BPZ Energy Reports Third Quarter 2013 Financial Results And Provides Update On Development Drilling

Houston, Nov. 7, 2013 (GLOBE NEWSWIRE) -- BPZ Energy, (NYSE: BPZ)(BVL: BPZ), an independent oil and gas exploration and productioncompany, today reported third quarter and nine-month 2013 financialresults as well as an operational update. 

President and CEO Manolo Zunigacommented , "I am pleased to reportinitial results from the new Corvina CX-15 platform at BlockZ-1.  I congratulate the teams for placing the CX15-1D well onproduction, which is the first well in a multi-well developmentdrilling program underway at the Corvina field.  The CX15-1Dwell is being evaluated with one of four intervals open during thelast 10 days, and gross production of approximately 500 bopd overthe last 24 hours.  We have also started drilling the CX15-2Dwell this week while we continue to evaluate the CX15-1Dwell.  At Albacora drilling is underway at the A-18Ddevelopment well.  In addition to the ongoing drilling atCorvina and Albacora, we are still on track to begin explorationdrilling onshore at Block XXIII by the end of this year."

Financial Summary

For the third quarter ended September 30, 2013, the Companyreported an operating loss of $10.9 million and net loss of $15.3million, or $0.13 loss per share, compared with an operating lossof $13.2 million and a net loss of $17.1 million, or $0.15 loss pershare, for the same period last year.  Third quarter 2013operating results improved mainly due to lower lease operatingexpense, lower geological geophysical and engineering expense, andlower depreciation, depletion and amortization expense, partiallyoffset by lower revenue from lower net production. 

For the nine months ended September 2013, the Company reportedan operating loss of $30.8 million and net loss of $47.7 million,or $0.41 loss per share, compared with an operating loss of $38.9million, and a net loss of $52.9 million or $0.46 loss per sharefor the same period last year. The improved operating result forthe nine months ended September 30, 2013, compared to the sameperiod last year, was mainly due to lower geological, geophysicaland engineering expenses, lower lease operating expenses, lowerdepreciation, depletion and amortization expenses and lower generaland administrative expenses, partially offset by the impact onoperating loss from lower revenue due to lower net production.  

Earnings before interest, income taxes, depletion, depreciation,amortization, and exploration expense (EBITDAX) was a negative$67,000 for the third quarter 2013 compared to a positive $6.5million for the same period last year.  EBITDAX for the ninemonths ended September 2013 was a negative $4.0 million comparedwith a positive $33.6 million for the same period in 2012. EBITDAX is a non-GAAP measure.  Please also see thereconciliation to net loss included at end of the pressrelease. 

The comparisons of the third quarter and year-to-date 2013results vs. the same periods in 2012 are impacted by the sale of a49% participating interest in the Block Z-1 license contract toPacific Rubiales Energy Corp, which closed in December2012. 

Production

BPZ Energy maintains a 51% working interest in offshore BlockZ-1, and the Company's respective share of production is referencedas net oil production.   

Net oil production from the Corvina and Albacora fields for thethree months ended September 30, 2013 was 122 thousand barrels(MBbls), or 1,330 bopd, compared to pro forma net oil production of134 MBbls, or 1,451 bopd for the same period in 2012. 

For the nine months ended September 30, 2013, net oil productionwas 386 MBbls, or 1,414 bopd, compared to pro forma net oilproduction of 478 MBbls, or 1,753 bopd for the same period in2012. 

The decrease in net oil production in the year-over-yearcomparisons is due to natural declines in oil production at boththe Corvina and Albacora fields.

Revenue

For the three months ended September 30, 2013, oil revenue afterroyalty payments decreased by $16.0 million to $12.5 million from$28.5 million for the same period in 2012.  The decrease isdue to a decrease in the amount of oil sold of 162 MBbls, slightlyoffset by an increase of $1.21, or 1%, in the average per barrelsales price received from $100.25 to $101.46 per barrel. Total oil sales for the three months ended September 30, 2013 were123 MBbls compared to 285 MBbls for the same period in2012.      

For the nine months ended September 30, 2013, oil revenue afterroyalty payments decreased by $59.1 million to $38.6 million from$97.7 million for the same period in 2012.  The decrease isdue to a decrease in the amount of oil sold of 554 MBbls, and adecrease of $4.25, or 4%, in the average per barrel sales pricereceived from $103.67 to $99.42 per barrel.  Total sales forthe nine months ended September 30, 2013 were 388 MBbls compared to942 MBbls for the same period in 2012.  

The decrease in amounts of oil sold in the year-over-yearcomparisons is mainly due to the December 2012 sale of a 49%participating interest in Block Z-1 to Pacific Rubiales EnergyCorp. 

Expenses

Lease Operating Expense (LOE)

For the three months ended September 30, 2013, lease operatingexpenses decreased by $9.0 million to $5.3 million ($43.24 per Bbl)from $14.3 million ($50.29 per Bbl) compared with the same periodlast year. The decrease in quarterly LOE year-over-year is drivenby a $7.0 million reduction related to the sale of a 49%participating interest in Block Z-1 in December 2012. Workover expenses were also lower by $1.0 million due to lowerworkover expenses during the three months ended September 30, 2013. Repairs and maintenance expense decreased by $0.6 millionrelated to vessel support services.  There were also lowercosts of $0.5 million associated with the change in oil inventoryin the three months ended September 30, 2013 compared to the changein oil inventory in the three months ended September 30,2012. 

For the nine months ended September 30, 2013, lease operatingexpenses decreased by $18.3 million to $20.1 million ($51.79 perBbl) from $38.4 million ($40.76 per Bbl) compared with the sameperiod last year.  The decrease is driven by a reduction inlease operating expenses of $18.8 million related to the sale of a49% participating interest in Block Z-1 in December 2012. 

During the nine months ended September 30, 2013 there werehigher workover expenses of $3.7 million associated with the onemajor workover performed in 2013, higher fuel costs of $0.8 millionand higher costs of $0.6 million associated with the change in oilinventory in the nine months ended September 30, 2013 compared tothe change in oil inventory in the nine months ended September 30,2012. Partially offsetting these increases during the year werelower repairs and maintenance expense of $2.5 million related tovessel support services, contract services of $0.8 million, andother lease operating expenses of $1.3 million. 

General and Administrative Expense (G&A)

For the three months ended September 30, 2013, G&A expensesincreased by $0.2 million, to $6.6 million from $6.4 million forthe same period in 2012.  Stock-based compensation expense, asubset of G&A expenses, was $1.0 million for the recentthree-month period and $0.7 million for the same period lastyear.

G&A expenses for the recent quarter, excluding stock-basedcompensation, decreased by $0.1 million to $5.6 million from $5.7million for the same period in 2012.

For the nine months ended September 30, 2013, G&A expensesdecreased 15% to $18.5 million from $21.9 million for the sameperiod in 2012.  Stock-based compensation expense, a subset ofG&A expenses, was $2.6 million for the nine months endedSeptember 30, 2013 and $2.1 million for the same period in2012. 

Nine-month 2013 G&A expenses excluding stock-basedcompensation decreased 20% to $15.9 million from $19.8 million forthe same period in 2012.  The $3.9 million decrease is duelower third party costs related to the 2012 Block Z-1 transactionof $1.1 million, lower salary and related costs of $1.0 million,lower non-income taxes of $1.0 million and lower other expenses of$0.8 million.

Geological, Geophysical and Engineering (GG&E)

For the three months ended September 30, 2013, geological,geophysical and engineering expenses decreased $6.2 million to $0.9million compared to $7.1 million for the same period in 2012. For the nine months ended September 30, 2013, geological,geophysical and engineering expenses decreased $33.8 million to$2.0 million compared to $35.8 million for the same period in2012. 

The decrease in GG&E for the nine months ended September 30,2013 compared to the same period in 2012 is due to the majority ofthe 3D seismic acquisition program for Block Z-1 having occurredduring 2012.  Seismic expenses for the three and nine monthsended September 30, 2013 were funded by Pacific Rubiales EnergyCorp. under the carry agreement.

Depreciation, Depletion and Amortization Expense(DD&A)

For the three months ended September 30, 2013, DD&A expensedecreased $4.0 million to $7.2 million from $11.2 million for thesame period in 2012.  For the nine months ended September 30,2013, DD&A expense decreased $12.3 million to $22.1 millionfrom $34.4 million for the same period in 2012. 

The decreased DD&A expenses for both the third quarter andnine-month periods of 2013 is due to the lower net oil productionin the Corvina and Albacora fields in 2013 as well as the sale of a49% participating interest in the Block Z-1 license contractin December 2012.

Standby Costs

For the three months ended September 30, 2013, standby costsdeclined $0.8 million to $0.7 million from $1.5 million for thesame period in 2012.  For the nine months ended September 30,2013, standby costs were $4.1 million, approximately the same asthe comparable period in 2012.

During the three months ended September 30, 2013 the Company hadone rig on standby versus three during the three-month period in2012. During the both nine months periods ended September 30, 2013and September 30, 2012 the Company had three rigs that were onstandby for varying amounts of time.

Other Operating Expense

For the three months ended September 30, 2013, the Company wroteoff $2.7 million of costs related to historical pre-developmentdrilling studies and associated capitalized interest compared to$1.5 million of abandonment charges related to a platform in thePiedra Redonda field in Block Z-1 during 2012.

For the nine months ended September 30, 2013, the Company wroteoff $2.7 million of costs related to historical pre-developmentdrilling studies and associated capitalized interest compared to$2.3 million of abandonment charges related to a platform in thePiedra Redonda field in Block Z-1 during 2012.

Other Income (Expense)

For the three months ended September 30, 2013, total otherexpense increased $3.7 million to $10.2 million compared to $6.5million during the same period in 2012.  The increase is dueto a $3.4 million loss on extinguishment of debt from repayment ofthe $40.0 million secured debt facility, fees associated with theexchange of convertible notes of $2.5 million and higher interestexpense of $1.3 million, partially offset by a lower loss onderivatives of $3.9 million.

For the nine months ended September 30, 2013, total otherexpense increased $0.4 million to $22.8 million compared to $22.4million during the same period in 2012.  The increase is dueto $2.5 million of fees associated with the exchange of convertiblenotes and increased foreign exchange losses of $0.9 million,partially offset by a change in the value of derivatives of $2.6million.

Income Taxes

For the three months ended September 30, 2013, the Companyrecognized an income tax benefit of $5.8 million on a loss beforeincome taxes of $21.1 million.  For the comparable 2012period, the Company recognized an income tax benefit of $2.6million on a loss before income taxes of $19.8 million.  

For the nine months ended September 30, 2013, the Companyrecognized an income tax benefit of $5.8 million on a loss beforeincome taxes of $53.6 million.  For the comparable 2012period, the Company recognized an income tax benefit of $8.3million on a loss before income taxes of $61.3 million.

Liquidity, Capital Expenditures and CapitalResources

Liquidity

At September 30, 2013, the Company had cash and cash equivalentsof $79.0 million and working capital of $81.1 million. 

Capital and Exploratory Expenditures 

For the three months ended September 30, 2013, the Company'snon-Block Z-1 total capital and exploratory expenditures were $1.5million, excluding capitalized interest of $2.2 million.  Forthe nine-month period ended September 30, 2013, capital andexploratory expenditures were $3.1 million, excluding capitalizedinterest of $7.2 million.

For Block Z-1, Pacific Rubiales provided 100% funding for grosscapital and exploratory expenditures of $48.5 million for the ninemonths ended September 30, 2013.  These capital andexploratory expenditures included $19.5 million related to theCX-15 development drilling program, of which $13.4 million was fordrilling of the CX15-1D well and $6.1 million was related to theCX-15 rig mobilization.  In addition, $12.4 million wasincurred for costs related to the installation, facilities, controlsystems, anchoring systems and pipeline connections for the CX-15platform, $7.5 million for the Block Z-1 seismic program, $3.0million associated with the Corvina offshore lease automaticcustody transfer (LACT) unit and $2.7 million related to thedevelopment drilling program at Albacora.  

The Company's remaining carry amount for Block Z-1 capital andexploratory expenditures at September 30, 2013 was $102million.

Capital Resources

In September 2013, the Company repurchased $85.0 million of the2015 Convertible Notes and issued $143.8 million of 2017Convertible Notes.  In addition, the Company repaid theremaining $36 million of the $40 million secured debt facility.

At September 30, 2013, the long-term portion of debt was $205.1million, which reflects the principal amount of the 2015Convertible Notes and 2017 Convertible Notes minus the remainingunamortized discount.  The outstanding principal amount of the2015 Convertible Notes is $85.9 million and outstanding principalamount of the 2017 Convertible Notes is $143.8 million, totaling$229.7 million of outstanding principal, before discount.

O perations Update

Offshore Block Z-1 (51% working interest)

Corvina Field CX-15 Platform

The CX15-1D well was completed in the Zorritos formation andcontinues to be evaluated.  Four prospective intervals havebeen identified in the oil zone, of which one 40 foot interval isnow open.  This opened interval has averaged approximately 330bopd over the past ten days, and over the last 24 hours it hasaveraged approximately 500 bopd, naturally flowing with no waterproduction and normal gas oil ratio.  Other perforatedintervals will be opened individually to assess optimal wellproductivity.  The CX15-1D well was drilled near the CX11-21XDto a measured depth of approximately 7,900 feet.

The second development well, the CX15-2D, was spud on November5, 2013.  The well will be drilled near the existing CX11-18XDwell to a measured depth of approximately 9,000 feet.  Thewell is anticipated to be completed in January 2014.

Albacora Field

Development drilling at the Albacora 18D continues with acurrent depth of approximately 9,600 feet at the top of theZorritos formation.  The well is anticipated to be completedby year-end 2013.  The A-18D well is located near the A-14XDwell, which is currently on production.

Exploration

The process to obtain an environmental permit for explorationdrilling at Block Z-1 on the mapped shallow water prospects isunderway.

Onshore Blocks (100% Working Interests)

Block XXIII

Right of way permits for well sites and access roads have beenreceived, and construction of roads has begun.  Three shallowexploratory wells will be drilled at Block XXIII, with spudding ofthe first well expected to occur by year-end 2013, or early2014. 

Block XIX

The process to obtain an environmental permit for the additional3-D seismic acquisition is underway.  The 3-D survey, which isexpected be acquired in 2014, will coincide with Block XXII seismicprogram to minimize mobilization costs.

Block XXII

The confirmation 2-D seismic acquisition program is expected tobegin in 2014 for the evaluation of potential drilling locations inthe block.  The process to obtain an environmental permit forexploration drilling is underway with drilling expected to begin inlate 2014.

New Vice President, Exploration andProduction

The Company has named Estuardo Alvarez-Calderon Vice President,Exploration and Production, effective November 1, 2013. Estuardo will be responsible for managing the exploration andengineering teams in Houston and Lima and ensuring the execution ofexploration and production programs in all BPZ Energy blocks. He joined BPZ in 2007 as Exploration Manager and most recentlyserved as Director of Exploration, Subsurface and NewVentures.  Prior to joining BPZ Energy, he was employed byOccidental Petroleum Corporation for over 28 years in both Houstonand Peru, where he held several positions including New VenturesManager for Latin America and Exploration Manager forPeru. 

Conference Call Information

The Company has scheduled a conference call and webcast todiscuss second quarter 2013 financial and operational results onFriday, November 8, 2013 at 10:00 a.m. CST (11:00 a.m. EST). The live conference call may be accessed via the Investor Relationssection of the Company's website at www.bpzenergy.com or by accessingthe following dial-in numbers.  A replay will also beavailable on the Company's website. 

USA and CanadaDial-In          877-293-5457

InternationalDial-In                707-287-9344   

About BPZ Energy

BPZ Energy is an independent oil and gas exploration andproduction company with license contracts covering 1.9 million netacres in four blocks located in northwest Peru.  Currentoperations in these blocks range from early stage exploration toproduction.  The Company holds a 51% working interest inoffshore Block Z-1, where development drilling is currentlyunderway at the Corvina and Albacora fields.  Onshore, thefocus has been seismic data acquisition at Blocks XIX, XXII andXXIII in anticipation of future exploration drilling.  Insouthwest Ecuador, the Company owns a non-operating net profitsinterest in a producing property.  BPZ Energy trades as BPZResources, Inc. on both the New York Stock Exchange and the Bolsade Valores in Lima under ticker symbol "BPZ".  Please visit www.bpzenergy.com for moreinformation.

FORWARD LOOKING STATEMENT

This Press Release contains forward-looking statements withinthe meaning of the Private Securities Litigation Reform Act of1995, Section 27A of the Securities Act of 1933 and Section 21E ofthe Securities Exchange Act of 1934.  These forward lookingstatements are based on BPZ Energy's (our) current expectationsabout our company, our properties, our estimates of requiredcapital expenditures and our industry.  You can identify theseforward-looking statements when you see us using words such as"will," "expected," "estimated," and "prospective," and othersimilar expressions.  These forward-looking statements involverisks and uncertainties.

Our actual results could differ materially from thoseanticipated in these forward looking statements. Such uncertaintiesinclude successful operation of our new platform in Corvina, thesuccess of our project financing efforts, accuracy of well testresults, results of seismic testing, well refurbishment efforts,successful production of indicated reserves, satisfaction of welltest period requirements, successful installation of requiredpermanent processing facilities, receipt of all required permits,the successful management of our capital expenditures, and othernormal business risks.  We undertake no obligation to publiclyupdate any forward-looking statements for any reason, even if newinformation becomes available or other events occur in thefuture.

CAUTIONARY STATEMENT REGARDING CERTAIN INFORMATIONRELEASES

The U.S. Securities and Exchange Commission (SEC) permits oiland gas companies, in their filings with the SEC, to disclose only"reserves" that a company anticipates to be economically producibleby application of development projects to known accumulations, andthere exists or is a reasonable expectation there will exist, thelegal right to produce, or a revenue interest in the production,installed means of delivering oil and gas or related substances tomarket, and all permits and financing required to implement theproject. We are prohibited from disclosing estimates of oil and gasresources that do not constitute "reserves" in our SEC filings.With respect to "probable" and "possible" reserves, we are requiredto disclose the relative uncertainty of such classifications ofreserves when they are included in our SEC filings. Further, thereserves estimates contained in this press release are not designedto be, nor are they intended to represent, an estimate of the fairmarket value of the reserves.

The Company is aware that certain information concerning itsoperations and production is available from time to time fromPerupetro, an instrumentality of the Peruvian government, and theMinistry of Energy and Mines ("MEM"), a ministry of the governmentof Peru as well as other governmental agencies orinstrumentalities.  This information is available from thewebsites of Perupetro and MEM and may be available from otherofficial sources of which the Company is unaware.  Thisinformation is published by Perupetro and MEM outside the controlof the Company and may be published in a format different from theformat used by the Company to disclose such information, incompliance with SEC and other U.S. regulatory requirements.

Additionally, the Company's joint venture partner in Block Z-1,Pacific Rubiales Energy Corp. ("PRE"), is a Canadian public companythat is not listed on a U.S. stock exchange, but is listed on theToronto (TSX), Bolsa de Valores de Colombia (BVC) and BOVESPA stockexchanges.  As such PRE may be subject to differentinformation disclosure requirements than the Company.  WhilePRE is subject to various confidentiality requirements regardingus, information concerning the Company, such as informationconcerning energy reserves, may be released by PRE outside of ourcontrol and may be released in a format different from the formatthe Company uses to disclose such information, incompliance withSEC and other U.S. regulatory requirements.

The Company provides such information in the format required,and at the times required, by the SEC and as determined to be bothmaterial and relevant by management of the Company.  TheCompany urges interested investors and third parties to considerclosely the disclosure in our SEC filings, available from us at 580Westlake Park Blvd., Suite 525, Houston, Texas 77079; Telephone:(281) 556-6200.  These filings can also be obtained from theSEC via the internet at www.sec.gov.

###

                                                                    BPZ Resources, Inc. andSubsidiaries

                                                        Consolidated Statements of Operations(Unaudited)

                                                                    (In thousands, except per sharedata)
                                 ThreeMonths                  Nine Months
         3Q2013        2Q2013        3Q2012   2013 YTD   2012 YTD
Net revenue:                    
Oil revenue, net    $         12,500    $         12,776    $         28,537    $         38,557    $         97,691
Other revenue                    29                    39                  135                    99                  215
                     
Total net revenue            12,529            12,815            28,672            38,656            97,906
                     
Operating and administrative expenses:                    
Lease operating expense               5,319               8,102              14,332              20,094              38,394
General and administrative expense               6,572               6,451               6,304              18,498              21,852
Geological, geophysical and engineeringexpense                  857                  746               7,061               1,961              35,801
Depreciation, depletion and amortizationexpense               7,246               7,955              11,204              22,105              34,358
Standby costs                  705               2,225               1,490               4,073               4,089
Other operating expense               2,683                    -                 1,510               2,683               2,266
                     
Total operating and administrativeexpenses               23,382              25,479              41,901              69,414             136,760
                     
Operating loss           (10,853)           (12,664)           (13,229)           (30,758)           (38,854)
                     
Other income (expense):                    
Income (loss) from investment inEcuador    property, net                    (8)                  216                  203                  161                  109
Interest expense, net               (3,559)              (4,280)              (2,302)            (12,137)            (12,592)
Loss on extinguishment of debt              (3,436)              (3,786)                    -                (7,222)              (7,318)
Gain (loss) on derivatives                (457)               1,277              (4,330)                  272              (2,291)
Interest income                   128                    38                    12                  175                    22
Other expense              (2,907)                (818)                (109)              (4,054)                (354)
                     
Total other expense, net             (10,239)              (7,353)              (6,526)            (22,805)            (22,424)
                     
Loss before income taxes             (21,092)            (20,017)            (19,755)            (53,563)            (61,278)
                     
Income tax benefit              (5,771)                (377)              (2,614)              (5,818)              (8,346)
                     
Net loss     $     (15,321)    $     (19,640)    $     (17,141)    $     (47,745)    $     (52,932)
                     
Basic net loss per share    $          (0.13)    $          (0.17)    $          (0.15)    $          (0.41)    $          (0.46)
Diluted net loss per share     $          (0.13)    $          (0.17)    $          (0.15)    $          (0.41)    $          (0.46)
                     
Basic weighted average common sharesoutstanding   116,009   115,935   115,694   115,911   115,594
Diluted weighted average common sharesoutstanding   116,009   115,935   115,694   115,911   115,594

                                                      BPZ Resources, Inc. and Subsidiaries

                                                            Consolidated Balance Sheets

                                                                         (In thousands)
         
    September 30, 2013   December 31, 2012
          (Unaudited)     
ASSETS        
Current assets:        
Cash and cash equivalents     $          78,983    $         83,540
Accounts receivable                 5,423               24,523
Income taxes receivable                 1,730                     -  
Value-added tax receivable                10,416               20,569
Inventory                17,597               19,851
Restricted cash                  1,250               25,129
Prepaid and other current assets                 6,609                 5,734
         
Total current assets               122,008             179,346
         
Property, equipment and construction inprogress, net               221,203             238,557
Restricted cash                  4,109               47,670
Other non-current assets                 5,305                 5,983
Investment in Ecuador property,net                     543                   632
Deferred tax asset                63,708               55,242
         
Total assets     $        416,876    $        527,430
         
LIABILITIES AND STOCKHOLDERS'EQUITY        
Current liabilities:        
Accounts payable     $            5,661    $         21,978
Accrued liabilities                 13,943               34,013
Other liabilities                 20,588               21,792
Current income taxes payable                      -                 10,460
Accrued interest payable                    669                 5,234
Derivative financial instruments                      -                   2,984
Current maturity of long-term debt                      -                 24,046
         
Total current liabilities                 40,861             120,507
         
Asset retirement obligation                 2,882                 2,708
Other non-current liabilities                20,755               20,755
Long-term debt, net              205,112             197,160
         
Total long-term liabilities              228,749             220,623
         
Commitments and contingencies        
         
Stockholders' equity:        
Preferred stock, no par value, 25,000authorized; none issued and outstanding                       -                       -  
Common stock, no par value, 250,000authorized; 117,820 and 116,932 shares    issued and outstanding at September 30, 2013 andDecember 31, 2012,    respectively               568,886             560,175
Accumulated deficit            (421,620)            (373,875)
         
Total stockholders' equity               147,266             186,300
         
   Total liabilities andstockholders' equity     $        416,876    $        527,430

                                               Reconciliationof Non-GAAP Measure

The table below represents a reconciliation of EBITDAX to theCompany's net income (loss), which is the most directly comparablefinancial measure calculated in accordance with generally acceptedaccounting principles in the United States of America.  Thecalculation of EBITDAX and its reconciliation table was updated, ascompared with previous presentations, for the three and nine monthperiods for both 2013 and 2012.
             ThreeMonths   Ended September 30,            NineMonths    Ended September 30,
    2013 2012   2013 2012
    (in thousands)     (in thousands)  
Net loss    $     (15,321)  $  (17,141)    $    (47,745)  $    (52,932)
Interest expense             3,559        2,302          12,137        12,592
Loss on extinguishment of debt             3,436            -               7,222           7,318
Income tax benefit             (5,771)       (2,614)            (5,818)          (8,346)
Depreciation, depletion and amortizationexpense             7,246       11,204          22,105        34,358
Geological, geophysical and engineeringexpense                857        7,061             1,961        35,801
Other operating expense             2,683        1,510             2,683           2,266
Other (income) expense             2,787          (106)             3,718             223
(Gain) loss on derivatives                457        4,330             (272)           2,291
EBITDAX (a)    $         (67)  $  6,546    $   (4,009)  $   33,571

(a) Earnings before interest, income taxes, depletion,depreciation and amortization, exploration expense and certainnon-cash charges ("EBITDAX") is a non-GAAP financial measure, as itexcludes amounts or is subject to adjustments that effectivelyexclude amounts, included in the most directly comparable measurecalculated and presented in accordance with GAAP in financialstatements.  "GAAP" refers to generally accepted accountingprinciples in the United States of America.  Non-GAAPfinancial measures disclosed by management are provided asadditional information to investors in order to provide them withan alternative method for assessing the Company's financialcondition and operating results.  These measures are not inaccordance with, or a substitute for, GAAP, and may be differentfrom or inconsistent with non-GAAP financial measures used by othercompanies. Pursuant to the requirements of Regulation G, wheneverthe Company refers to a non-GAAP financial measure, it alsopresents the most directly comparable financial measure presentedin accordance with GAAP, along with a reconciliation of thedifferences between the non-GAAP financial measure and suchcomparable GAAP financial measure.  Management believes thatEBITDAX may provide additional helpful information with respect tothe Company's performance or ability to meet its debt service andworking capital requirements.
CONTACT: A. Pierre Dubois         Investor Relations & Corporate Communications         281-752-1240         pierre_dubois@bpzenergy.com

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