BPZ Resources has provided an update for Company's operations on Block Z-1 in northwest Peru.
The Company averaged approximately 2,244 barrels of oil per day (bopd) in fourth quarter 2009 from the CX11 platform in Corvina, consistent with the levels reported in third quarter 2009 of 2,334 bopd. Current quarter Corvina production to date from January 1, 2010 through March 7, 2010 has averaged approximately 3,630 bopd and for the first week of March it has averaged 5,521 bopd. Including the oil production from Albacora, currently being stored until the corresponding initial oil sales contract is executed, fourth quarter 2009 production from both fields averaged 2,273 bopd; while current quarter production averaged 4,295 bopd and first week of March production averaged 7,560 bopd.
Investors should not draw conclusions or make projections from the above-mentioned production about forecasted revenues or the size or value of reserves. In particular, the Company notes that it is still awaiting response to its request to continue testing the original five Corvina oil wells until May 31, 2010, pursuant to the recently published Extended Well Testing (EWT) regulation, at which time the Company is required to transition from the exploration phase to the commercial exploitation phase. In order to transition to commercial exploitation, the Company is required to install and commission the needed gas and water reinjection equipment to comply with the current environmental regulations. The Company expects to receive the decision regarding the EWT later this month.
Further, the Company has learned that certain pieces of equipment required for the gas reinjection will be delayed, which would cause the Company to shut-in some or all of its production from May 31, 2010 until such equipment is in place. The Company will apply to the proper authorities 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.
As previously announced, the Company has been drilling the A-15D well from the "A" platform in Albacora. Unfortunately, due to a problem encountered while preparing to set the 9 5/8" casing on top of the Zorritos target formation, the intermediate 13 3/8" casing was damaged, forcing the Company to abandon the well. The Company will begin drilling a new well from a new slot following the same trajectory of the original 15D well. If possible, the Company may attempt to regain access to the original wellbore after it sets the new 13 3/8" casing.
Manolo Zunyiga, President and Chief Executive Officer, commented, "We will continue to update the market on our EWT request for Corvina and the transition to commercial exploitation. Assuming the authorities reject our request for an extension to the May 31, 2010 dateline, the expected delay may allow us to drill at least one additional well in Corvina before the gas compression equipment is installed." Mr. Zunyiga concluded, "We will address the problem encountered during the 15D drilling operation and hopefully drill the next well without unforeseeable delay."
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