BPZ Resources, Inc (BPZ)

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BPZ Resources, Inc. (BPZ)

Q3 2012 Earnings Conference Call

November 9, 2012 11:00 ET

Executives

Pierre Dubois - Investor Relations

Manolo Zuniga - President and Chief Executive Officer

Richard Spies - Chief Operating Officer

Rick Menniti - Chief Financial Officer

Analysts

John Freeman - Raymond James

Neal Dingmann - SunTrust

Jeff Hayden - KLR Group

Chris McDougall - Westlake Securities

Irene Haas - Wunderlich Securities

Adam Michael - Miller Tabak

Presentation

Operator

Good day, everyone and welcome to the BPZ Energy Third Quarter 2012 Conference Call to review earnings and operations. This call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Pierre Dubois, Investor Relations of BPZ Energy. Mr. Dubois, please go ahead, sir.

Pierre Dubois - Investor Relations

Thank you, Kevin. We appreciate everyone's interest in the BPZ Energy call this morning. With me today are Manolo Zuniga, President and Chief Executive Officer, Richard Spies, Chief Operating Officer; and Rick Menniti, Chief Financial Officer.

Our format for the call today will include opening remarks by Manolo followed by a financial summary that Rick will provide. We will then ask the operator to open up the question-and-answer session, and after Q&A, Manolo will provide closing remarks, but before we move forward, I'd like to provide you with the customary cautionary statements. This call and related earnings release contain forward-looking statements. These statements are based on current expectations about our company, our properties, our estimates of required capital expenditures and our industry.

Actual results could differ materially from those anticipated in these forward-looking statements. Such uncertainties include the success of our project financing efforts, accuracy of well tests, refurbishment efforts, successful production of indicated reserves, satisfaction of the well test period requirements, installation of required processing facilities, receipt of required permits, acquisition of seismic data, the successful management of our capital expenditures and other normal business risks associated with our business and the global economy.

With respect to any oil and gas reserve estimates discussed on this call, we are prohibited from disclosing estimates of oil and gas resources that do not constitute reserves in our SEC filings. With respect to probable and possible reserves, we are required to disclose the relative uncertainty of such classifications. Further, the reserve estimates and referential price information contained in the earnings call and release are not designed to be nor are they intended to represent an estimate of the fair market value of any unproved reserves. In connection with the information conveyed in this call today, please also consider the additional disclaimers and information contained in the company's SEC filings. Manolo?

Manolo Zuniga - President and Chief Executive Officer

Thank you, Pierre, and thanks to everyone for your interest in BPZ Energy. I am happy to report that we have a new addition to our family, the new CX-15 platform. Rise in Peru during the third quarter, I want to congratulate our integrated teams who for the last two years have been working hard to make this a reality. These two years are measured from conception and (indiscernible) to finally sign financing, fabricating, transporting and selling at the Corvina field, and of course per meeting. Regarding per meeting, I am especially excited to report that we have received the environmental permit that will allow us to complete installation, operate the production and reinjection facilities, and drill 24 wells from the new CX-15 platform.

Now, sales at the Corvina field. Finally, equipment tie-ins are now been completed at the CX-15. The drilling rig is being mobilized and we expect to spud our first well in December. In anticipation of the environmental permit, the company was given the green light 10 days ago to carryout equipment tie-ins on the platform that were needed before the rig can be mobilized, including the support crane and the flare-boom. As you know, the CX-15 tower whole and top side deported Nantong, China in August and a rise in Peru in September. You can see the latest project pictures on our website, including the whole tower flowed off and operating and the meeting of the top side to the whole tower. We then set the platform about a mile southwest from the CX-11 platform near the crest of the structure. So, I encourage you to look at our website, because it was all quite an impressive operation.

Looking forward, with a December spud date expected for our first developing well from the CX-15 platform, completion of this first well is scheduled during the first quarter of 2013. After we drilled and completed the first two wells, we expect to drill and complete a well every 6 to 8 weeks. We have 24 drill slots. So, of course, some of those will serve as injectors. We call the CX-11 and Albacora platforms did not come equipped with reinjection equipment. So, those had to be added after the effect. With the CX-15 all the reinjection equipment came installed on the top side already making it a custom-built fully equipped platform. The new multi-year development drilling program at the CX-15 is a material catalyst for production growth and will cover all of Corvina's proved undeveloped reserves or PUDs as they are referred to in the industry.

Besides the CX-15 project, we continue working at both fields to optimize existing production through various means, including a gas cap reinjection program at Corvina, artificial lift, and work-overs. We began a 6 well work-over program during the third quarter at the CX-11 platform. Having completed the first two work-overs, the program will extend into next year. In addition, we are interconnecting the CX-11 and CX-15 platforms via subsea pipelines, which will increase efficiencies at the Corvina's field. So, even though, we will have two different platforms, we will have a consolidated processing facility, which means we can use equipment on each platform to optimize our operations at the field.

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