S&P downgrades OGX oil company's rating.

Reuters Standard & Poor's on Wednesday downgraded OGX's corporate credit rating from "B" to "B-", with a negative outlook, due to the weak operational performance of the oil company owned by billionaire Eike Batista's group.

The credit rating agency sees potential for "further deterioration in the company's credit quality," believing that the oil company will deplete its cash reserves this year.

"The reduction is primarily based on weaker-than-expected operational performance, particularly in terms of production levels and productivity per well," the rating agency said in a report on Wednesday.

Production delays and higher costs are expected to keep credit metrics weak for the next two years, S&P added in a report.

"Although the company has no major debt maturities until 2018, we are forecasting that the company will burn through its current cash reserves during 2013," said S&P.

Company directors recently stated that OGX's cash reserves and revenue will be sufficient to cover investments in 2013, estimated at $1,3 billion.

OGX's lower-than-expected production over the past few months has led to a drop of more than 75 percent in its share price since June.

Eike Batista's oil company posted a net loss of 286 million reais in the fourth quarter of 2012, compared to a loss of 332,6 million reais in the same period of 2011. Last year, the net loss was 1,2 billion reais.

(By Roberto Samora)