BPZ Reports Corvina Completion

BPZ Energy, Inc. on Monday reported that the Corvina CX11-16X well was successfully completed as a natural gas producing well, following workover and testing operations. A total of four Drill Stem Tests (DST) were conducted on various zones in the well including one in a formation previously untested in the entire basin. After completion, a final production test yielded approximately 20 million cubic feet per day (mmcf/d).

The bulk of the production came from the gas zone at the top of the Upper Zorritos formation, which tested up to 19.4 mmcf/d with 1" choke and average wellhead pressure of 665 psia. No formation water was detected during the corresponding DST #3 or the production test carried out with the final completion of the well. These test results are consistent with the test conducted in the upper gas zone of the 21XD well that yielded 40 mmcf/d. The difference is attributable to the smaller production tubing of 2 7/8" in the 16X well, as compared to the tubing of 3 1/2" in the 21XD, as well as formation damage established from a preliminary analysis of the pressure and rate data collected in the 16X well. This formation damage prevents the 16X well to produce at its full potential and may be removed at a later date through a stimulation treatment.

The first two DSTs that were targeting possible oil sands tested formation water at rates of 440 and 516 barrels per day, respectively. However, the Company believes that the position of the 16X well, which was drilled in 1982, was not optimized for the appraisal of the oil sands extending down dip from the 21XD. As such, the Company will position its next well (CX11-14D) between the 21XD and the 16X to further delineate the discovered Zorritos oil pool in the Corvina field, as well as continue developing the gas zone found at the top of the Zorritos formation.

Cardalitos Formation Tested for the First Time

The Company tested for the first time the Cardalitos formation, which is located immediately above the Upper Zorritos formation. The Cardalitos section tested during DST #4 was chosen without the aid of a full suite of logs, mostly using the available mud logs. The opened interval initially tested approximately 0.5 mmcf/d of high quality natural gas. A further injectivity test did confirm the permeability of the formation sands. In future wells the Company plans to run a full suite of logs to be able to perform detailed analysis and further testing of the Cardalitos gas potential.

Corvina's Natural Gas Richness under Review

Another important finding is that the field measured gas gravity was higher than previously reported. The 16X well gas gravity in the Cardalitos and Zorritos formations ranged from 0.58 to 0.67. Measurements done in 1982 and 1994 estimated the gas gravity at 0.56, equivalent to a dry gas with mostly methane. The new 16X field measured gas gravity values are consistent with the field measurements obtained during the 21XD gas tests. The Company has sent several samples of gas to specialized laboratories to obtain an accurate analysis of the gas composition and the quantification of its condensate yield.

Production test results and well log data from this well and the previously completed and tested CX11-21XD well have been turned over to the Company's independent reserve engineering firm. They will begin work in determining certifiable reserves from these two wells.

The test results noted above give no assurance that the test rates will result in actual production rates at similar levels as those obtained during tests.

Manolo Zuniga, President and CEO of BPZ Energy, said: "The test results from the CX11-16X well met our expectations in regards to daily production from the Upper Zorritos formation. More importantly, the pressure data also confirmed that this gas zone is still under original conditions. This well originally tested 8 mmcf/d, but in 1994 was re-tested to approximately 16 mmcf/d. Ahead of schedule, our technical team was able to successfully re-complete and test the well to about 20 mmcf/d, now allowing the Company to have two of the required three gas producers mandated by the International Finance Corporation in connection with the pending financing for our Corvina gas-to-power project."

The Company has secured a lease, with an option to purchase, for two barges to assist in the development of the Corvina oil. The two barges will be towed to Peru where they will be fitted with the required equipment for their intended use. One of these barges, to be moored next to the CX11 platform, will act as a floating production and storage facility ("FPSO") for oil produced from the Corvina field. The Company has also identified several sources for the necessary oil production facilities to be installed on the FPSO barge. The second barge will be used to offload the produced oil from the FPSO and transport it to a refinery located approximately 80 miles to the south in the port of Talara.

In addition, work has commenced on the previously announced 2-D seismic shoot in Block XIX. The Company anticipates that it will take approximately two months to complete the data acquisition phase of this project. Once completed, data processing and analysis will take place.

Houston based BPZ Energy, Inc. is an oil and gas exploration and production company which has exclusive rights and license agreements for oil and gas exploration and production covering approximately 2.4 million acres in four properties in northwest Peru. It also owns a working interest in a producing property in southwest Ecuador. The Company is currently executing an integrated gas-to-power strategy, which includes generation and sale of electric power in Peru and sales of gas into Ecuador for third-party power generation, in parallel with the development of the Corvina oil discovery and the redevelopment of the Albacora oil field.