BPZ Energy Reports First Quarter 2014 Results And New Production From CX15-3D Well

Houston, May 8, 2014 (GLOBE NEWSWIRE) -- BPZ Energy, (NYSE: BPZ)(BVL: BPZ), an independent oil and gas exploration and productioncompany, today provided first quarter 2014 financial results and anoperational update.

Highlights:

·        First quarter endedMarch 31, 2014 operating income of $2.1 million, compared with anoperating loss of $7.2 million for the same period last year.

·        Net loss of $3.6million or $0.03 loss per share, compared to $12.8 million or $0.11loss per share for the same period last year.

·        TheCompany's 51% share of oil production from the Corvina and Albacorafields at offshore Block Z-1 for first quarter ended March 31, 2014was 2,566 barrels of oil per day (bopd), compared to 1,491 bopd forthe same period in 2013. 

·        Improved firstquarter 2014 results, compared to the same period last year, wereprimarily due to higher revenues from increased production at BlockZ-1. 

·        Earnings beforeinterest, income taxes, depletion, depreciation and amortization,exploration expense and non-recurring charges (EBITDAX), was apositive $9.6 million for the first quarter of 2014 compared to apositive $21 thousand for the same period last year.  (EBITDAXis a non-GAAP measure.  Please also see the reconciliation tonet income table included at the end of the press release.)

·        TheCX15-3D development oil well was completed at the end of April 2014and over the last seven days the well has produced an average ofapproximately 720 bopd gross, or 367 bopd net to BPZ.

Manolo Zuniga, President and CEO of BPZEnergy, commented "With the Corvina CX15-3D well recentlycoming online and the Albacora A-21D well currently beingcompleted, our development drilling program at Block Z-1 isprogressing nicely with recent gross production levels ofapproximately 5,750 bopd, or 2,930 bopd net to BPZ.  In thefirst quarter, we began to see the positive financial impact fromour development drilling with increasing production and cash flowas well as lower unit production costs. This is encouraging as westill have seven additional proved undeveloped locations, or PUDs,to drill this year.  I am also pleased that we have finisheddrilling the first three onshore exploration wells at Block XXIII,and we secured a workover rig to test these wells.

Looking ahead, we expect to continue drilling atCorvina from the CX-15 platform throughout next year.  As wecontinue to develop and prove up the boundaries of the Albacorafield, additional drilling is also possible.  In terms ofother offshore opportunities we expect to begin appraising Delfinfirst, which has tested oil in the past.  This project iscurrently in the planning phase with the first well expected to bespud in 2015.  Onshore, we also expect to begin drilling nextyear at Block XXII, where we are pursuing conventional andunconventional plays."

Production and Revenue

The Company's 51% share of oil production fromthe Corvina and Albacora fields at offshore Block Z-1 for the threemonths ended March 31, 2014 was 231 thousand barrels, or 2,566bopd, compared to 134 thousand barrels, or 1,491 bopd, for the sameperiod in 2013.  The increased oil production is a result ofthe reinitiated drilling campaign at Block Z-1 which began in thesecond half of 2013, and is currently ongoing, partly offset bydeclines from previous wells drilled at the CX-11 and Albacoraplatforms.

For the three months ended March 31, 2014, oilrevenue after royalty payments increased by $7.6 million to $20.9million from $13.3 million for the same period in 2013. 

Current quarter sales volumes were 212 thousandbarrels compared to 129 thousand barrels for the same period lastyear.  Higher sales volumes of 83 thousand barrels were due tohigher oil production.  Increased revenue from higher salesvolumes was partly offset by a decrease of $4.49 in the average perbarrel sales price received after royalty payments from $103.27 to$98.78 per barrel. 

Expenses

Lease Operating Expense

For the three months ended March 31, 2014, leaseoperating expense (LOE) decreased by $1.5 million to $5.2 million($24.68 per Bbl) from $6.7 million ($51.89 per Bbl) for the sameperiod in 2013. 

LOE declined as no major workovers wereperformed in 2014, compared to one major workover in 2013 for $2.0million, as well as other LOE reductions of $0.1 million. These lower expenses were partially offset by higher crude oiltransportation expense of $0.6 million due to higher crude oilsales volumes.

General and Administrative Expense

For the three months ended March 31, 2014,general and administrative (G&A) expenses increased by $0.7million, to $6.2 million from $5.5 million for the same period in2013.  Stock-based compensation expense, a subset of G&Aexpenses, was $0.8 million for the three months ended March 31,2014 and $0.7 million for the same period in 2013.

G&A expenses, excluding stock-basedcompensation, increased $0.6 million to $5.4 million from $4.8million for the same period in 2013.  The increase is due tohigher indirect charges from our Block Z-1 partner of $0.8 millionand higher other general and administrative expenses of $0.4million, partially offset by lower salary and related costs of $0.6million.

Geological, Geophysical andEngineering

For the three months ended March 31, 2014,geological, geophysical and engineering expenses increased $0.4million to $0.8 million compared to $0.4 million for the sameperiod in 2013. 

Depreciation, Depletion and Amortization Expense

For the three months ended March 31, 2014,depreciation, depletion and amortization expense decreased $0.3million to $6.6 million from $6.9 million for the same period in2013 mainly due to lower depletion expense as the company's proveddeveloped producing reserves volumes increased. 

Standby Costs

For the three months ended March 31, 2014, therewere no standby costs.  For the same period last year, theCompany incurred $1.1 million in standby costs as two Petrex rigswere either partially of fully on standby for approximately twomonths. 

Other Expense

For the three months ended March 31, 2014, totalother expense decreased $1.5 million to $3.7 million compared to$5.2 million during the same period in 2013.

The decrease is primarily due to $0.5 million oflower net interest expense resulting from higher capitalizedinterest and lower amortization of debt expenses, a $0.5 millionimprovement in gains on derivatives due to lower crude oil pricesduring the 2014 quarter and a $0.5 million improvement in otherincome.

Income Taxes

For the three months ended March 31, 2014, the Companyrecognized income tax expense of $2.0 million on a loss beforeincome taxes of $1.6 million.  

The $2.0 million of income tax expense relates to the Company'sforeign operations which had income before tax of $3.4 million. Thedifference on the income tax of $2.0 million from the 22% statutoryrate provided for under the Block Z-1 License Contract is due toforeign withholding on USA tax entities, deferred tax adjustmentsrelated to oil inventory, deferred tax adjustments on certainmarine transactions and tax return to tax accrual adjustments.

Liquidity, Capital Expenditures and CapitalResources

Liquidity

At March 31, 2014, we had cash and cashequivalents of $46.5 million, an accounts receivable balance of$32.0 million and a working capital deficit of $4.1 million.

Capital and ExploratoryExpenditures

The Company's non-Block Z-1 total capital andexploratory expenditures for the first quarter ended March 31, 2014were $7.1 million, mainly related to the Company's onshoreexploration drilling campaign.  This excludes capitalizedinterest of $2.9 million.

For Block Z-1, Pacific Rubiales provided 100%funding for capital and exploratory expenditures of $33.8 millionfor the three months ended March 31, 2014 under its fundingcommitment (carry amount).  These gross capital expendituresinclude approximately $15.6 million related to the CX-15development drilling program, $14.4 million related to thedevelopment drilling program in Albacora and other expenditures of$3.8 million.  At March 31, 2014, the Company's remainingcarry amount from Pacific Rubiales was $64.0 million.

Capital Resources

At March 31, 2014, outstanding long-term debtconsisted of convertible notes with an aggregate principal amountof $168.7 million. Outstanding current short-term debt consisted ofconvertible notes with an aggregate principal amount of $60.9million.

Subsequent Events

In April 2014, $26.0 million of the aggregateprincipal amount of the Convertible Notes due 2015 were exchangedfor an additional $25.0 million of the aggregate principal amountof Convertible Notes due 2017.  Because the Company refinancedthe obligation on a long-term basis, $25.0 million of aggregateprincipal amount of the Convertible Notes due 2015 that wasoriginally expected to become a current maturity of long-term debtas of March 31, 2014 is being classified as long-term debt.

OPERATIONS UPDATE

Offshore Block Z-1 (51%BPZ)

As of May 7, 2014 gross production at Block Z-1was approximately 5,750 bopd, or net production of 2,930 bopd toBPZ Energy.

Corvina Field

The CX15-3D development well was completed atthe end of April 2014.  The well was drilled to a measureddepth of 7,750 feet.  Over the past seven days, this new wellhas produced an average of approximately 720 bopd gross, or 367bopd net to BPZ.  For the last 24 hours the CX15-3D well hasaveraged gross production of approximately 725 bopd, or netproduction to BPZ of 370 bopd. 

The new Corvina CX15-5D development well wasspud the last week of April 2014 and has a targeted measured depthof 8,500 feet, with initial results expected in July2014. 

Albacora Field

The A-21D development well is currently beingcompleted.  The well was drilled to a total measured depth of12,500 feet.  Initial results are expected later thismonth.

As previously disclosed, the A-18D oil well wasshut in due to gas intrusion at the end of first quarter 2014,resulting in lost production for approximately one month. Production has recently been partially restored byconstraining the gas flow.  As a result, gross production hasaveraged 800 bopd over the last seven days, or net production toBPZ of 408 bopd.  Evaluation of the well continues todetermine whether additional intervention could further optimizeproduction.

Onshore Block XXIII (100% BPZ)

As previously reported on the Caracol 1X, anupper interval in the Zorritos Formation with oil shows wasperforated and stimulated for subsequent testing.  Otherintervals tested gas with formation water.  The Cardo 2X wellwas then drilled to a total measured depth of 3,800 feet andcompleted in early April 2014.  The Piedra Candela 3X well wasspud in late April 2014 and drilled to a target measured depth of3,500 feet and well logs are currently being run.  Aftercompleting the Piedra Candela well, the drilling rig will bedemobilized and a workover rig will be utilized to test the threewells.

Conference call

The Company has scheduled a conference call andwebcast to discuss first quarter 2014 results on Friday, May 9,2014, at 10:00 a.m. CDT (11:00 a.m. ET.) 

The live conference call may be accessed via theInvestor Relations section of the Company's website at http://www.bpzenergy.com or byaccessing the following dial-in numbers:

US and Canada Dial-In:   (877)293-5457

International Dial-In:       (707) 287-9344

A replay of the conference call will beavailable at the Investor Relations section of the Company'swebsite. 

About BPZ Energy

BPZ Energy is an independent oil and gasexploration and production company with license contracts covering1.9 million net acres in four blocks located in northwestPeru.  Current operations in these blocks range fromearly-stage exploration to production.  The Company holds a51% working interest in offshore Block Z-1, where developmentdrilling is currently underway at the Corvina and Albacorafields.  Onshore the Company holds a 100% interest in threeblocks with exploration drilling currently underway at BlockXXIII.  In southwest Ecuador, the Company owns a 10%non-operating net profits interest in a producing property. BPZ Energy trades as BPZ Resources, Inc. on both the New York StockExchange and the Bolsa de Valores in Lima under ticker symbol"BPZ".  Please visit www.bpzenergy.com for moreinformation.

Forward Looking Statement

This Press Release contains forward-lookingstatements within the meaning of the Private Securities LitigationReform Act of 1995, Section 27A of the Securities Act of 1933 andSection 21E of the Securities Exchange Act of 1934. These forwardlooking statements are based on our current expectations about ourcompany, our properties, our estimates of required capitalexpenditures 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 fromthose anticipated in these forward looking statements. Suchuncertainties include successful operation of our new platform inCorvina, the success of our project financing efforts, accuracy ofwell test results, results of seismic testing, well refurbishmentefforts, successful production of indicated reserves, satisfactionof well test period requirements, successful installation ofrequired permanent processing facilities, receipt of all requiredpermits, the successful management of our capital expenditures, andother normal business risks.  We undertake no obligation topublicly update any forward-looking statements for any reason, evenif new information becomes available or other events occur in thefuture.

Cautionary statement regarding certaininformation releases

The U.S. Securities and Exchange Commission(SEC) permits oil and gas companies, in their filings with the SEC,to disclose only "reserves" that a company anticipates to beeconomically producible by application of development projects toknown accumulations, and there exists or is a reasonableexpectation there will exist, the legal right to produce, or arevenue interest in the production, installed means of deliveringoil and gas or related substances to market, and all permits andfinancing required to implement the project. We are prohibited fromdisclosing estimates of oil and gas resources that do notconstitute "reserves" in our SEC filings, including any estimatesof contingent and prospective resources included in this pressrelease.  With respect to "probable" and "possible" reserves,we are required to disclose the relative uncertainty of suchclassifications of reserves when they are included in our SECfilings. Further, the reserves estimates contained in this pressrelease are not designed to be, nor are they intended to represent,an estimate of the fair market value of the reserves.

The Company is aware that certain informationconcerning its operations and production is available from time totime from Perupetro, an instrumentality of the Peruvian government,and the Ministry of Energy and Mines ("MEM"), a ministry of thegovernment of Peru.  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 venturepartner in Block Z-1, Pacific Rubiales Energy Corp. ("PRE"), is aCanadian public company that is not listed on a U.S. stockexchange, but is listed on the Toronto (TSX), Bolsa de Valores deColombia (BVC) and BOVESPA stock exchanges.  As such PRE maybe subject to different information disclosure requirements thanthe Company.  Information concerning the Company, such asinformation concerning energy reserves, may be published by PREoutside of our control and may be published in a format differentfrom the format the Company uses to disclose such information,incompliance with SEC and other U.S. regulatory requirements.

The Company provides such information in theformat required, and at the times required, by the SEC and asdetermined to be both material and relevant by management of theCompany.  The Company urges interested investors and thirdparties to consider closely the disclosure in our SEC filings,available from us at 580 Westlake Park Blvd., Suite 525, Houston,Texas 77079; Telephone: (281) 556-6200.  These filings canalso be obtained from the SEC via the internet at www.sec.gov.

Financial Tables Follow

###

BPZ Resources, Inc. andSubsidiaries

Consolidated Statements of Operations(Unaudited)

(In thousands, except per sharedata)
    ThreeMonths
    1Q 2014   4Q 2013   1Q 2013
Net revenue:            
Oil revenue, net    $         20,904    $         12,028    $         13,281
Other revenue                    72                    45                    31
             
Total net revenue            20,976            12,073            13,312
             
Operating and administrative expenses:            
Lease operating expense               5,223               4,799               6,673
General and administrative expense               6,197               5,613               5,475
Geological, geophysical and engineeringexpense                  821                  223                  358
Depreciation, depletion and amortizationexpense               6,612               5,109               6,904
Standby costs                    -                    238               1,143
Other operating expense                    -                 1,747                    -  
             
Total operating and administrativeexpenses               18,853              17,729              20,553
             
Operating income (loss)              2,123             (5,656)             (7,241)
             
Other income (expense):            
Loss from investment in Ecuador    property, net                    (8)                    (9)                  (47)
Interest expense, net               (3,837)              (4,021)              (4,298)
Gain (loss) on derivatives                    30                  (30)                (548)
Interest income                      5                     7                     9
Other income (expense)                    67                (214)                (329)
             
Total other expense, net               (3,743)              (4,267)              (5,213)
             
Loss before income taxes               (1,620)              (9,923)            (12,454)
             
Income tax expense               1,950                    43                  330
             
Net loss     $       (3,570)    $       (9,966)    $     (12,784)
             
Basic net loss per share    $          (0.03)    $          (0.09)    $          (0.11)
Diluted net loss per share     $          (0.03)    $          (0.09)    $          (0.11)
             
Basic weighted average common sharesoutstanding   116,042   116,035   115,788
Diluted weighted average common sharesoutstanding   116,042   116,035   115,788
             
             

BPZ Resources, Inc. andSubsidiaries

Consolidated Balance Sheets

(In thousands)
    March 31,   December 31,
    2014   2013
     (Unaudited)     
ASSETS        
         
Current assets:        
Cash and cash equivalents     $          46,513    $         57,395
Accounts receivable                31,964               21,630
Income taxes receivable                 2,219                 2,134
Value-added tax receivable                 8,802               10,490
Inventory                15,654               17,368
Restricted cash                  1,250                 1,250
Prepaid and other current assets                 5,518                 5,419
         
Total current assets               111,920             115,686
         
Property, equipment and construction inprogress, net               220,125             217,753
Restricted cash                  4,109                 4,109
Other non-current assets                 4,820                 5,065
Investment in Ecuador property,net                     526                   534
Deferred tax asset                62,251               63,602
         
Total assets     $        403,751           406,749
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
         
Current liabilities:        
Accounts payable     $            6,392    $           3,127
Accrued liabilities                 10,412               11,246
Other liabilities                 41,287               24,494
Accrued interest payable                    465                 5,119
Derivative financial instruments                      -                       30
Current maturity of long-term debt                57,448                     -  
         
Total current liabilities               116,004               44,016
         
Asset retirement obligation                 1,660                 1,564
Other non-current liabilities                      -                 16,755
Long-term debt, net              151,335             206,939
         
Total long-term liabilities              152,995             225,258
         
Commitments and contingencies        
         
Stockholders' equity:        
Preferred stock, no par value, 25,000authorized; none issued and outstanding                       -                       -  
Common stock, no par value, 250,000authorized; 118,605 and 117,526 shares    issued and outstanding at March 31, 2014 andDecember 31, 2013,    respectively               569,908             569,061
Accumulated deficit            (435,156)            (431,586)
         
Total stockholders' equity               134,752             137,475
         
   Total liabilities andstockholders' equity     $        403,751    $        406,749
         

Reconciliation of non-GAAPmeasure

The table below represents a reconciliation ofEBITDAX to the Company's net income (loss), which is the mostdirectly comparable financial measure calculated in accordance withgenerally accepted accounting principles in the United States ofAmerica.
    ThreeMonthsEnded March 31,  
    2014   2013  
    (in thousands)
Net loss    $    (3,570)    $    (12,784)  
Interest expense            3,837             4,298  
Income tax expense            1,950              330  
Depreciation, depletion and amortizationexpense            6,612             6,904  
Geological, geophysical and engineeringexpense             821              358  
Other (income) expense             (64)              367  
(Gain) loss on derivatives             (30)              548  
EBITDAX (a)    $   9,556    $         21  
           
           

(a) Earnings before interest, income taxes,depletion, depreciation and amortization, exploration expense andcertain non-cash charges ("EBITDAX") is a non-GAAP financialmeasure, as it excludes amounts or is subject to adjustments thateffectively exclude amounts, included in the most directlycomparable measure calculated and presented in accordance with GAAPin financial statements.  "GAAP" refers to generally acceptedaccounting principles in the United States of America. Non-GAAP financial 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         BPZ Energy         1-281-752-1240         pierre_dubois@bpzenergy.com