Merchant Marine Fund OKs Financing to OSX Shipbuilding Unit

- Merchant Marine Fund OKs Financing to OSX Shipbuilding Unit

Thursday, June 23, 2011
OSX Brasil S.A.

Merchant Marine Fund (Fundo da Marinha Mercante ­ FMM) has approved the prioritization of financial support for the Açu Shipbuilding Unit ("UCN Açu") project of OSX Construção Naval S.A., pursuant to the resolution published today in the Federal Official Gazzete (Diário Oficial da União).

According to the news published by the media in general, OSX estimates that the credit line could reach R$ 2.7 billion to implement the largest shipyard in the Americas within the Açu Superport Industrial Complex, which is located in the São João da Barra Industrial District created by the Rio de Janeiro State Government and implemented by the Rio de Janeiro State Developing Company (Companhia de Desenvolvimento do Estado do Rio de Janeiro - CODIN).

"This decision from the FMM is a confirmation of the national interest in the realization of the OSX Shipbuilding Unit, which is a decisive instrument so that we, Brazilians, may enjoy the benefits arising from the oil and gas that we have discovered in the offshore basins of our country," stated Eike Batista, Chairman of the Company's Board of Directors.

The Açu Shipbuilding Unit is a result of a partnership between OSX Construção Naval S.A. and its partner Hyundai Heavy Industries. "In addition to the technological endorsement provided by Hyundai, our project receives with pride and responsibility the most important credit line available to the Brazilian naval industry from the FMM's Board," affirmed Luiz Eduardo Carneiro, OSX's CEO.

The main characteristics of the shipyard are:

• 5th generation shipyard leveraging the Korean technology of Hyundai
• Largest shipyard of the Americas, creating more than 10,000 direct jobs during the operational phase
• Located in the Açu Superport Industrial Complex, with excellence in logistics and strategic location, at approximately 150 km from Campos Basin, responsible for 85% of Brazil's crude oil output
• Proximity to steel plants, enabling operation with steel plates of 18m x 4m, generating up to a 56% cost reduction in welding
• Near to energy plants, guaranteeing its supply and up to 30% cost reduction
• Quay of 2,400m, expandable to 3,525m, enabling the integration of up to 11 FPSOs

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BHP Billiton Hands Reins to FOGL Offshore Falklands

BHP Billiton Hands Reins to FOGL Offshore Falklands

Thursday, March 31, 2011
Falkland O&G Ltd.
by  SubseaIQ

FOG announced further progress on its rig contract negotiations and certain changes to its license arrangements.

Changes to license arrangements

On March 30, 2011 FOGL signed a binding Heads of Agreement with its joint venture partner, BHP Billiton, that provides for the exit of BHP Billiton from the Northern license area once certain conditions have been satisfied, including approval of the Falkland Islands Government to both the assignment of BHP Billiton's 51% interest and transfer of operatorship to FOGL.

In relation to this withdrawal BHP Billiton will contribute towards the costs of drilling the Loligo well, by placing funds in an escrow account. The funds are to be drawn by FOGL against the costs of drilling the Loligo well. In the event that the Loligo well encounters hydrocarbons, BHP Billiton will have the option to back in to the Loligo development area only, for a maximum 40% non-operating interest in the discovery, in return for making a cash contribution to FOGL's future exploration and appraisal costs. Such a reassignment of interests will also be subject to approval by the Falkland Islands Government.

The settlement with BHP Billiton will, together with other funds available to FOGL, provide FOGL with total cash resources of US $110 million. These cash resources will be sufficient to fund the Loligo well, other exploration expenditures and allow the Company to fulfill the Phase 1 work commitment of the Northern license area.

Operations

Further to its announcement on March 15, the company is close to finalizing a rig contract for its deep water exploration program.

FOGL is also considering additional drilling options. The site survey program is progressing well, with surveys already completed on three locations. FOGL is considering the most appropriate means of financing and advancing these options and is in discussion with several parties that are interested in farming in to its licenses.

Tim Bushell, Chief Executive of FOGL, said, "We are pleased to have made good progress in our rig contract negotiations and to have reached an amicable agreement with our joint venture partner that gives FOGL control over its deepwater exploration program, commencing with the drilling of the Loligo prospect."