BPZ Resources, Inc. - Shareholder.com

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Net Proved Reserve Summary The following table sets forth the Company’s net proved developed and undeveloped reserves at December 31, 2010, 2009 and 2008, and the changes in the net proved reserves for each of the three years in the period then ended. All of the Company’s proved reserves are located in Peru. The Company’s net profit interest in the Santa Elena property is located in Ecuador and is based on a service contract. 108 Natural gas (MMcf)(4) Natural gas liquids and crude oil (MBbls)(1) (MBbls) equivalents(2) Net proved reserves at December 31, 2007......................................................... — 11,940 11,940 Revisions of previous estimates (7) ................................................................ — (1,699) (1,699) Purchases of minerals in place ........................................................................ — — — Extensions, discoveries and other additions (6) .............................................. — 7,740 7,740 Sales in place................................................................................................... — — — Production (8) ................................................................................................. — (827) (827) Other ............................................................................................................... — — — Net proved reserves at December 31, 2008......................................................... — 17,154 17,154 Revisions of previous estimates (7) ................................................................ — (1,552) (1,552) Purchases of minerals in place ........................................................................ — — — Extensions, discoveries and other additions (6) .............................................. — 22,873 22,873 Sales in place................................................................................................... — — — Production (8) ................................................................................................. — (991) (991) Other ............................................................................................................... — — — Net proved reserves at December 31, 2009......................................................... — 37,484 37,484 Revisions of previous estimates (7) ................................................................ — 319 319 Purchases of minerals in place ........................................................................ — — — Extensions, discoveries and other additions (6) .............................................. — 2,600 2,600 Sales in place................................................................................................... — — — Production (8) ................................................................................................. — (1,527) (1,527) Other ............................................................................................................... — — — Net proved reserves at December 31, 2010......................................................... — 38,876 38,876 Company’s proportional interest in reserves of investees accounted for by the cost method—December 31, 2010 (3) .................................................. — 187 187 Proved Developed Reserves as of: December 31, 2006 (5).................................................................................... — — — December 31, 2007 ......................................................................................... — 2,977 2,977 December 31, 2008 ......................................................................................... — 4,223 4,223 December 31, 2009 ......................................................................................... — 9,912 9,912 December 31, 2010 ......................................................................................... — 12,231 12,231 Proved Undeveloped Reserves as of: December 31, 2006 (5).................................................................................... — — — December 31, 2007 ......................................................................................... — 8,963 8,963 December 31, 2008 ......................................................................................... — 12,930 12,930 December 31, 2009 ......................................................................................... — 27,573 27,573 December 31, 2010 ......................................................................................... — 26,645 26,645
(1) Includes crude oil, condensate and natural gas liquids. (2) Natural gas volumes have been converted to equivalent natural gas liquids and crude oil volumes using a conversion factor of six thousand cubic feet of natural gas to one barrel of natural gas liquids and crude oil. (3) Based on an independent reservoir engineer’s report provided by the operator of the Santa Elena property. (4) The Company does not currently have the financial capacity or commitments for a development program of this magnitude for its gas reserves. Accordingly, the Company has not disclosed amounts of proved gas reserves in its SEC filings. At such time as the Company obtains sufficient financial commitments to proceed with the full development of the gas-to-power project and all other conditions necessary to record proved reserves are met, the Company expects to record SEC proved gas reserves as permitted under SEC rules and disclose such reserves in future SEC filings. (5) The Company did not have the financial capacity or commitments for a development program of this magnitude. Accordingly, the Company did not disclose amounts of proved reserves in its SEC filings for the year ended December 31, 2006. (6) The 2007 balance represents the initial oil reserves as a result of completing the two initial wells drilled and completed by the Company toward the end of 2007. The 2008 additions to the extensions and, discoveries and additions of 7.8 MMBbls were due to additional wells drilled in 2008. The 2009 additions to the extensions and discoveries and additions of 22.8 MMBbls were due to additional wells drilled in the Corvina field (12. 8 MMBbls) and the discoveries of the Albacora field (10.1 MMBbls). The 2010 additions to the extensions and, discoveries and additions of 2.6 MMBbls were due to additional wells drilled in the Corvina field. (7) The 2008 negative revisions were due to price. The 2007 reserve analysis as prepared by NSAI used $85.49 per barrel price while the 2008 reserve analysis as prepared by NSAI used a $37.80 per barrel price, resulting in a negative revision of 1.7 MMBbls in 2008. The 2009 reserve analysis as prepared by NSAI included negative revisions due to performance. The negative revision was due to the lower than expected performance of the CX11-14D, CX11-18XD, and CX11-20XD wells and corresponding revisions of other wells resulting in a negative revision of 1.6 MMBbls. The 2010 reserve analysis as prepared by NSAI included positive revisions due to price of approximately 347 MBbls that was partially offset by negative revisions of approximately 28 MBbls due to performance. The 2010 reserve analysis as prepared by NSAI used a $76.92 per barrel price while the 2009 reserve analysis as prepared by NSAI used a $57.30 per barrel price. (8) The 2008 oil production was from the Corvina field. The 2009 oil production of 991 MBbls includes 984MBbls from the Corvina field and 7 MBbls from the Albacora field. The 2010 oil production of 1,527 MBbls includes 1,123MBbls from the Corvina field and 404 MBbls from the Albacora field. Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Natural Gas Reserves The following information has been developed utilizing procedures prescribed U.S. GAAP and based on natural gas and crude oil reserve and production volumes estimated by the independent petroleum reservoir engineers. This information may be useful for certain comparison purposes but should not be solely relied upon in evaluating the Company or its performance. Further, information contained in the following table should not be considered as representative of realistic assessments of future cash flows, nor should the standardized measure of discounted future net cash flows be viewed as representative of the current value of the Company’s oil and natural gas assets. The future cash flows presented below are based on sales prices, cost rates and statutory income tax rates in existence as of the date of the projections. It is expected that material revisions to some estimates of natural gas and crude oil reserves may occur in the future, development and production of the reserves may occur in periods other than those assumed, and actual prices realized and costs incurred may vary significantly from those used. Income tax expense has been computed using expected future tax rates and giving effect to tax deductions and credits available, under current laws, and which relate to oil and natural gas producing activities. Management does not rely upon the following information in making investment and operating decisions. Such decisions are based upon a wide range of factors, including estimates of probable as well as proved reserves and varying price and cost assumptions considered more representative of a range of possible economic conditions that may be anticipated. 109
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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
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Lease Operating Lease operating exp
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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 and 112: minority position in the project. H
Page 113 and 114: of the subjective decisions require
Page 115: Costs Incurred in Oil and Natural G
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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