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BPZ Energy (BPZ) Closes $335M Sale of Minority Stake in Block Z-1

December 27, 2012 9:08 AM EST Send to a Friend
BPZ Energy (NYSE: BPZ) announced that on December 26, 2012, it closed its contractual arrangements for the sale of a 49% participating interest ("closing") in offshore Block Z-1 to Pacific Rubiales Energy Corp.

The Board of Directors of Perupetro and the Ministry of Energy and Mines have approved the plan to modify the Block Z-1 License Contract allowing PRE to become a party to the amended agreement. Upon receipt of formal approval from the Ministry of Economy and Finance, the Peruvian Government's Supreme Decree will be signed, allowing Perupetro to complete the Block Z-1 License Contract amendment process.

BPZ and PRE have a high degree of confidence in the processes of the Peruvian Government and agreed that receipt of the Supreme Decree was no longer a mandatory condition precedent to closing their contractual arrangements concerning the Z-1 transaction. The closing with PRE will also allow the transition plan for operations to be accelerated.

Under terms of the agreements signed on April 27, 2012, the Company (together with its subsidiaries) formed an unincorporated joint venture relationship with PRE to explore and develop the offshore Block Z-1 located in Peru. Pursuant to the agreements, PRE agreed to pay $150.0 million for a 49% participating interest in Block Z-1 and agreed to fund $185.0 million of the Company's share of capital and exploratory expenditures in Block Z-1 from the effective date of the SPA, January 1, 2012.

In December 2012, BPZ and PRE waived and modified certain contract conditions in order to effect an accelerated closing of the transaction. With this closing BPZ Energy received the remaining $85 million of cash. Operating revenues and expenses were also allocated at each partner's respective participating interest.




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