BPZ Energy (BPZ) Enters Block Z-1 Exploration Agreement with Pacific Rubiales
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BPZ Energy (NYSE: BPZ) announced the formation of an unincorporated joint venture with Pacific Rubiales Energy Corp. to explore and develop offshore Block Z-1 in Peru. The agreement calls for Pacific Rubiales to pay $150 million in cash and is subject to a commitment of $185 million for BPZ's share of capital and exploratory expenditures in Z-1, for their assumption of a 49% participating interest in Block Z-1.
BPZ Energy's offshore Block Z-1 assets are included in the transaction. The Block covers 555,000 gross acres with two producing fields which averaged 3,880 bopd in the first quarter of 2012. Total proved oil reserves on Block Z-1 were approximately 34.7 million barrels at year-end 2011. It also contains several prospects and leads in water depths ranging from 200 to 1000 feet. The transaction excludes non-Block Z-1 assets such as BPZ Marine S.R.L., Empresa Eléctrica Nueva Esperanza S.R.L., and Blocks XIX, XXII, and XXIII.
Under terms of the agreement, BPZ Exploración & Producción S.R.L. (BPZ E&P) will continue to be the Operator of the Block Z-1 License Contract and will retain a 51% participating interest, while Pacific Rubiales assumes a 49% participating interest. BPZ E&P will carry out administrative, regulatory, government and community related duties while Pacific Rubiales will be technical operations manager performing technical and operational duties in Block Z-1 under a service contract with BPZ E&P. Peruvian government approvals are needed to allow Pacific Rubiales to become a party to the Block Z-1 License Contract.
As previously stated, the agreement calls for $150 million of cash and a commitment of $185 million for BPZ Energy's share of capital and exploratory expenditures on Block Z-1. Upon signing, BPZ Energy received $65 million in cash along with additional funds for each partner's share of capital and exploratory expenditures incurred on Block Z-1 as of January 1, 2012. Once approvals by the relevant Peruvian authorities are granted, BPZ Energy will receive an additional $85 million in cash. Operating revenues and expenses will also be allocated at each partner's respective participating interest.
Once the commitment for BPZ Energy's capital and exploratory expenditures has been satisfied by Pacific Rubiales, each partner will share these costs at their respective participating interest.
Cash received was utilized to reduce BPZ E&P debt and pay associated bank fees. The secured $75 million bank loan was reduced to $35 million. Final maturity of the loan was extended to July 2015, along with a revised principal repayment schedule and amended covenants.
With respect to the existing $40 million loan secured by the GE turbines, the Company also extended the maturity of the facility to January 2015 and amended the principal repayment schedule and covenant package.
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BPZ Energy's offshore Block Z-1 assets are included in the transaction. The Block covers 555,000 gross acres with two producing fields which averaged 3,880 bopd in the first quarter of 2012. Total proved oil reserves on Block Z-1 were approximately 34.7 million barrels at year-end 2011. It also contains several prospects and leads in water depths ranging from 200 to 1000 feet. The transaction excludes non-Block Z-1 assets such as BPZ Marine S.R.L., Empresa Eléctrica Nueva Esperanza S.R.L., and Blocks XIX, XXII, and XXIII.
Under terms of the agreement, BPZ Exploración & Producción S.R.L. (BPZ E&P) will continue to be the Operator of the Block Z-1 License Contract and will retain a 51% participating interest, while Pacific Rubiales assumes a 49% participating interest. BPZ E&P will carry out administrative, regulatory, government and community related duties while Pacific Rubiales will be technical operations manager performing technical and operational duties in Block Z-1 under a service contract with BPZ E&P. Peruvian government approvals are needed to allow Pacific Rubiales to become a party to the Block Z-1 License Contract.
As previously stated, the agreement calls for $150 million of cash and a commitment of $185 million for BPZ Energy's share of capital and exploratory expenditures on Block Z-1. Upon signing, BPZ Energy received $65 million in cash along with additional funds for each partner's share of capital and exploratory expenditures incurred on Block Z-1 as of January 1, 2012. Once approvals by the relevant Peruvian authorities are granted, BPZ Energy will receive an additional $85 million in cash. Operating revenues and expenses will also be allocated at each partner's respective participating interest.
Once the commitment for BPZ Energy's capital and exploratory expenditures has been satisfied by Pacific Rubiales, each partner will share these costs at their respective participating interest.
Cash received was utilized to reduce BPZ E&P debt and pay associated bank fees. The secured $75 million bank loan was reduced to $35 million. Final maturity of the loan was extended to July 2015, along with a revised principal repayment schedule and amended covenants.
With respect to the existing $40 million loan secured by the GE turbines, the Company also extended the maturity of the facility to January 2015 and amended the principal repayment schedule and covenant package.
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