BPZ Energy Signs Two Exploration Contracts in Peru

BPZ Energy has signed two new license contracts for exploration and production of hydrocarbons, thus obtaining exclusive rights to Blocks XXII and XXIII located in northwest Peru.

The license contracts were signed on November 21, 2007, in a ceremony at the Presidential Palace hosted by the President of Peru, Alan Garcia. Present at the ceremony were representatives from 12 companies who signed 18 such license contracts for exploration and production of hydrocarbons in Peru. During the ceremony, President Garcia noted the companies involved would be investing in Peru’s economic growth and that the country welcomed this type of investment.

The signing of Block XXII and Block XXIII completes the approximately 2.4 million acres, in conjunction with Blocks Z-1 and XIX, the Company initially plans to develop in northwest Peru.

Block XXII:

This block covers approximately 948,000 acres and is located onshore in the Lancones basin, although its southern sector also covers the productive Talara basin of northwest Peru, near the Talara Refinery. During the initial seven-year exploration phase the company has committed to shoot 200 km of 2D seismic and drill 4 exploration wells. The term of the license contract is for 30 years in the case of oil and 40 years in case of gas. Royalties start at 15% if and when production is less than 5,000 barrels of oil equivalent per day (boepd) and are capped at 30% if and when production surpasses 100,000 boepd.

Block XXIII:

This block covers approximately 248,000 acres and is located onshore between the Company's offshore Block Z-1 and onshore Block XIX in northwest Peru. This block is located in the Tumbes basin, although in its southern section Talara basin sediments maybe found deeper. The term and royalties are similar to those of Block XXII. During the initial seven-year exploration phase the company has committed to shoot 400 km of 2D seismic, 600 square km of 3D seismic, and drill 4 exploration wells.

"These two new license contracts will now allow us to implement the geologic models we have been developing during the past few years," said Zuniga. "We look forward providing more details on these two blocks as they become available."

License contracts were signed by companies from seven countries; such as Pacific Stratus Energy and Talisman from Canada; BPZ Energy, Hunt Oil, Occidental Oil and Gas, and Vetra Peru from the United States; Ecopetrol from Colombia; Petro-Tech Peruana from Peru; Pan Andean Resources from Ireland; ZSN PE from Russia; PVEP Peru from Vietnam; and SK Energy from Korea. The 18 contracts signed during the ceremony were a record for Perupetro during any single event.