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Brazilian Oil and Gas Company Files for Bankruptcy

By: PanAm Post Staff - Nov 4, 2013, 12:21 pm

The Brazilian oil and gas company OGX, belonging to EBX Group, has filed for bankruptcy protection. Brazilians and analysts have struggled to understand Wednesday’s event, since the chairman of EBX Group and owner of OGX, Eike Batista, was previously a billionaire and the richest man in Brazil. Some have pointed to the fact that, back in 2012, Batista misled investors to believe that OGX had nearly 1 billion barrels, but only a few weeks ago lowered that projection to 285 million barrels.

Others have speculated that this is a sign that Brazil is still far from reaching the end of an economic slump. The government of Brazil has attempted to help the economic situation by encouraging infrastructure investment, urging tax reform, and sending tens of thousands of students abroad to study science so they can return to fill the skilled labor gap. However, the most recent release showed that Brazil’s economic growth last year was only 0.9 percent.

According to OGX, $250 million is needed “to satisfy near-term liquidity through the first quarter of 2014.” However, OGX says it is very likely that it will run out of cash before the end of the year without new funding or acceptance of the restructuring plan put forth.

Source: Yahoo News.