BPZ Energy (ticker: BPZ) is exploring and producing from licensed contracts covering approximately 2.2 million gross acres in four properties in northwest Peru. One short year ago, a strategic inflection point for BPZ Energy was identified by OAG360. BPZ announced a long-awaited joint venture with Pacific Rubiales Energy Corp. (ticker: PRE:CA) for the development of BPZ’s offshore Block Z-1.
Pacific Rubiales paid BPZ $150 million in cash and committed $185 million for BPZ’s share of capital and exploratory expenditures in Block Z-1 in exchange for a 49% participating interest. BPZ retained a 51% operating interest and Pacific Rubiales is contributing technical and operational expertise. Remember, the BPZ-Pacific Rubiales deal marked first production and cash flow for Pacific Rubiales and complemented Pacific’s existing exploration acreage in the interior Maranon Basin of Peru.
An Update from Peru
A year later, the operational focus of the joint venture team in Peru continues to be the development of the Corvina oil discovery, as well as the redevelopment of the Albacora field. On April 16, 2013, BPZ announced an operational update on its projects.
A few takeaways:
- Production: First quarter 2013 production at offshore Block Z-1 was 1,491 net BOPD.
- Corvina Field: Modifications to the new CX-15 platform are underway. The joint technical team continues to interpret the available Corvina 3D seismic, and an additional update will be provided after meetings are held to verify the drilling locations. Additionally, it appears the CX-11 workover program is progressing. Mini-fracs having been performed at the CX-11 14D well and the workover rig is preparing to run a final completion string in the well.
- Albacora: Early processing results of the 3D seismic data acquired over the Albacora field are expected to be received by the end of April.
Capital Budget
BPZ allocated a mere $27 million to be spent shallow drilling and shooting 2D and 3D seismic onshore Peru. The focus is offshore where the joint venture (BPZ is fully carried by PRE) will spend $154 million in 2013 (roughly 81% of the drilling carry).
Initial Thoughts on BPZ Announcement
Interpreting 3D seismic data on Block Z-1 will be imperative to solidify BPZ’s future in Peru. We are confident BPZ is working with Pacific Rubiales to finalize modifications to the CX-15 platform and reviewing 3D seismic data before commencing its development drilling program.
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