BPZ Energy (NYSE:BPZ) (BVL:BPZ), an independent oil and gas exploration and production company, announced that on December 26, 2012, it closed its contractual arrangements for the sale of a 49% participating interest ("closing") in offshore Block Z-1 to Pacific Rubiales Energy Corp. (TSX:PRE) (BVC:PREC) (BOVESPA:PREB).
The Board of Directors of Perupetro and the Ministry of Energy and Mines have approved the plan to modify the Block Z-1 License Contract allowing PRE to become a party to the amended agreement. Upon receipt of formal approval from the Ministry of Economy and Finance, the Peruvian Government's Supreme Decree will be signed, allowing Perupetro to complete the Block Z-1 License Contract amendment process.
BPZ and PRE have a high degree of confidence in the processes of the Peruvian Government and agreed that receipt of the Supreme Decree was no longer a mandatory condition precedent to closing their contractual arrangements concerning the Z-1 transaction. The closing with PRE will also allow the transition plan for operations to be accelerated.
President and CEO Manolo Zúñiga commented, "We are pleased with the closing of the Block Z-1 transaction with PRE before year-end. Our partnership continues to work diligently to unlock the value of this asset, with development drilling expected to begin soon at Corvina's CX-15 platform and the 3D seismic campaign nearing completion."
Under terms of the agreements signed on April 27, 2012, the Company (together with its subsidiaries) formed an unincorporated joint venture relationship with PRE to explore and develop the offshore Block Z-1 located in Peru. Pursuant to the agreements, PRE agreed to pay $150.0 million for a 49% participating interest in Block Z-1 and agreed to fund $185.0 million of the Company's share of capital and exploratory expenditures in Block Z-1 from the effective date of the SPA, January 1, 2012.
In December 2012, BPZ and PRE waived and modified certain contract conditions in order to effect an accelerated closing of the transaction.
With this closing BPZ Energy received the remaining $85 million of cash. Operating revenues and expenses were also allocated at each partner's respective participating interest.
A complete description of the changes to the previously announced contract terms will be included in the SEC Form 8-K filing.
ABOUT BPZ ENERGY
Houston-based BPZ Energy, which trades as BPZ Resources, Inc. under ticker symbol BPZ on the New York Stock Exchange and the Bolsa de Valores in Lima, is an independent oil and gas exploration and production company which has license contracts for oil and gas exploration and production covering approximately 2.2 million gross acres in four properties in northwest Peru. In partnership with Pacific Rubiales Energy Corp., the Company is currently executing the development in offshore Block Z-1 of the Corvina oil discovery, as well as the redevelopment of the Albacora oil field. In addition, the Company is pursuing the exploration of onshore Blocks XIX, XXII and XXIII, in parallel with the execution of an integrated gas-to-power strategy, which includes generation and sale of electric power in Peru and the development of a regional gas marketing strategy. The Company also owns a non-operating net profits interest in a producing property in southwest Ecuador. Please visit the Company's website at www.bpzenergy.com for more information.
Source: BPZ Resources, Inc.
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