BPZ Contracts Second Rig, FPSO Ready for Hook Up

BPZ Resources, Inc. announced the execution of a second drilling rig contract.

The Company also announced that its Floating-Production-Storage-and-Offloading (FPSO) vessel, the first in service in the history of Peru, is now in position near the CX-11 platform and is being prepared to receive production from the platform. Now that the necessary transportation clearance has been received the Company expects to ramp-up production to approximately 6,000 barrels of oil per day (bopd) towards the end of June, approximately a month later than previously projected. The unexpected administrative delays incurred in obtaining the clearance for oil transportation will cause the Company to miss its second quarter production targets. However, the Company is maintaining previously announced second half 2008 and 2009 Corvina production forecasts.

Drilling on the CX11-20XD well continues on schedule and is expected to be at total depth by late July. The Company plans to spud the CX11-15D well shortly after completion of the 20XD. The Company expects this well to also take approximately 90 days to reach total depth, and to be completed and tested late this year. The Company would then move the drilling rig from the CX-11 platform to the Albacora platform.

The Company has successfully completed the well control on the three shut-in oil wells located at the Albacora platform, and continues the platform refurbishment program. Drilling will begin late this year once the platform is fully refurbished and the Company completes its initial six-well campaign in Corvina.

The Company plans to drill a twin to Albacora's discovery well as an exploratory well aimed at testing the prospective Lower Zorritos formation sands. As previously reported, the 8-X-2 discovery well drilled 35 years ago tested at rates of approximately 4,600 bopd and 20 million cubic feet per day with 400 barrels per day of condensate, all from Upper Zorritos formation sands. Management will provide a schedule for the initial drilling phase in Albacora later this year.

The Company has signed a two-year contract, with a third-year option, to secure a second drilling rig (PTX18), which will be initially used onshore to drill an exploratory well in Block XIX, the "Pampa la Gallina" prospect. The targets for this well are oil from the Heath formation and gas from the Mancora formation. The Company plans, once the PTX18 rig has been delivered, to spud the Pampa la Gallina well late this year, which will be the first in a series of wells aimed at appraising the Mancora Gas Play. The Company believes the Mancora Gas Play extends approximately 60 miles, from Block XIX through onshore Block XXIII and into offshore Block Z-1's Piedra Redonda field. This well, in Block XIX, is expected to cost approximately $8 million and will take approximately 90 days to drill and complete. The Company plans to test both the Heath and Mancora formations extensively, if warranted.

The PTX18 rig is contracted with Petrex, the Company's current drilling contractor, for a period of three years. This rig will be capable of drilling to approximately 14,000 feet, and could be modified to drill from an offshore platform. The PTX18 is scheduled for delivery later this year.


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