BPZ Energy (BZP) update #11
Posted by intelledgement on Tue, 10 Jun 08
Finally! Our spec E&P play, BPZ Energy (BZP) announced yesterday that they received clearance to transport crude from their CX-11 platform to the nearby Talara refinery. We have been waiting for this approval for months; now the leased transport barge Nu’uanu, filled to its 30,000 BBLS capacity, is on its way to Talara to deliver its first new shipment since production was suspended following the sinking of the Supe in January.
BZP also announced that the Nomoku, their Floating-Production-Storage-and-Offloading (“FPSO”) vessel (actually, a converted barge)—the first in service in the history of Peru—is now in position near the CX-11 platform and is being prepared to receive crude production.
The unexpected administrative delays incurred in obtaining the clearance for oil transportation will result in the company missing their 2Q08 production targets. However, previously announced 2H08 and 2009 Corvina production forecasts have been confirmed.
Meanwhile, drilling on the fifth Corvina well, CX11-20XD, continues on schedule and is expected to be at total depth by late July. BZP also plan to spud the CX11-15D well shortly after completion of the 20XD. Management expect this well to also take approximately 90 days to reach total depth, and to be completed and tested late this year. The drilling rig will then be moved from the CX-11 platform to the Albacora platform. BZP have successfully completed the well control on the three shut-in oil wells located at the Albacora platform, and the platform refurbishment program continues. Drilling will begin late this year once the platform is fully refurbished.
BPZ Energy have also signed a two-year contract, with a third-year option, to secure a second drilling rig (PTX18), which will be initially used onshore to drill an exploratory well in Block XIX, the “Pampa la Gallina” prospect. The targets for this well are oil from the Heath formation and gas from the Mancora formation. The Pampa la Gallina well should be spudded late this year; it will be the first in a series of wells aimed at appraising the Mancora Gas Play. Management believe the Mancora Gas Play extends approximately 60 miles, from Block XIX through onshore Block XXIII and into offshore Block Z-1’s Piedra Redonda field. This well, in Block XIX, is expected to cost approximately $8 million and will take approximately 90 days to drill and complete. The PTX18 rig is contracted from Petrex, BZP’s current drilling contractor, for a period of three years. This rig is capable of drilling to approximately 14,000 feet, and could be modified to drill from an offshore platform.
Initial engineering designs are in progress for the new CX-14 platform for the Corvina field. This platform will have up to 16 slots, which are expected to enable the company to complete the development of the Corvina field; it should be ready by mid-2010.
Negotiations are ongoing with the International Finance Corporation for approximately $200 million in senior debt. A term sheet is expected in the next few weeks, with closing sometime in the third quarter. BZP expect to use the funds to kick off the gas-to-power project, as well as to continue the development of both the Corvina and Albacora fields.
Manolo Zúñiga, President and Chief Executive Officer, stated, ”The permitting issues with our transport barge for Corvina only slowed our progress temporarily, and will not have long-term effects on our strategy. We are pleased to be once again selling oil to the Talara refinery and we will press forward to ramp up production. Now that the FPSO is moored near the platform, we should be able to efficiently sustain oil production which will allow us to give our investors a better picture of production rates moving forward. The production we are going to deliver to the Talara refinery is in many respects as important to Peru, and to the region of Tumbes, as it is to BPZ. I have personally been involved in face-to-face discussions with multiple agencies in Peru to provide information as requested to assist in the review of BPZ’s development plans.”
Mr. Zúñiga continued, “We are progressing nicely on all other fronts, including Albacora, which is expected to add significant reserves in 2009. Furthermore, the contracting of a second rig gives BPZ the ability to work on three simultaneous projects by year’s end: Corvina, Albacora, and Block XIX. I am pleased with the progress we are making in these areas of our operations, where we continue adding key people which will help move BPZ forward as both an oil and gas producer and future power generator.”