BPZ Resources, Inc., has begun oil production at the CX11 platform in the Corvina field of its offshore Block Z-1 in northwest Peru. This early production was initiated pursuant to the Company’s Initial Development Plan that requires the new wells to be put on extended production tests. This will allow the Company to start gathering crucial reservoir data that will be used to optimize the field’s performance.

Manolo Zúñiga, President and Chief Executive Officer of BPZ Energy stated “The accelerated oil production from the Corvina field, and the forthcoming delivery of our first cargo to the Talara refinery, are historical milestones for BPZ. We acted quickly and prudently to establish cash flow before year end.” Mr. Zúñiga continued, “We are planning to increase production step-by-step, first by placing in service the larger FPSO, followed by bringing online our next well, the CX11-18D towards the end of the first quarter of 2008. We have taken our first major step in evolving from a company in development, to an established exploration and production company.”

The Company began producing from the CX11 platform on November 1, 2007 using two 6,000 barrel capacity tankers leased from the Peruvian navy. First production came from the CX11-21XD well, which reached a stabilized rate of 2,500 barrels of oil per day (bopd). The 21XD well was shut after the first tanker was filled with 5,000 barrels of oil and to allow the Company to finish the dual-completion of the recently drilled CX11-14D well.

The Company then proceeded to conduct a new gas test by opening the 2 7/8” tubing string used in the dual-completion, allowing the 14D well to reach the maximum design throughput of 28 million cubic feet per day, as expected. Subsequently, the 14D oil tubing string was opened and the 14D flowed at a stabilized rate of 1,900 bopd, producing 5,000 barrels of oil into the second tanker. No formation water was detected in either well.

The two Navy tankers will deliver this first 10,000 barrels of Corvina oil to the Company’s recently refurbished 40,000 barrel transport barge, which will be moored adjacent to Petroperu’s Talara refinery located approximately 70 miles south of the Corvina field. Once the transport barge is filled to near capacity, the oil will be off-loaded into the refinery. The Company expects to receive internationally based spot prices in accordance to the quality of the Corvina oil.

Using the two Navy tankers, the Company expects to achieve average production rates of up to 2,500 bopd. Production is expected to increase to 4,000 bopd by year end or early next year once the FPSO with 40,000 barrel capacity is also placed in service at the platform.

Frederic Briens, Chief Operating Officer, added “It is exciting to be able to say that BPZ Energy is now an oil producer. Having both oil wells producing will provide the Company with a tremendous amount of critical reservoir data that will aid with the ongoing reserve certification process, as well as future field development. Furthermore, the dual completion allows the Company to establish the needed feedstock for our proposed gas-to-power project.”

Tags: BPZ Resources