UPDATE 1-Brazil's Oleo e Gas says reviewing viability of oil output

viernes 27 de febrero de 2015 19:11 GYT

(Adds possibility of new contract, background)

RIO DE JANEIRO Feb 27 (Reuters) - Oleo e Gas Participações SA said on Friday it was reviewing the viability of oil production at its principal oilfield after the sharp drop in oil prices cut off funds for an expansion of output.

Without new financing, Tubarão Martelo output will fall to about 8,000 barrels of oil a day in 2015, the company said in a securities filing. The goal was to raise output to 12,700 barrels a day this year. Production was about 11,280 barrels a day in January.

Oleo e Gas depends on Tubarão Martelo to keep the company's plans for continued production alive after filing the biggest bankruptcy protection petition in Latin American history in October 2013. Its only other producing field, Tubarão Azul, has seen output fall to about 2,800 barrels a day from more than 4,000.

The company had hoped to complete a restructuring by April and emerge from bankruptcy protection with almost no debt shortly after, it said in October.

Brazil's oil regulator ANP has given Oleo e Gas until March 8 to present a development plan for Tubarão Martelo, the statement said, adding that the company has hired a consultant to reconsider the viability of output at the field.

The consultant will consider whether to maintain production, deactivate the field temporarily, or return it and the rights to operate it to ANP.

The problems at OGX are likely to hurt shipbuilder and ship-leaser OSX Brasil SA, which depends on Oleo e Gas for nearly all its revenue. The fall in oil prices will require a renegotiation of leasing costs for the OSX-3 oil production ship used to process the oil in Tubarão Martelo, Oleo e Gas said.

Oleo e Gas, formerly known as OGX Petroleo e Gas Participações SA, and OSX were once controlled by Brazilian tycoon Eike Batista and his EBX Group. (Reporting by Jeb Blount; Editing by Bernard Orr and Alan Crosby)