BPZ Energy Finalizes the Acquisition of Block Z-1 in Peru

BPZ Energy reports that the Government of Peru issued a Supreme Decree, authorizing Perupetro to sign a license contract with BPZ Energy. With this contract, BPZ acquired 100% interest in the hydrocarbon license on Block Z-1, offshore Northwest Peru, and became an approved offshore operator. The Z-1 Block is a mainly shallow-water block that covers nearly 3/4 million acres extending out from the shoreline to the international boundary with Ecuador.

BPZ has already completed contract requirements for the first exploration period, including an environmental impact assessment (EIA) study and a detailed inspection of the four existing offshore platforms. In addition, a substantial amount of seismic data was reprocessed, leading to a series of seismic depth-structure maps on significant horizons. Those maps, together with reprocessed well logs from selected offshore wells, form the basis of an integrated study of the subsurface potential. On the Corvina and Piedra Redonda structures, where platforms are located, BPZ confirmed the presence of natural gas reserves that have been certified by the international consulting firm Gaffney Cline & Associates as totaling 4.02 Tcf (trillion cubic feet, including proved, probable, and possible reserves).

Manolo Zuniga, President of BPZ Energy, stated, "As operator, BPZ will now be able to immediately begin the development of these natural gas reserves and carry out further exploration for both oil and gas in the block. Our plans for the short term include upgrading the two platforms to ensure that they are in good working condition. At the Corvina platform the existing well will be re-entered and recompleted to put it on production. A short pipeline (10 miles) to shore will then be laid to deliver gas to a power plant to be erected on the coast near the village of Caleta Cruz. At this site there is already a small power plant owned by ElectroPeru that is operating next to a large sub-station capable of transmitting over 300 MW (megawatts) of electric power into Peru's national grid. BPZ's new plant will have an initial generating capacity of 140 MW. Additionally, once we consolidate our gas markets, we plan to bring Piedra Redonda online."

Mr. Zuniga added, "The substantial volume of gas reserves will allow BPZ to become a major player in the region's energy business, and the prospect of increasing revenues will facilitate BPZ's access to additional capital for expanded field development, increased power generation capacity, and enlarged transmission facilities."