BPZ Resources, Inc. - Shareholder.com

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Includes the monthly lease expense for one of the Company’s oil transportation vessels whose lease is set to expire in February 2012 and storage vessel whose lease is set to expire in February 2013. Note 21 — Subsequent Events The Company and its subsidiaries completed a credit agreement with Credit Suisse on January 27, 2011 where Credit Suisse provided $40.0 million of secured financing and utilized a portion of the proceeds to retire the existing debt with IFC. For further information, see Note 9 “Long-Term Debt and Capital Lease Obligations”. The initial conversion rate on the $170.9 Million Convertible Notes due 2015 was adjusted on February 3, 2011. The conversion rate and conversion price changed to 169.0082 and $5.9169, respectively. For further information, see Note 9 “Long-Term Debt and Capital Lease Obligations”. On January 24, 2011, production from the A14-XD well was shut-in under the EWT program. On February 10, 2011, the Company received notice that its application for EWT testing for the A-14XD well was denied. For further information, see Note-18, “Commitment and Contingencies”. Note 22 — Quarterly Results of Operations (Unaudited) Three Months Ended March 31, June 30, September 30, December 31, 2010 (in thousands except per share data) Revenue, net .............................................................. $ 24,045 $ 22,397 $ 26,688 $ 37,334 Operating income (loss) ............................................ 1,265 169 (50,393) (11,833) Other expense ........................................................... (1,917) (3,385) (2,398) (2,887) Net loss ..................................................................... $ (1,774) $ (4,262) $ (43,659) $ (10,076) Basic net income (loss) per share .............................. $ (0.02) $ (0.04) $ (0.38) $ (0.09) Diluted net income (loss) per share Basic and diluted weighted average common shares outstanding ............................................................ 115,224 115,309 115,405 115,508 Three Months Ended March 31, June 30, September 30, December 31, 2009 (in thousands except per share data) Revenue, net .............................................................. $ 13,225 $ 11,049 $ 13,088 $ 15,092 Operating loss ........................................................... (7,462) (10,885) (11,155) (12,986) Other income (expense) ............................................ (794) (584) 401 1,088 Net loss ..................................................................... $ (7,048) $ (9,813) $ (8,963) $ (9,978) Basic net income (loss) per share .............................. $ (0.08) $ (0.10) $ (0.08) $ (0.09) Diluted net income (loss) per share Basic and diluted weighted average common shares outstanding ............................................................ 88,620 95,347 113,929 115,135 Supplemental Oil and Gas Disclosures (Unaudited) Oil and Natural Gas Producing Activities The following disclosures for the Company are made in accordance with ASC Topic 932, “Extractive Activities —Oil and Gas” and SEC rules for oil and gas reporting disclosures. Users of this information should be aware that the process of estimating quantities of proved, proved developed and proved undeveloped crude oil and natural gas reserves is very complex, requiring significant subjective decisions in the evaluation of all available geological, engineering and economic data for each reservoir. The data for a given reservoir may also change substantially over time as a result of numerous factors including, but not limited to, additional development activity, evolving production history and continual reassessment of the viability of production under varying economic conditions. Consequently, material revisions to existing reserve estimates occur from time to time. Although every reasonable effort is made to ensure that reserve estimates reported represent the most accurate assessments possible, the significance 104
of the subjective decisions required and variances in available data for various reservoirs make these estimates generally less precise than other estimates presented in connection with financial statement disclosures. Accordingly, reserve estimates are often different from the quantities of crude oil and natural gas ultimately recovered. SEC and FASB Updates on Oil and Gas reporting On December 31, 2008 the SEC adopted the final rules regarding amendments to current oil and gas reporting requirements. The amendments are designed to modernize and update the oil and gas disclosure requirements to align them with current practices and changes in technology. Additionally, in January 2010, the FASB issued Accounting Standard Update 2010-3, “Oil and Gas Reserve Estimation and Disclosures”, to align its reporting guidance with the new SEC rules. The Company adopted these rules effective December 31, 2009 and the changes, including those related to pricing, are included in the Company’s reserve estimates. The most significant changes to the Company’s reserve estimates as a result of the new rules are as follows: • Requiring companies to report oil and gas reserves using an un-weighted average price based upon the prior 12-month period rather than year-end prices; • Requiring companies to report the independence and qualifications of a preparer or auditor, based on current Society of Petroleum Engineers criteria; • Requiring the filing of reports for companies that rely on a third party to prepare reserves estimates or conduct a reserves audit; and • Limiting proved undeveloped reserves locations to those that are scheduled to be drilled within the next five years. Reserves Proved reserves represent estimated quantities of crude oil and natural gas that geological and engineering data demonstrate, with reasonable certainty, to be recoverable in future years from known reservoirs under economic and operating conditions existing at the time the estimates were made. Proved developed reserves are proved reserves expected to be recovered, through wells and equipment in place and under operating methods being utilized at the time the estimates were made. Proved undeveloped reserves are reserves that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion. Reserves on undrilled acreage are limited to those drilling units offsetting productive units that are reasonably certain of production when drilled. Proved reserves for other undrilled units can be claimed only where it can be demonstrated with certainty that there is continuity of production from the existing productive formation. Estimates for proved undeveloped reserves are not attributed to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual tests in the area and in the same reservoir. Our relevant management controls over proved reserve attribution, estimation and evaluation include: • controls over and processes for the collection and processing of all pertinent operating data and documents needed by our independent reservoir engineers to estimate our proved reserves; • engagement of well qualified and independent reservoir engineers for review of our operating data and documents and preparation of reserve reports annually in accordance with all SEC reserve estimation guidelines; • review by our senior reservoir engineer and his staff of the independent reservoir engineers’ reserves reports for completion and accuracy; and • oversight and review by our Technical Committee, made up of independent members of the Board of Directors, who review the propriety of our methodology and procedures for determining the oil and gas reserves as well as the reserves estimates resulting from such methodology and procedures. The Technical Committee may also review the qualifications, independence and performance of our independent reserve engineers. 105
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BPZ 2010 ANNUAL REPORT
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Manuel Pablo Zúñiga-Pflücker Pre
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I would like to express my sincere
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Company drilled and completed at th
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UNITED STATES SECURITIES AND EXCHAN
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PART I BPZ Resources, Inc. cautions
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Our Competition Intense competition
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License contracts are subject to ro
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Although we believe our operations
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Our reserve estimates depend on man
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The debt facility matures on July 2
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• clean-up responsibilities; •
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• although we plan to enter into
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esult in the suspension of our curr
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We may not be able to replace our r
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Because we are a relatively new pub
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the existing platform located in th
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In connection with the first explor
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In addition, the Board of Directors
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Block Z-1 Seismic Acquisition Altho
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Performance Graph The following gra
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(1) In our Form 10K for the year en
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Oil Development General We will con
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The A-16D well was originally inten
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agreements; and change in control.
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We estimated our non-convertible bo
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Loan Agreement. The amount availabl
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wells and regular maintenance, the
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million of salary and salary relate
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of revenue to offset our deferred t
Page 61 and 62: Lease Operating Lease operating exp
Page 63 and 64: The income tax expense (benefit) fo
Page 65 and 66: cash of $6.4 million and in 2008 pr
Page 67 and 68: Long-Term Debt and Capital Lease Ob
Page 69 and 70: (2) prior to January 1, 2015, durin
Page 71 and 72: Other In July 2009, we, through our
Page 73 and 74: (1) Includes operating leases for o
Page 75 and 76: Revenue Recognition We recognize re
Page 77 and 78: Interest Rate Risk. As of December
Page 79 and 80: ITEM 8. FINANCIAL STATEMENTS AND SU
Page 81 and 82: To the Board of Directors and Stock
Page 83 and 84: BPZ Resources, Inc. and Subsidiarie
Page 85 and 86: BPZ Resources, Inc. and Subsidiarie
Page 87 and 88: investment under the cost method. A
Page 89 and 90: Oil and Gas Accounting Reserves Det
Page 91 and 92: Loss per Common Share In accordance
Page 93 and 94: Note 5 — Property, Equipment and
Page 95 and 96: Activity related to the Company’s
Page 97 and 98: The Company estimates the cash paym
Page 99 and 100: holders of the 2015 Convertible Not
Page 101 and 102: an amended registration statement w
Page 103 and 104: there was $1.2 million of total unr
Page 105 and 106: Additional Fair Value Disclosures $
Page 107 and 108: costs related to the platform in th
Page 109 and 110: Note 17 — Business Segment Inform
Page 111: minority position in the project. H
Page 115 and 116: Costs Incurred in Oil and Natural G
Page 117 and 118: (1) Includes crude oil, condensate
Page 119 and 120: The following table sets forth the
Page 121 and 122: (d) Attestation Report To the Board
Page 123 and 124: PART IV ITEM 15. EXHIBITS AND FINAN
Page 125 and 126: Net acres or net wells. The sum of
Page 127 and 128: INDEX OF EXHIBITS 2.1 Plan of Conve
Page 129 and 130: Company Information Board of Direct
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