BPZ Resources, Inc. announced the gas reserves certification from independent reserve engineers Netherland Sewell and Associates, Inc. (NSAI) from the Company's Corvina field in offshore Block Z-1 in northwest Peru. NSAI's reserves report certified Proved, Probable, and Possible gas reserves (commonly known as 3P reserves) as of February 29, 2008 based on the definitions and guidelines set forth in the 2007 Petroleum Resources Management System approved by the Society of Petroleum Engineers (SPE). The combined total of 3P reserves in Corvina approximates 284 billion cubic feet of gas (Bcf), or approximately 50 million barrels of oil equivalent (Mmboe). The Corvina gas-in-place estimates were based on data gathered from the four wells drilled to date from the CX11 platform. Particular attention was paid to the three wells that tested gas down to 6,300 feet, forming a gas pool covering an area of approximately 2,000 acres. Gas-in-place in this area around the CX11 platform is estimated by NSAI at 328 Bcf, which is in line with the Company's previously disclosed estimate of 351Bcf.
As in the case of the previously certified Corvina oil reserves, the Proved gas reserves were based on the gas-in-place delineated by the first three gas wells, while the Probable reserves take into account the gas expected to be encountered up dip, and the Possible reserves are derived from an assumed higher recovery factor than in the Proved or Probable cases.
The Company has 82 million shares outstanding on a fully diluted basis, making the NPV of 3P reserves approximately $2.03 per share. The NPV was calculated using a referential price of $2.10 per million cubic feet.
Manolo Zuniga, President and CEO, stated, "This certification, coupled with the 60 million barrels of 3P oil previously certified, now brings the total certified reserves in Corvina to approximately 110 million barrels of oil equivalent. Considering that the Corvina oil and gas pools cover a total approximate area of 3,500 acres out of Corvina's approximate 40,000 acres, and this is the first project of a portfolio of 50 mapped prospects within our 2.4 million acres, we are excited about the next steps the Company will be taking in the future. This certification now gives us the needed information to begin the final negotiations with the International Finance Corporation (IFC) on the gas-to-power project. The certification of 328 Bcf of gas-in-place down to 6,300 feet compares very well with our internal estimate of 351 Bcf, which shows that our Corvina geologic model is once again proving accurate. We will need an additional well to test the potential gas below 6,300 feet to complete delineating the gas-in-place in Corvina.
BPZ acquired a working interest in offshore Block Z-1 in 2001, and in 2004 became operator with 100% interest in the license. The block of some 740,000 acres extends from the shoreline out to water depths of 1,100 ft. The northern limit of the block is the international maritime boundary with Ecuador. The gas will be sent to an onshore hub by submarine pipelines from each platform. The primary destination of the dry gas will be a nearby power plant to be built and operated by BPZ. Subsequently, additional gas will be piped east some 40 miles to fuel power plants in the town of Arenillas, in Ecuador.
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 2.4 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.
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