OGX Petroleo Starts First Oil Production At Waimea Field

Dear PGM Capital Blog readers,
Brazil’s biggest private oil company, OGX Petroleo e Gas Participacoes SA (OTCBB: OGXPY; ISIN: US6708491088) says in a statement it began producing the oil Tuesday at the OGX-26HP well in the Campos Basin’s Waimea field off the coast of Rio de Janeiro

The first barrel of OGX oil was extracted from the Waimea accumulation, which is located in the shallow waters of the Campos Basin. This extraction, a milestone in the Company’s history, represents the beginning of OGX’s production phase and demonstrates the Company’s ability to deliver results within timeframes that are unparalleled in the industry.

The EWT in Waimea marks the beginning of OGX’s cash flow generation, through the sale of two cargos to Shell, which will total 1.2 million barrels. Over the course of the coming weeks, the Company’s production team will test different flow rate levels, gradually reaching a stable production level of around 15,000 barrels per day. OGX expects to declare commerciality for Waimea after gathering additional, conclusive reservoir data, which is expected to occur during the first half of 2012. Subsequent to this, the Company anticipates that it will connect two additional horizontal wells, which could take production levels to 40,000 – 50,000 barrels per day during the second half of the year.

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Based on its fundamentals we  have a STRONG BUY rating on the stock.

Last but not least, before following any investing advice, always take your investment horizon and risk tolerance into consideration and keep in mind that the price of Commodities, as well as the stocks of their producers can be very volatile and that sharp corrections might happen in the short term.

Yours sincerely

Eric Panneflek
Chairman

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