BPZ Resources, Inc. - Shareholder.com

Results of Operations
Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
46
Year Ended
December 31,
2010 2009
(in thousands except per bbl information)
Increase/
(Decrease)
Net sales volume:
Oil (MBbls)........................................................................... 1,518 963 555
Net revenue:
Oil and condensate ............................................................... $ 110,075 $ 52,454 57,621
Other revenue........................................................................ 389 — 389
Total net revenue............................................................... 110,464 52,454 $ 58,010
Average sales price (approximately):
Oil (per Bbl).......................................................................... $ 72.53 $ 54.49 $ 18.04
Operating and administrative expenses
Lease operating expense ....................................................... 32,585 28,113 4,472
General and administrative expense...................................... 32,655 33,258 (603)
Geological, geophysical and engineering expense................ 19,107 7,768 11,339
Dry hole costs ....................................................................... 32,778 — 32,778
Depreciation, depletion and amortization expense ............... 33,755 25,803 7,952
Standby costs ........................................................................ 7,487 — 7,487
Other expense ....................................................................... 12,889 — 12,889
Total operating and administrative expenses .................... $ 171,256 $ 94,942 $ 76,314
Operating loss .......................................................................... $ (60,792) $ (42,488) $ (18,304)
Net Oil Revenue
On November 30, 2010, we placed the Corvina field into commercial production. Prior to that time all oil sales were from oil
produced under the Peruvian well testing regulations. Additionally, all oil sales from the Albacora field were from oil produced under
the Peruvian well testing regulations.
For the year ended December 31, 2010, our net oil revenue increased by $57.6 million to $110.1 million from $52.5 million
for the same period in 2009. The increase in net revenue is due to an increase in the amount of oil sold, 555 MBbls and an increase of
$18.04, or 33%, in the average per barrel sales price received. During 2010, oil prices again rose during the year, trading in a range of
$70 - $90 per barrel compared to prices in 2009, which rose from $39 per barrel at the start of the year to $73 per barrel toward the
end of the year.
For the year ended December 31, 2010, oil production was 1,527 MBbls compared to 991 MBbls for the same period in
2009. Total sales for the year ended December 31, 2010 were 1,518 MBbls compared to 963 MBbls for the same period in 2009.
For the both the year ended December 31, 2010 and 2009, we had intermittent oil production from six producing wells in the
Corvina field and one producing well in the Albacora field.
Although we suspended oil production from five of our Corvina wells as required under the Peruvian well testing regulations
in May 2010 and the CX11-19D well in June 2010, we have been able to produce more oil than during the same period in 2009. Our
latest wells, the CX11-17D, CX11-19D, A-14XD, and CX11-23D, experienced high production rates relative to our older producing
wells. In addition, since we placed the Corvina field into commercial production, we have begun to produce from the previous shut-in
wells and are working toward finding the proper production schedule in order to optimize oil production while operating within the
limits of the gas reinjection equipment.
During the year ended December 31, 2009, the majority of our oil production came from five wells with two additional wells,
the CX11-19D and A-14XD, beginning producing in December 2009. Due to workovers to address issues encountered with certain