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OGX revving up production

Brazil's OGX, the oil and gas start-up controlled by billionaire Eike Batista, will produce 40,000 to 50,000 barrels of oil a day and drill 26 new wells by the end of 2012, the company's director of exploration said on Friday.

OGX, Brazil's second largest oil company, has drawn investor attention since it began producing its first oil on 31 January, 26 months after it made its first discovery in the Waimea field in the Campos basin.

"We plan to produce from four wells, up from the three originally forecast (at Waimea)," Paulo Mendonca, director of exploration at OGX, told reporters in a call following the company's fourth-quarter earnings, according to Reuters.

The company also expects to declare the field commercial in the second quarter of this year, Mendonca said, according to Agencia Estado’s Brazil news wire.

OGX also said on Friday it recorded a net loss of 509.8 million reais ($280.72 million) in 2011. Its shares on the BM&FBovespa exchange were down 4% in late afternoon trading at 16.28 reais.

The company that did not even exist five years ago is seen as an alternative investment in Brazil's subsalt oil boom to the state-run oil company Petrobras, which comes with the baggage of government management.

Waimea is now producing an average 10,000 to 13,000 bpd, which should continue in the coming months as part of a long-term production test phase. Output from the field will begin to rising in the second half of 2012.

The first shipment of 600,000 barrels of crude from Waimea will be delivered to Shell in late March, Mendonca said.

The company will drill 26 wells this year, up from a previous estimate of 19, the director of production said, adding that by the end of 2013, the company would sink 121 wells.

OGX is due to receive two new floating production, storage and offloading vessels by the end of 2013 from OSX, the shipbuilding arm of Batista's EBX industrial conglomerate.