BPZ Resources (BZP) and Shell Agree to Consider Joint Venture

June 26, 2008 7:35 AM EDT

BPZ Resources, Inc. (AMEX: BZP) today announced that it has signed a Memorandum of Understanding with Shell Exploration Company B.V. This non-binding MOU allows both parties to move forward with their negotiations on a possible Farm-out Agreement with the ultimate goal of jointly developing Blocks Z-1, XIX and XXIII in Northwest Peru into large-scale oil and gas ventures, including regional power generation, gas supply for local and regional industry, and LNG.

The intent of forming a joint venture is to complement BPZ Energy's assets, local knowledge and experience, stakeholder relationships, and vision with Shell's technology, equipment, manpower and leadership, especially in gas marketing.

Both BPZ Energy and Shell recognize the need to accelerate the exploration of these three blocks and will work toward an Agreement that includes, but is not limited to, the following fundamental points:

• 50%/50% unincorporated joint venture in Blocks Z-1, XIX and XXIII.
  
• BPZ Energy will be the operator of record in the three blocks.
  
• BPZ Energy will initially retain 100% of the oil and gas assets in Corvina, Delfin and Mero as well as 100% of the oil assets in Albacora, (the "Carved-out areas") so as to enable BPZ Energy to appraise the Carved-out areas. Shell will have the option, in order to fully align the desired joint venture, to buy a 50% stake in any one of these four Carved-out areas, beginning in July 2012 and ending in January 2015, at prevailing market prices. Additionally, Shell will join with BPZ Energy to refurbish the platform and drill the first well in Albacora, where BPZ Energy would retain 100% of oil assets and 50% of gas assets discovered until such time Shell elects to exercise the option to buy 50% of Albacora's oil assets.
  
• BPZ Energy will retain 100% ownership of its planned gas-to-power project, subject to an option retained by Shell to purchase a 50% interest in the project at a later date.
  
• Shell will commit to an exploration and appraisal program with three phases which could amount to approximately $300 million.
  
• Any future oil and/or gas production, excluding that acquired from the Carved-out areas, will be shared 51.75% by BPZ Energy and 48.25% by Shell.

BPZ Resources, Inc. engages in the exploration, development, and production of oil and natural gas in Peru and Ecuador.

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