BPZ Energy Provides Fourth Quarter And Year Ended December 31, 2010 Financials And Operations Update

For the year ended December 31, 2010, oil production was 1,527 MBbls (4,185 bopd) compared to 991 MBbls (2,715 bopd) for the same period in 2009. For both the year ended December 31, 2010 and 2009, the Company had intermittent production from six producing wells in the Corvina field and one producing well in the Albacora field.

Other Revenue

After suspending drilling operations at the A platform in the Albacora field in October 2010, another operator chartered two of the Company's support vessels for a one year term. Therefore, included in other revenue is revenue of $0.4 million for the three months and full year ending December 31, 2010 associated with the chartering of those vessels since November 15, 2010.

Lease Operating

For the three months ended December 31, 2010, lease operating expense (LOE) was $11.3 million ($23.92 per Bbl) compared to $6.7 million ($30.52 per Bbl) for the same period in 2009. The increase in LOE is due primarily to increased repair and maintenance expense of $1.6 million, crude oil transportation costs of $1.0 million, increased fuel costs of $0.5 million, increased salary expenses of $0.4 million, increased rental expenses of $0.2 million and increased expenses associated with sales from oil inventory of $1.0 million. Partially offsetting these increases are decreases in workover expenses of $1.2 million. The main reason for the increase in the lease operating expense is due to operating two fields for the fourth quarter 2010 compared to operating one field for most of the fourth quarter in 2009. Lease operating expense for 2010 also includes the operation of a larger oil transportation vessel and new storage vessel.  

For the year ended December 31, 2010, lease operating expense increased by $4.5 million to $32.6 million ($21.47 per Bbl) from $28.1 million ($29.21 per Bbl) for the same period in 2009. During 2010 compared to 2009, nearly all lease operating expenses increased; however, the Company has seen the largest increases in crude oil transportation costs of $3.7 million, increased fuel costs of $2.4 million, increased repair and maintenance expenses of $2.0 million, supplies used in operations of $1.0 million, increased lab fees of $0.9 million, salary and labor costs of $0.6 million, increased equipment rental expense of $0.5 million, and increased other lease operating expenses of $1.2 million. Partially offsetting these increases to expense are decreases in workover expenses of $7.7 million. The main reason for the increase in the lease operating expense is due to operating two fields in 2010 compared to operating one field for most of 2009, and lease operating expense for 2010 also includes the operation of a larger oil transportation vessel and new storage vessel. With respect to workovers, during the year ended December 31, 2010, we performed a total of four workovers. However, only the workover on the CX11-19D well, whose total was $1.9 million, was greater than $0.1 million. For the same period in 2009, we also had four workovers, totaling $9.8 million.

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