OGXP3:BZ | OGXPY - OGX Petroleo

[moore_capital54]

Hey Guys! Hope you are well. I have been lurking but too busy to participate in some of the most recent discussions (as wonderful as they have been).

 

We started looking at OGX on Thursday with the recent media attention to Eike Batista's woes. My view is at these valuations there is value here. I thought why not throw this up as something we could dissect together.

 

The EV essentially places no valuation on the equity while Batista has openly said he will NOT sell anymore shares of OGX and what he sold was imperative to keep his empire afloat.

 

The bond holders appear to be supporting of Batista as he still controls over 51% of the equity.

 

OGX did not turn out to be what it was hyped up to be by Batista from 2007 and beyond when he was traveling on his private jet (since sold to raise cash) to the far corners of the earth and making the rounds, raising billions of dollars in debt and equity, on the dreams of producing 1 billion + barrels. That said, I believe there is value here and that at these levels one could model a decent risk adjusted IRR.

 

To me there is a perfect storm with regards to Mr. Market here as the Brazilian equity market is experiencing a significant decline while Batista's financial issues are being exacerbated by the media (the guy is still a multi billionaire).

 

We have no position yet, I am thinking of nibbling some next week after I get through the annual reports this weekend.

 

Anyhow looking forward to hearing your thoughts.

[Josh4580]

The bonds are probably more interesting at this point at 40 cents on the dollar.

 

http://www.bloomberg.com/news/2013-06-14/ogx-default-seen-in-bonds-as-batista-empire-sinks-brazil-credit.html

 

The oil producer’s $2.56 billion of notes due 2018 have plummeted 16.9 cents this week, the most since the debt was issued in May 2011, to a record-low 40 cents on the dollar. The securities are trading below the average of 45 cents for defaulted Latin American corporate debt tracked by Bloomberg and less than the maximum 50 cents on the dollar that Fitch Ratings estimates bondholders would recover in a restructuring.

 

Batista lured investors to his oil startup with promises of output of as much as 730,000 barrels a day by 2015 and 1.4 million barrels a day in 2019. Crude production climbed to 6,800 barrels a day in May after slumping to 1,800 a day in April as the company shut two of three wells at its only active offshore field, known as Tubarao Azul.

 

-Wow those production numbers are really low.

 

 

[PlanMaestro]

Grupo de Eike Batista será dividido para facilitar vendas e parcerias

http://economia.estadao.com.br/noticias/negocios-industria,grupo-de-eike-batista-sera-dividido-para-facilitar-vendas-e-parcerias,157673,0.htm

 

http://farm8.staticflickr.com/7407/9146682173_7f06546fd0.jpg

 

Analysis - How debt woes brought Batista's Brazil empire to the brink

http://uk.reuters.com/article/2013/06/25/uk-brazil-batista-idUKBRE95O19L20130625

 

All but one of EBX's six traded companies has lost more than 90 percent of their value compared with record highs, and the bonds of oil company OGX Petroleo e Gas SA (OGXP3.SA), EBX's flagship unit, are trading at levels that suggest default is imminent.

 

 

Petrobras in venture talks with Batista

http://www.ft.com/intl/cms/s/0/b551310a-a15b-11e2-bae1-00144feabdc0.html#axzz2XN9bNTfa

 

Independent directors exit as investors flee OGX

http://www.ft.com/intl/cms/s/0/45a27856-dabc-11e2-8062-00144feab7de.html#axzz2XN9bNTfa

 

Nothing is certain

http://www.economist.com/news/business/21569450-brazilian-firms-fight-huge-and-unpredictable-tax-bills-nothing-certain

 

Money magnet

http://www.economist.com/node/11599006

 

The salesman of Brazil

http://www.economist.com/node/21555907

 

Back in business

http://www.economist.com/news/business/21578095-strong-bidding-exploration-rights-ends-industrys-long-dry-spell-back-business

[enoch01]

Maybe the bonds are worth a look, given recent events.

[PlanMaestro]

OGX: the solids hit the fan

http://blogs.ft.com/beyond-brics/2013/07/01/ogx-the-solids-hit-the-fan/#axzz2XvBe2Y6M

 

OGX dropped yet another bombshell - its only oil producing wells may run dry by next year. The company also said it was shutting down three offshore projects.

 

OGX: what’s left for shareholders?

http://blogs.ft.com/beyond-brics/2013/07/02/ogx-whats-left-for-shareholders/#axzz2XvBe2Y6M

 

The reason? The geology of the fields were too complex and there is no technology available that would allow for OGX to develop the fields profitably.

 

This leaves it with just one field – Tubarão Martelo – which that has yet to start production.

 

In a nutshell, all the production and reserve projections that OGX has sold debt and equity investors on, turned out to be duds. And the aggressive R$1.57bn it bidded back in 2007 to win exploration rights for the blocks is pretty much money down the drains now.

 

Batista: fighting fire at OSX

http://blogs.ft.com/beyond-brics/2013/06/26/batista-fighting-fire-at-osx/#axzz2XvBe2Y6M

 

Batista is looking for buyers for all or part of his 27 percent stake in MMX Mineracao e Metálicos SA, his iron ore mining company, as well as in his 62 percent stake in coal company CCX Carvão da Colombia SA, a source linked to the EBX Group told Reuters on Tuesday.

 

He’s also trying to sell his privately held AUX gold mining company, the source said.

 

On Tuesday, Brazil’s Valor Economico daily newspaper said Glencore Xstrata Plc and Brazilian investment bank BTG Pactual SA were considering a bid for Batista’s stake in MMX. The Folha de S.Paulo newspaper said Dutch transportation and logistics company Trafigura Beheer BV TRAFG.UL was doing due diligence for a possible bid. Neither paper named the source of their reports.

[PlanMaestro]

Batista begins shake-up of troubled empire

http://www.ft.com/cms/s/0/1a41d622-e4ba-11e2-875b-00144feabdc0.html#ixzz2YDGTzdIf

 

OGX will be left with a group of valuable oil exploration fields and a gasfield but will need to overhaul its capital structure through a restructuring and haircut on its $4bn in mostly fixed income debt. The company will be maintained as a going concern for as long as possible, possibly one to two years, by carefully controlling capital expenditure, the person said.

[fareastwarriors]

http://www.bloomberg.com/news/2013-07-25/brazil-s-batista-loses-billionaire-status-as-debts-mount.html

 

Brazil’s Batista Loses Billionaire Status as Debts Mount