Oil production for the quarter averaged 4,002 barrels of oil per day (bopd) in spite of the fact that BPZ Resources was in the process of upgrading and improving operations at Corvina while continuing the work on the CX11-15D well. For the first quarter of 2009 the company reported operating loss of $7.5 million. In addition, BPZ Resources had earnings before interest, income tax, depreciation and amortization of $0.4 million. First quarter results were impacted by the continued decline in global oil prices.

During the quarter BPZ Resources implemented, or in some cases are in the process of implementing, a number of cost cutting measures including, but not limited to, salary reductions, staff reductions and renegotiation of terms and pricing of BPZ Resources major exploratory and lease operating contracts. These reductions, along with increased revenue from oil sales in Corvina, drove the company’s first quarter performance. During the quarter BPZ Resources also successfully concluded an equity offering for about $48 million that strengthened the balance sheet of BPZ Resources.

Production and Revenue

For the three months ended March 31, 2009 BPZ Resources oil production and sales were about 355,175 barrels and 330,847 barrels, correspondingly. For the quarter, average oil sales price, net of royalties, was $39.97 per barrel. As earlier announced, production during the first quarter was impacted by the decreased production from the CX11-20XD well due to the gas channeling encountered, replacement of submarine flex hoses from the platform to the FPSO and to the delay in bringing the CX11-15D well on line as a result of the subsequent drilling of a sidetrack wellbore that was finished at the end of March 2009.

The CX11-15D well, whose lower oil sands have successfully tested oil, is undergoing further completion work and should placed on long-term testing in a few weeks. BPZ Resources anticipates a raise in production once both submarine flex hoses are replaced, the CX11-15D well is put on line, and the programmed work-over of the CX11-20XD is successfully performed. All of this work is anticipated to be concluded during the second quarter 2009.

Lease Operating:

For the first quartr of 2009, lease operating expenses were $4 million ($12.02 per Bbl). This represents a $0.7 million (or about 15.5%) reduction from fourth quarter 2008. BPZ Resources has been able to renegotiate numerous lease operating contracts decreasing the overall per day rate. As previously announced, the company is targeting a general savings of about 20%, year-on-year, related to its operating expenses.

General and Administrative:

For the three months ended March 31, 2009, general and administrative expenses were $8.5 million. Included in the first quarter G&A is stock-based compensation expense of $3.3 million.

General and administrative expense of $5.2 million, excluding stock-based compensation, is considerably lower than the preceding quarters because of cost restructuring as mentioned above. Comparing first quarter G&A to the average quarterly G&A of $5.9 million from the previous year, results in a decrease of $0.7 million (or 12%). BPZ Energy is targeting an overall year-on-year decrease of its G&A expense of about 15%.

Stock-based compensation of $3.3 million is also considerably lower than earlier quarters mainly because of equity awards not being granted to employees, consultants or non-employee directors in 2009 and the final vesting, for expense purposes, of earlier issued awards.

Depreciation, Depletion and Amortization:

For the first quarter of 2009, depreciation, depletion and amortization expense was $7.9 million an overall decrease from the fourth quarter ended December 31, 2008 of about $0.2 million. The overall decline was because of decreased production quarter-on-quarter. This was partly counterbalanced by an raise to the per barrel depletion rate of about $3.50. The per-barrel increase is mainly because of the impact that decreased oil prices have had on the economics of BPZ Energy reserves which shorten their production life, thus lowering the reserve base. This was mostly counterbalanced by the 40% raise in BPZ Energy proved reserve base through the development of the Corvina field during the year ended December 31, 2008.

Other Income/(Expense):

For the three months ended March 31, 2009, other income/(expense) was $(0.8) million related to settlement of a contract dispute.

Income Tax

For the first quarter of 2009, BPZ Energy recognized an income tax benefit of about $1.2 million on a net loss before income tax of about $8.3 million resulting in an effective tax rate of 15%. The disparity between the effective tax rate recognized and the 22% statutory rate as promulgated under the block Z-1 license contract is largely due to:

— A 100% allowance on our net operating losses generated in the US – A assessment allowance for the full amount of the domestic deferred tax asset resulting from the income tax benefit generated from net losses in the US, as BPZ Energy believes, based on the weight of available evidence, that it is more likely than not that the deferred tax asset will not be realized previous to the expiration of net operating loss carry-forwards in different amounts through 2027.

Certain US expenses are not deductible in Peru- The tax benefit is based on a taxable Peruvian loss that excludes certain US expenses that are not deductible at the Peruvian level.

Liquidity, Capital Expenditures and Capital Resources

Liquidity

At March 31, 2009, BPZ Energy had cash and cash equivalents of $28.5 million and existing accounts receivable related to our March 2009 oil sales of $3.8 million. In addition, there was $16.3 million in value added tax receivable which will be collected over time as oil sales are invoiced.

Capital Expenditures

BPZ Energy reported total capital expenditures of $18.2 million for the three months ended March 31, 2009.

Highlights include:

— $13.8 million related to drilling and testing and completion of the 20XD and 15D wells;

— $2.2 million related to restoration and refurbishment of the Albacora platform, initial engineering study of the Piedra Redonda platform, and work performed on the Caleta Cruz dock;

— $0.5 million related to performing well control and initial drilling activities in Albacora; and,

— $1.7 million related to capitalized depreciation, capitalized interest, office equipment and other;

BPZ Energy has budgeted $86 million for 2009 capital expenditures related to its E&P activities as follows: $43 million allocated to drilling activities and facilities at Corvina, $41 million allocated to drilling activities and facilities at Albacora; and $2 million for other projects such as refurbishment of the dock at Caleta Cruz which has allowed us to increase efficiency and decrease costs associated with supporting our offshore activities.

Capital Resources

2009 Private Placement of Common Stock

On February 23, 2009, BPZ Energy closed a private placement of about 14.3 million shares of common stock, no par value, to institutional and accredited investors pursuant to a stock purchase agreement dated February 19, 2009. Additionally, in March 2009, the international finance corporation (IFC) exercised its pre-emptive right to elect to participate in the private placement offering resulting in an additional 1.4 million shares of common stock which brought the total to about 15.7 million shares of common stock sold in the private placement offering.

The common stock was priced at $3.05 per share resulting in net proceeds to BPZ Energy, after placement agent and financial advisory fees, of about $45.2 million. On April 27, 2009, BPZ Energy obtained effectiveness of the registration statement related to the stock purchase agreement.