BPZ Energy (BPZ) Brings CX15-7D Online; Offers Operational Update

BPZ Energy (NYSE: BPZ) provided the following operations update.

Manolo Zuniga, President and CEO of BPZ Energy commented , "We are pleased to have brought the Corvina CX15-7D development oil well online in less than seven weeks, an improvement in our drilling efficiency. This improvement in drilling and completion allowed us to spud the new CX15-10D development well earlier than anticipated, improving the possibility of completing a sixth Corvina well by year end. At the Albacora field, the A-18D side track well is currently being completed as an oil producer, after which we will spud the A-27D development well.

In terms of exploration, we are wrapping up the testing program on the three shallow onshore Block XXIII wells, and we expect to share these results along with next steps in October. At offshore Block Z-1 we continue our plans to drill the Delfin prospect by the middle of next year, while we continue to advance other exploration projects like Piedra Redonda and Raya, for which we have drilling permits approved for all three.

While production rates will be lower this quarter at Block Z-1, we expect that production from new wells and improved rates resulting from the gas lift program will allow us to exit this year with improved levels of production and cash flow."

Offshore Block Z-1 (51% BPZ)

Development Drilling Campaign

The new Corvina CX15-7D development oil well was completed on September 9, 2014. The well has averaged gross production of 640 barrels of oil per day [bopd], or 326 bopd net to BPZ for the last ten days with no formation water. During the last 24 hours gross production was approximately 700 bopd, or net production to BPZ of 357 bopd.

The new CX15-10D development well was spud on September 14, 2014. The CX15-10D will have a targeted measured depth of approximately 8,200 feet, and is expected to be completed by November 2014.

At Albacora, the A-18D side track well is currently being completed and production results will be reported in early October. The completion is targeting the known oil zones, as well as new deeper zones that are also producing or seen in other Albacora wells. The A-27D development well is scheduled to be drilled next, which will be located near the crest of the structure similar to where the A-19D producing oil well is located.

Production Optimization

Recent gross production at Block Z-1 was approximately 5,000 bopd, or 2,550 bopd net to BPZ. Third quarter to date 2014 gross production has averaged approximately 4,680 bopd, or 2,387 bopd net to BPZ, through September 21, 2014.

While the CX15-7D has recently come online, production has been temporarily impacted due to scheduled work on several oil wells during the third quarter. This work included the sidetrack on the A-18D well which required it to be shut in, but is expected to come back online shortly. The CX15-1D is also shut in as the well is being intervened to prepare to perforate the deeper unopened oil sand that is also producing in the new CX15-7D well.

The CX15-3D and the Albacora A-21D have recovered approximately 36% of their prior combined oil production, producing 406 bopd, or 207 bopd net to BPZ, with the assistance of temporary gas lift systems. The CX15-3D well has recently produced approximately 224 bopd gross, or 114 bopd net to BPZ, with the A-21D well producing about 182 bopd gross, or 93 bopd net to BPZ. To further optimize production on these two wells, a production logging tool (PLT) will be run to verify the water source to determine how best to optimize their productivity. The PLT is expected on location next month, and will be used on other wells, including the Albacora A-26D, to evaluate their performance.

Permanent gas lift installations and facilities will then be placed on the three platforms in the fourth quarter and continuous gas lift operations will begin. Seven wells in total are being targeted for the gas lift program to increase production levels, including the CX15-1D, CX15-3D, and the A-21D.

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