HOUSTON, March 29, 2010 (GLOBE NEWSWIRE) -- BPZ Resources, Inc. (NYSE:BPZ) announced today that it received a decision from the Hydrocarbons General Bureau ("DGH"), the division of the Ministry of Energy and Mines in charge of hydrocarbons activities in Peru, regarding its previously submitted application for Extended Well Testing ("EWT") on the Company's first five oil wells in the Corvina Field in offshore northwest Peru. In its decision, the DGH approved the Company's application to continue EWT until the first date of commercial production, currently set for May 31, 2010, subject to specific limits on the amount of natural gas flared from each of the first five Corvina wells.
Based on the natural gas flaring limits set by the DGH in its decision, the Company expects it will have to limit its oil production from the first five Corvina oil wells in order to comply with the established gas flaring limits. The actual future decrease in production from these five Corvina wells will not be known until the Company fully implements its gas flaring mitigation strategy to optimize oil production while complying with the gas flaring limits, but the Company estimates production from these wells could decrease by as much as 400 to 800 bopd.
We expect the newly completed 19D and 17D in Corvina, the A-14XD in Albacora, and future wells drilled in both Albacora and Corvina, to be regulated by the new Peruvian well testing regulation which allows companies six months to evaluate a new well, before applying for the Extended Well Testing ("EWT") program to continue testing, if necessary. However, the DGH may impose limits on any extended well test as was the case with our five Corvina wells as described above.
Cautionary Remarks about Corvina and Albacora
Transition to Commercial Production: The Company has learned that certain pieces of equipment required for gas re-injection will be delayed, which may cause the Company to shut-in some or all of its Corvina production from May 31, 2010 until such equipment is in place and the pending environmental permit to use such reinjection equipment is awarded. Any shut-in production would negatively impact the revenue and cash flow associated with those wells. The Company will advise Perupetro for the need to change the date of first commercial production and will then apply to the DGH for an extension of the May 31, 2010 date to be able to maintain testing the wells in Corvina; however, no assurance can be given that such extension will be awarded. Depending on the extent of the delay, the Company plans to use the additional time to drill one or two more wells from the CX11 platform after the current well, the 22D, is completed. In the future, similar re-injection equipment to handle any associated gas and formation water will also be required in Albacora, or any other new field thereafter, to transition the field to commercial production.
About BPZ Energy
Houston based BPZ Energy is an oil and gas exploration and production company which has exclusive license contracts for oil and gas exploration and production covering approximately 2.2 million acres in four properties in northwest Peru. It also owns a minority working interest in a producing property in southwest Ecuador. The Company is currently executing the development of the Corvina oil discovery, the redevelopment of the Albacora oil field, and the exploration of Block XIX, in parallel with the execution of an integrated gas-to-power strategy, which includes generation and sale of electric power in Peru and the development of a regional gas marketing strategy. The Company's website at www.bpzenergy.com provides additional information about the Company's plans, including photographs and other information with respect to its operations.
Forward Looking Statements
This Press Release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward looking statements are based on our current expectations about our company, our properties, our estimates of required capital expenditures and our industry. You can identify these forward-looking statements when you see us using words such as "expect," "will", "anticipate," "indicate," "estimate," "believes," "plans" and other similar expressions. These forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward looking statements. Such uncertainties include the success of our project financing efforts, accuracy of well test results, well refurbishment efforts, successful production of indicated reserves, satisfaction of well test period requirements, successful installation of required permanent processing facilities, receipt of all required permits, and the successful management of our capital expenditures, and other normal business risks. We undertake no obligation to publicly update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future. We caution you not to place undue reliance on those statements.