BPZ Resources, Inc. - Shareholder.com

taxable income over the periods in which the deferred tax assets are deductible, along with the transition into the commercial phase
under the Block Z-1 License Contract, we believed it is more likely than not that we will realize the benefits of the these deductible
differences at December 31, 2009. As a result, we recognized a deferred tax asset of $16.9 million as of December 31, 2009.
Estimated interest and penalties related to potential underpayment on unrecognized tax benefits, if any, are classified as a
component of tax expense in the Consolidated Statement of Operations. As of the date of adoption of FIN 48, now codified under
ASC Topic 740, “Income Taxes”, we did not have any accrued interest or penalties associated with any unrecognized tax benefits, nor
were any interest expense recognized during the year. Additionally, the adoption had no effect on our financial position or results of
operations. We did not have any uncertain tax positions generated from unrecognized tax benefits resulting from differences between
positions taken in tax returns and amounts recognized in the financial statement as of December 31, 2009 or December 31, 2008.
For the year ended December 31, 2009, our net loss increased $26.2 million to a net loss of $35.8 million or ($0.35) per basic
and diluted share from a net loss of $9.6 million or ($0.12) per basic and diluted share for the same period in 2008.
Liquidity, Capital Resources and Capital Expenditures
At December 31, 2010, we had cash and cash equivalents of $11.8 million and current accounts receivable related to our
December oil sales of $11.2 million, all of which was collected in early January 2011. We also had $28.4 million in the current portion
of our value-added tax receivable, which we will collect over time as we invoice our oil sales.
At December 31, 2010, we had trade accounts payable and accrued liabilities of $51.8 million.
At December 31, 2010, our outstanding long-term debt and short-term debt consisted of a $12.5 million IFC Facility bearing
interest at LIBOR plus 2.75% due December 31, 2012 and 2015 Convertible Notes whose net amount of $140.8 million includes the
$170.9 million of principal reduced by $30.1 million of the remaining unamortized discount. At December 31, 2010, the current and
long-term portions of our capital lease obligations, primarily related to the barges used in our marine operations were $4.2 million and
$3.4 million, respectively.
We had a working capital surplus at December 31, 2010 of $22.7 million.
For the Year Ended December 31,
Cash Flows 2010 2009 2008
(in thousands)
Cash provided by (used in):
Operating activities ........................................................................ $ (5,125) $ (30,785) $ 48,722
Investing activities ......................................................................... (158,104) (90,005) (102,185)
Financing activities ........................................................................ 156,834 133,620 51,266
Operating Activities
Cash used in operating activities decreased by $25.7 million to a use of cash of $5.1 million for the year ended December 31,
2010 from a use of cash of $30.8 million for the same period in 2009. The change in cash flows before changes in operating assets and
liabilities increased by $25.4 million as a result of higher non-cash charges during 2010 compared to 2009. Changes in cash flow as a
result of changes in operating assets and liabilities provided an increase in cash of $0.3 million. The increase in the use of cash is due
to: (1) increase in the change in accounts receivable due to the timing of oil deliveries and payments of those deliveries, $11.5 million;
(2) increase in the change of prepaid and other assets to secure additional pipe, casing and accessories, $3.0 million; (3) decrease in
the change to accrued and other liabilities balances due to the timing of payments of certain Peruvian taxes, $0.8 million; and
(4) decrease in the change of current taxes payables as a result of achieving commercial production, $1.7 million. Offsetting these uses
of cash are changes in operating assets and liabilities providing sources of cash including: (1) increases in the change to accounts
payables, $7.6 million; and (2) decrease in the change to value-added taxes and inventory as we had less expenses subject to VAT and
used less inventory in 2010 compared to the same period in 2009, $9.7 million.
Cash used in operating activities increased by $79.5 million to a use of cash of $30.8 million in 2009 from a source of cash of
$48.7 million in 2008. Cash flow before changes in operating assets and liabilities decreased by $29.1 million reflecting lower oil
production revenues and higher lease operating costs and geological, geophysical, and engineering costs during 2009 compared to
2008, partially offset by lower general and administrative expenses. Changes in operating assets and liabilities provided a use of cash
of $50.4 million. In 2009, the change in accounts payable provided a use of cash of $2.9 million and in 2008, provided a source of
cash of $23.4 million, the change being a net use of cash of $26.1 million. The reason for the change in accounts payable is due to our
initiatives taken in 2009 to better manage our accounts payable balance. In 2009 the change in income taxes payable provided a use of
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