2025)
Cost of Goods Sold
Royalties
Leasing
O&M
Logistics
Others
TOTAL
Bbls Thousands sales
R$ / bbls
US$ / bbls *
Tubarão
Azul
(13,093)
(14,919)
(37,166)
(28,072)
(1,959)
(95,209)
605
R$ thousand
Tubarão
TOTAL
Martelo
(45,773)
(58,866)
(89,729)
(104,648)
(48,878)
(86,044)
(57,596)
(85,668)
(3,784)
(5,743)
(245,760)
(340,969)
1,788
2,393
(157)
(137)
(143)
(71)
(62)
(65)
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Earnings Release
(*) Converted at the quarter’s closing rate (2.2025).
Financial Result
Financial result was positive by R$785 million in 1H14, basically due to gains on foreign exchange
variation, especially unrealized, of R$760 million, calculated on the net debt denominated in foreign
currency. This net debt results primarily from senior unsecured notes totaling US$3.6 billion and the
US$1.5 billion obligation with OSX due to the compensation to be paid as a result of the termination of
contracts/agreements related to FPSOs OSX1 and OSX2 and WHP2. It is worth mentioning that the
Senior Unsecured Notes and the US$1.5 billion obligation with OSX are included in the Company’s list of
creditors and will be converted into capital under the Reorganization Plan.
Net Income
In the first half of 2014, the Company’s net income was of R$516 million, compared to a net loss of
R$5.5 million in the same period last year, primarily due to: (i) the production portfolio being focused
on the Tubarão Martelo field, which ended the quarter with two producing wells and generated EBITDA
of R$141 million; (ii) the restart, in February 2014, of production at the Tubarão Azul field, which
contributed with an EBITDA of R$32 million; (iii) gains on foreign exchange variation, especially
unrealized, of R$760 million; and (iv) the 43% reduction in general and administrative expenses, with
a leaner headcount that is in line with the Company’s current needs and a cost reduction program
which includes moving to a new office and the renegotiation of agreements with service providers.
These impacts were partially offset by: (v) restructuring costs totaling R$52 million; (vi) the
constitution of a provision for inventory losses of R$155 million; (vii) the constitution of a provision for
contingencies of R$54 million, due to the enforcement, by the ANH, of bank guarantees of the
exploratory program of the Cesar Ranchería Basin in Colombia; and (viii) income taxes payable,
totaling R$145 million, which were offset with tax losses.
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Earnings Release
Cash Position
Cash Disbursement – Accrual Basis (US$ million)
393
348
322
33
289
1Q13
37
32
209
356
316
2Q13
3Q13
44
162
104
18
165
143
94
4Q13
1Q14
2Q14
10
Notes:
¹ Considers the following average foreign exchange rates: BRL 2.00/USD (1Q13); BRL 2.07/USD (2Q13);BRL 2.29 (3Q13); BRL 2.27 (4Q13); BRL 2.37 (1Q14); BRL 2.23
(2T14)
In 2Q14, OGpar’s cash disbursement declined by approximately 36% over the previous quarter, and
since the beginning of the financial restructuring, the Company has maintained its commitment to
financial discipline, aiming to preserve the continuity of its business.
Cash Flow in 2Q14 (US$ million)
42
58
(99)
21
1Q14
22
Financing
Activities
Operating
Activities
Investing
Activities
Notes:
¹ Considers the following average foreign exchange rates: BRL 2.27/USD (4Q13); BRL 2.37/USD; BRL 2.23 (2Q14)
2
Considers the following average foreign exchange rate at the end of the period equivalent to: BRL 2.34/USD (4Q13); BRL 2.26/USD; BRL 2.20 (2Q14)
2Q14
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Earnings Release
Cash and Cash Equivalents
CASH AND CASH EQUIVALENTS
Balance as of December 31, 2013
(‘000 R$)
26.366
(+) New fundings (i)
573.664
(-) Principal paid (ii)
(152.588)
(-) Amortization of funding costs (iii)
(57.921)
(+) Receiveing from oil sales of 2013
175.912
(+) EBITDA consolidated S1/14
(-) CAPEX S1/14
(-) G&A - included restructuring costs
44.312
(549.296)
(92.626)
(+) Receiveing from PGN – cost-sharing
50.000
(+) Outros
30.269
Balance as of June 30, 2014
48.092
Key:
(i) $125 million from the DIP Financing, $73 million from PPE and $50 million from the Bridge Loan
(ii) $50 million from the Bridge Loan and $15 million from Magno Law
(i) RS$23 million from the DIP Financing (~8%) and RS$34 million from PPE (~20%)
Credits with Related Parties
On June 30, 2014, credits with related parties amounted to R$133 million, chiefly due to amounts to be
received by OGX P&G from Parnaíba Gás Natural under the cost sharing agreement.
Asset maintained for sale
This line refers to the non-controlling equity interest of 36.36% in Parnaíba Gás Natural S.A. which is
intended for sale and has been measured at fair value.
Loans and Financing
The Company’s Reorganization Plan, already approved at the creditors' meeting and ratified by the
Reorganization Court, envisages the conversion of US$8,5 billion, related to the Senior Unsecured
Notes (“bonds”) and the DIP Financing, into capital.
Property, Plant and Equipment (CAPEX)
The Property, plant and equipment line includes mainly expenses related to development campaigns in
the Tubarão Martelo, Atlanta and Oliva fields. From December 31, 2013 to June 30, 2014, CAPEX totaled
approximately R$549 million.
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Earnings Release
Income Statement
PROFIT& LOSS
YTD Jun/14
Net revenue
∆
YTD Jun/13
1Q14
1Q13
R$ ('000)
∆
513,792
405,504
108,288
292,995
150,870
142,125
(340,969)
(24,928)
(40,367)
107,528
(261,069)
(40,722)
(5,508)
(71,378)
26,827
(79,900)
15,794
5,508
31,011
80,701
(198,176)
(13,278)
(32,283)
49,258
(119,876)
(17,882)
(39,746)
(26,634)
(78,300)
4,604
(4,973)
75,892
(52,259)
(10,957)
44,312
(15,742)
(4,118)
(17,025)
(4,122)
(12,616)
(54,000)
(155,000)
(60)
(218,371)
(49,224)
(956,839)
(979,236)
(47,745)
(3,620)
1,035,376
(19,519)
(1,636,771)
(3,644,523)
(1,306)
(5,297,344)
(52,259)
38,267
956,839
1,023,548
32,003
(498)
(1,035,376)
2,494
1,632,649
3,631,907
(54,000)
(155,000)
1,246
5,078,973
(28,742)
(48,595)
(28,079)
(6,107)
(2,518)
(15,448)
(3,752)
(4,474)
(54,000)
(155,000)
(12,821)
(282,199)
(49,224)
(956,839)
(1,032,697)
(14,396)
(1,908)
1,035,376
1,047
(474,254)
(3,644,523)
(827)
(4,132,182)
(28,742)
629
956,839
1,004,618
8,289
(610)
(1,035,376)
(16,495)
470,502
3,640,049
(54,000)
(155,000)
(11,994)
3,849,983
12,506
12,587
25,093
760,126
(1,608)
565,240
775,264
(996,923)
(221,659)
(401,459)
2,266
(5,918,196)
(762,758)
1,009,510
246,752
1,161,585
(3,874)
6,483,436
5,570
266,090
271,660
340,345
(928)
328,878
555,349
(677,132)
(121,783)
(464,146)
2,538
(4,715,573)
(549,779)
943,222
393,443
804,491
(3,466)
5,044,451
(145,067)
-
1,957,648
(1,555,729)
(2,102,715)
1,555,729
(121,672)
-
1,652,140
(1,665,712)
(1,773,812)
1,665,712
Descontinued operations
Income tax of descontinued operations
420,173
96,198
-
(5,516,277)
(15,098)
4,588
5,936,450
111,296
(4,588)
207,206
96,198
-
(4,729,145)
2,357
4,588
4,936,351
93,841
(4,588)
Net profit (loss) of descontinued operations- Pro form a
516,371
(5,526,787)
6,043,158
303,404
(4,722,200)
5,025,604
Attributed to:
Non controlling interests
Controlling shareholders
516,371
(3,474)
(5,523,313)
3,474
6,039,684
303,404
2,296
(4,724,496)
(2,296)
5,027,900
Cost of products sold (CPS) *
Exploration expenses
Selling expenses
General and administrative expenses
EBITDA from operation
Restructuring costs
Other operational incomes (expenses)
Settlement OSX
Adjusted EBITDA including non recurrent item s
Depreciation
Amortization
Capital gain
Stock option
Dry/subcommercial w ells/areas
Impairment
Provision for losses - PEM/PEA Garatee
Provision for inventory loss
Equity results
EBIT
Financial revenue
Financial expense
Net financial results
Currency exchange
Derivatives
EBT
(-) Income tax
Income tax valuation allow ance
Net profit (loss) of continued operations
(i)
(ii)
(iii)
(iii)
(v)
(v)
(vi)
(iii)
(ii)
(vi)
(v)
(v)
(iv)
(iv)
(iv)
(iv)
Notes:
(i) This total does not include the portions of Cost of Goods Sold (COGS) related to Depreciation (R$20,695), presented in specific lines.
(ii) The sum of these lines corresponds to total Expenses with Exploration in the Income Statement of the Quarterly Information (ITR).
(iii) The sum of these lines, together with Depreciation (R$4,953) and Amortization (R$4,188), corresponds to the total General and Administrative Expenses in the Income
Statement of the Quarterly Information (ITR) of June 2014.
(iv) The sum of these lines corresponds to the total of the Financial Result in the Income Statement of the Quarterly Information (ITR).
(v) Presented as "Other Operating Expenses" in the Income Statement of the Quarterly Information (ITR).
(vi) Presented as "Provision/realization of impairment" in the Income Statement of the Quarterly Information (ITR).
12
Earnings Release
Balance Sheet
Balance Sheet
Jun 30, 2014
ASSETS
Current assets
Cash and cash equivalents
Escrow deposits
Account Receivable
Derivative financial instruments
Oil inventories
Credits with related parties
Other credits
48,092
31,783
50,604
222
23,809
95,000
53,899
303,409
Assets held for sale
200,000
Noncurrent Assets
Long-term assets
Escrow deposits
Inventories
Taxes and contributions recoverable
Deferred income taxes and social contributions
Credits with related parties
Other credits
Dec 31, 2013
26,366
32,262
175,912
1,830
17,909
38,169
292,448
295,672
167,934
537,163
-
Investments
18,027
14,276
Fixed assets
2,893,287
3,351,878
737,006
730,268
4,173,664
5,097,191
4,677,073
5,389,639
Total Assets
Property, plant and equipment
Fixed Assets
Balance as of December 31, 2013
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade payables
Taxes, contributions and profit sharing payable
Salaries and payroll charges
Loans and financings
Derivative financial instruments
Accounts payable to related parties
Provisions
Other accounts payable
-
5,000
67,500
139,923
275,097
37,824
-
Intangible assets
Jun 30, 2014
Portion attributed to controlling shareholders
Portion attributed to non-controlling interests
R$ ('000)
3,351,878
LOANS AND FINANCINGS
Balance as of December 31, 2013
(+) Principal paid (iii)
Campos Basin
391,210
Santos Basin
160,842
Corporate
(+) Paid of funding costs (iv)
(916,797)
(-) Depreciation
(15,207)
Balance as of June 30st, 2014
(+) Interest paid
329
(3,650)
(70,956)
(-) Write off Dry/Subcommercial wells
(-) Currency exchange
(-) Amortization of funding costs
(+) Asset retirement obligation
(-) Impairment
(-) Accrued interests (ii)
565
549,296
(-) Deconsolidation of PGN
13,736,394
14,779,025
210,564
344,974
210,564
344,974
8,821,155
89,452
81,134
(18,261,626)
8,821,155
79,220
91,362
(18,777,997)
(9,269,885)
-
(9,786,260)
51,900
(9,269,885)
(9,734,360)
4,677,073
5,389,639
Loans and financing
(+) CAPEX
Pará Maranhão Basin
1,279,421
19,561
15,299
9,525,616
3,639,303
173,790
126,035
Total Liabilities + Shareholders’ Equity
(-) New fundings (i)
Espirito Santo Basin
1,174,142
14,019
15,711
8,665,530
3,543,205
213,769
110,018
Noncurrent Liabilities
Loans and financings
Provisions
Shareholders’ Equity
Capital stock
Capital reserves
Currency translation adjustments
Retained earnings (deficit)
R$ ('000)
Dec 31, 2013
(805)
(4,122)
2,893,287
(+) PGN Deconsolidation
Balance as of June 30, 2014
R$ ('000)
(9,525,616)
(573,664)
152,588
56,469
548,023
9,050
(29,122)
57,921
638,821
(8,665,530)
Key:
i) $125 million from the DIP Financing,
$73 million from PPE and $50 million
from the Bridge Loan
(ii) DIP Interest, PPE, Bridge and Magno
Law, minus reversal of the Bonds
Interest of Nov and Dec 13
(iii) $50 million from the Bridge Loan and
$15 million from Magno Law
(iv) $23 million from the DIP Financing
(~8%) and $34 million from PPE (~20%)
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Earnings Release
FINANCIAL RESTRUCTURING
In 2013, given the Company’s financial situation, the accumulated losses, and the recently due and
forthcoming payments of a large portion of its debt, the Management considered court-supervised
reorganization as the most appropriate measure to preserve the continuity of its business and protect the
interests of OGPar, its creditors and shareholders. Consequently, in October 2013, the Company filed, in
the Court of the Judicial District of Rio de Janeiro, a request for court-supervised reorganization, together
with its subsidiaries OGX Petróleo e Gás S.A., OGX International GmbH and OGX Austria GmbH.
On February 14, 2014, the Companies presented, on an individual basis, the court-supervised
reorganization plan (“Plan”) describing the means to be employed. The Company’s Reorganization Plan
was approved at the Creditors’ General Meeting held on June 3, 2014 and was ratified by the 4th Business
District Court of Rio de Janeiro, which decided to approve the Company’s court-supervised reorganization
on June 13, 2014.
This approval represents an important milestone in the restructuring process of the Company and the
OGX Group as a whole, as it confirms the feasibility of the implementation of the recovery plan and will
help the Company emerge from the court-supervised reorganization without financial debt and fully
prepared to conduct its activities in line with its corporate purpose.
The Company's management believes that the new funds obtained under the Reorganization Plan,
combined with sales of oil produced in the Tubarão Martelo field, will be enough to meet OGpar’s cash
requirements in the next 6 months. Once these cash requirements are met and debt is restructured,
Management hopes to ensure the Company’s operational continuity.
Note, however, that even though the business model has adopted Management's best estimates for a
number of premises, it is still subject to various uncertainties, especially in the financial (projected costs,
per-barrel oil prices, additional financing, etc), geological and judicial areas. Considering this scenario, the
generation of results and cash position can vary significantly in relation to forecasted figures.
The Plan is based on the following guidelines:
1. Granting of new funds: For the Company to be able to recompose its working capital required to
continue with its activities and develop its business plan, it is essential that it obtains new funds,
as follows:
a. DIP (“Debtor in Possession”) Financing: These funds will come from convertible debentures,
in the total amount of US$215 million, to be raised by OGX Petróleo e Gás S.A., a Company
subsidiary, through three series, the first one amounting to US$125 million, which was
received on March 13, 2014, and the second plus the third totaling US$90 million.
b. Incremental Facility: On April 15, 2014, the Company obtained a loan totaling US$73.2
14
Earnings Release
million to finance exports and pay related fees and expenses.
The loan will mature on February 11, 2015, and is mandatorily pre-payable upon the
occurrence of certain events, including the conversion of the debentures.
c. Possible Sale of Assets in Colombia: The Company received a binding offer for its blocks
located in the Cesar Ranchería Basin (CR-2, CR-3 and CR-4) and Low Magdalena Valley
Basin (VIM-19 and VIM-19), which was not approved by the ANH. The offeror made another
proposal which establishes the payment of US$30 million to OGpar only for the assets
located in the Low Magdalena Valley Basin (VIM-5 and VIM-19).
The conclusion of this transaction is subject to certain conditions, including the approval by
the ANH, and the definitive documentation of said transaction. At this time, there is no
assurance that the transaction will be consummated.
2. Restructuring of debts: In addition to obtaining new funds, it is essential that the Company
restructures debt incurred with its general creditors, as well as with post-petition creditors who expressly
adhere to the Plan.
The DIP Financing, after certain conditions precedent are fulfilled, will be convertible into shares
issued by OGX Petróleo e Gás S.A. which will represent, provided that all stages of the CourtSupervised Reorganization Plan are fully implemented, 65% of the total capital stock of the
restructured company. After the conversion of the DIP Financing, OGpar’s creditors will be holders
of shares representing 25% of the total capital stock of the restructured company. The
Company’s current shareholders, after the dilution resulting from the conversion of the credits
into capital, including the DIP Financing, will remain holders of shares representing, in the
aggregate, 10% of the total capital stock of the restructured company. Additionally, the current
shareholders will receive subscription warrants of the restructured company with the following
main conditions: (i) exercise term of 5 years; and (ii) number of common shares to be subscribed
representing, in the aggregate, fifteen percent (15%) of the total capital stock of the restructured
company, considering an issue price based on the appraised amount (equity value) of the
restructured company of US$1.5 billion.
The restructuring of debts will be effected, provided that certain conditions precedent are fulfilled,
by means of conversion of the claims into OGX Petróleo e Gás S.A. capital stock, while the
unsecured creditors that wish so may receive the amount of up to R$30,000.00 cash, and the
remainder of the claims will be converted into capital stock under the terms and conditions set
forth in the Plan.
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Earnings Release
OGpar Contacts
Investors:
Márcia Mainenti
Marianna Sampol
[email protected]
+55 21 3916-4545
Media:
Cibele Flores
[email protected]
+55 21 3916-4588
LEGAL NOTICE
This document contains statements and information about the Company that reflect the current views
and/or expectations of the Company and its management with regard to its business plan. These include
all statements containing forecasts and projections that indicate or imply future results, performance or
achievements, which may include such words as "believe," “predict,” “expect,” “contemplate,” “will
probably result,” or any other words or expressions of similar meaning. Such statements are subject to a
series of risks, uncertainties and assumptions. Readers are warned that several important factors may
lead actual results to significantly diverge from the plans, targets, expectations, estimates and intentions
expressed herein. Under no circumstances shall the Company or its directors, officers, representatives or
employees to be liable to any third parties (including investors) should they make decisions, investments
or business acts based on information and statements presented herein, nor shall the Company be liable
for any indirect damages, loss of profit, or similar consequences thereof. The Company does not intend to
provide shareholders with any revised versions of the statements or analysis of differences between the
statements and actual results. This presentation does not contain all the necessary information for a
complete investment assessment on the Company. Investors shall produce their own assessments,
including the associated risks, before making an investment decision.
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