**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,DC 20549**

**Form 10-K/A**

**(AmendmentNo. 1)**

**x**                              ANNUAL REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

**Forthe fiscal year ended December 31, 2006**

**or**

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934

**Forthe transition period from              to                .**

**CommissionFile Number:  001-12697**

**BPZ Energy, Inc.**

(Exact name of registrantas specified in its charter)

| **Colorado**                                    |   | **33-0502730**                           |
|-------------------------------------------------|--------|------------------------------------------|
| (State or other  jurisdiction of incorporation) |   | (I.R.S. Employer  Identification Number) |

 

**580Westlake Park Blvd., Suite 525**

**Houston,Texas 77079**

(Address of principalexecutive office)

Registrant’s telephonenumber, including area code:  **(281)556-6200**

Securitiesregistered pursuant to Section 12(b) of the Exchange Act:

| **Common Stock, With No Par Value** |   | **American  Stock Exchange**    |
|-------------------------------------|--------|---------------------------------|
| (Title of Class)                    |   | (Exchange on  Which Registered) |

 

Securities registeredpursuant to Section 12(g) of the Exchange Act:  **None**

Indicate by check mark ifthe registrant is a well-known seasoned issuer, as defined in Rule 405 of theSecurities Act.   Yes  o   No  x

Indicate by check mark ifthe registrant is not required to file reports pursuant to Section 13 or 15(d)of the Exchange Act.   Yes  o   No  x

*Note* — Checking the box above willnot relieve any registrant required to file reports pursuant to Section 13 or15(d) of the Exchange Act from their obligations under those Sections.

Indicate by check markwhether the Registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Exchange Act during the past 12 months (orfor such shorter period that the Registrant was required to file such reports),and (2) has been subject to such filing requirements for the past 90 days.   Yes  x   No  o

Indicate by check mark ifthere is no disclosure of delinquent filers in response to Item 405 ofRegulation S-K contained herein, and no disclosure will be contained, to thebest of registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K.   o

Indicateby check mark whether the Registrant is a large accelerated filer, anaccelerated filer or a non-accelerated filer as defined in Rule 12b-2 of theSecurities Exchange Act of 1934.

| o    Large  accelerated filer |   | x    Accelerated  filer |   | o    Non-Accelerated  filer |
|-----------------------------------------------------------|--------|-------------------------------------------------------------|--------|---------------------------------------------------------|

 

Indicate by check markwhether the Registrant is a Shell Company as defined in Rule 12b-2 of theExchange Act.   Yes  o   No  x

Registrant did not earnrevenues for the fiscal year ended December 31, 2006.

The number of shares ofCommon Stock held by non-affiliates as of June 30, 2006 was 38,419,431 shares, all of one class of common stock,no par value, having an aggregate market value of approximately $153,677,724 basedupon the closing price of Registrant’s common stock on such date of $4.00 pershare as quoted on the Pink Sheets.  Forpurposes of the foregoing calculation, all directors, executive officers, and5% beneficial owners have been deemed affiliated.

As of February 27, 2007,there were 54,253,869 shares of common stock outstanding.

**DOCUMENTS INCORPORATED BYREFERENCE**

None.

 

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**EXPLANATORY NOTE**

Pursuant to Rule 12b-15 of the Securities Exchange Actof 1934, BPZ Energy, Inc. (the “Company” or “BPZ”) hereby amends its AnnualReport on Form 10-K for the year ended December 31, 2006 (the “Original 10-K”)to include the information required by Items 10, 11, 12, 13 and 14 of Part IIIrelating to Directors, Executive Officers and Corporate Governance of theRegistrant, Executive Compensation, Security Ownership of Certain BeneficialOwners and Management and Related Stockholder Matters, Certain Relationshipsand Related Transactions, and Director Independence, and Principal AccountantFees and Services, respectively.  Certaininformation required by Part III was to be incorporated by reference to BPZ’sdefinitive proxy statement for the 2007 Annual Meeting of Shareholders.  BPZ’s definitive proxy statement will not befiled with the Securities and Exchange Commission (the “SEC”) within 120 daysof the fiscal year ended December 31, 2006. Therefore, Part III, Items 10 through 14 of the Company’s Original 10-Kare hereby amended and restated in their entirety.  No modification or update to otherdisclosures as presented in the Original 10-K have been made.

**TABLE OF CONTENTS**
| **PART III** | ** ** | ** **                                                                                       | ** ** | **1**  |
|-------------------|------------|--------------------------------------------------------------------------------------------------|------------|--------|
| Item 10.          |       | Directors,  Executive Officers and Corporate Governance                                          |       | 1      |
| Item 11.          |       | Executive  Compensation                                                                          |       | 4      |
| Item 12.          |       | Security  Ownership of Certain Beneficial Owners and Management and Related Stockholder  Matters |       | 12     |
| Item 13.          |       | Certain  Relationships and Related Transactions, and Director Independence                       |       | 13     |
| Item 14.          |       | Principal  Accountant Fees and Services                                                          |       | 14     |
|              |       |                                                                                             |       |   |
| Signatures        |       |                                                                                             |       | S-1    |
|              |       |                                                                                             |       |   |
| Exhibit Index     |       |                                                                                             |       | E-1    |

 

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**PART III**

**ITEM 10.**                      DIRECTORS, EXECUTIVE OFFICERS ANDCORPORATE GOVERNANCE

**Directors and Executive Officers**

The following table sets forth the names of the directorsand executive officers of the Company, along with their positions and ages, asof March 31, 2007. 
| Name                                             | ** ** | **Age** | ** ** | **Position**                                           |
|--------------------------------------------------|------------|---------|------------|--------------------------------------------------------|
| Dr.  Fernando Zúñiga y Rivero (1)      |       | 79      |       | Chairman  of the Board of Directors                    |
| Manuel  Pablo Zúñiga-Pflücker (1) |       | 45      |       | President,  Chief Executive Officer, and Director      |
| Frederic  Briens                                 |       | 47      |       | Chief  Operating Officer                               |
| Edward G.  Caminos (2)                           |       | 44      |       | Vice  President - Finance and Chief Accounting Officer |
| Edward  Gilliard (2)                             |       | 51      |       | Vice  President - Finance and Treasurer                |
| Gordon  Gray                                     |       | 54      |       | Director                                               |
| John J.  Lendrum, III                            |       | 56      |       | Director                                               |
| E. Barger  Miller, III                           |       | 68      |       | Director                                               |
| Dennis G.  Strauch                               |       | 59      |       | Director                                               |

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(1)             Dr. Zúñiga y Rivero is the father of the Company’s President, ChiefExecutive Officer and Director, Mr. Zúñiga-Pflücker.There are no other family relationships between any directors or executiveofficers of the Company.

(2)             Appointed to theirrespective positions as of October 30, 2006.

Set forthbelow are brief descriptions of the recent employment and business experienceof the officers and directors of the Company.

**Dr. Fernando Zúñiga****y Rivero****, Chairmanof the Board.**  Dr. Zúñiga yRivero became Chairman of the Board of BPZ upon consummation of the merger withNavidec, Inc. in September 2004. Immediately prior to the merger and since1996, he served as Chairman of BPZ & Associates Inc., the former parentcompany of BPZ’s subsidiary, BPZ Energy, Inc., a Texas corporation (“BPZ —Texas”), which has been inactive subsequent to the Merger. Dr. Zúñiga y Rivero was also Energy Division project officer of TheWorld Bank, where he planned and implemented exploration promotion projects in58 countries, primarily in East and West Africa, Eastern Europe, Southeast Asiaand Latin America from 1979 to 1996. Dr. Zúñiga yRivero has fifty years of experience in the international energy industrystarting as an exploration geologist, biostratigrapher, and exploration head ofan Exxon affiliate in Peru where he was responsible for crude oil findings infive fields producing from Paleozoic rocks; and continuing as explorationproduction manager, integrated operations manager, general manager, andultimately serving as Chairman and Chief Executive Officer of Petroleos delPeru, the national oil company of Peru and was responsible for discovery offive large oilfields (with over 2.5 billion barrels of reserves) in the Amazonjungle of Peru. Dr. Zúñiga y Rivero holds a B.S., aGeological Engineering degree and a Ph.D. in Geology from the University of SanAugustin, Peru, and he conducted postgraduate studies at the University ofCalifornia, Los Angeles. In April 2005, Dr. Zúñiga yRivero became a director of Transmeridian Exploration, Inc., a public oil andgas company with operations in Kazakhstan.

**Manuel Pablo Zúñiga-Pflücker****,President, Chief Executive Officer, and Director.** Mr. Zúñiga-Pflücker became President andDirector of BPZ upon consummation of the merger with Navidec, Inc. in September2004 and in May 2005 assumed the additional title of Chief Executive Officer.Immediately prior to the merger and since its formation in 2001, Mr. Zúñiga-Pflücker served as President of BPZ — Texas. Mr. Zúñiga-Pflücker also served as President of BPZ & Associates, Inc.,the former parent company of BPZ — Texas, from 1989 until its Merger withNavidec, Inc. in September 2004, at which time BPZ & Associates, Inc.became inactive. Mr. Zúñiga-Pflücker began his career withOccidental Petroleum Corporation. Mr. Zúñiga-Pflückerhas spent the past 20 years in the international oil and gas business, and hehas been involved in projects throughout Latin America and other areas of theworld ranging from exploitation of marginal oil and gas fields to frontierexploration projects. He has also focused on the creative development ofnatural gas fields utilizing power generation and gas to liquids technology. Heholds a B.S. in mechanical engineering from the University of Maryland as wellas an M.S. in petroleum engineering from Texas A&M University.

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**Frederic Briens, Chief Operating Officer.**  Mr. Briensjoined BPZ as Vice President of Engineering in December 2004 and was namedChief Operating Officer in May 2005. From 2002 through 2004,Mr. Briens served as Geosciences and Business Development Manager forPerenco Venezuela S.A. From 1999 to 2002, Mr. Briens was the ChiefReservoir Engineer for Lundin Petroleum in Switzerland. Mr. Briens is apetroleum engineer with over twenty (20) years of operating experience ininternational oil and gas projects spanning the globe. He has also served insenior technical and operating positions with Conoco, Schlumberger and Chevron.Mr. Briens holds an M.S. and a Ph.D. in petroleum engineering from TexasA&M University, a master’s degree in business administration from Colorado State University and an engineeringdegree from Ecole Centrale de Paris. Mr. Briens was a co-founder ofBPZ & Associates, Inc., a predecessor to the Company, in 1989.

**EdwardG. Caminos, Vice President—Finance and Chief Accounting Officer**.  Mr. Caminoswas appointed as Vice President—Finance and Chief Accounting Officer of theCompany, effective October 30, 2006. Mr. Caminos served as interimChief Financial Officer from June 15, 2006 until October 30, 2006 and asCorporate Controller of the Company from January 2005 until October 30,2006. Prior to joining the Company, Mr. Caminos served asDirector—Financial Reporting for the Americas Division at Duke Energy from June 2004to January 2005. From February 2001 to May 2004,Mr. Caminos served as Financial Reporting Manager and, prior to its sale,as interim Controller for the Europe Division, at Reliant Energy.  Mr. Caminos is a CPA and holds a Bachelor’sDegree in Business Administration — Accounting from Bloomsburg University ofPennsylvania.

**Edward Gilliard, VicePresident—Finance and Treasurer.**  Mr. Gilliard was appointed as Vice President—Finance andTreasurer of the Company, effective October 30, 2006. Mr. Gilliard startedhis career in 1977 with Amoco Production Company as an operations and reservoirengineer. He worked in energy lending and project financing with ContinentalIllinois National Bank, Banque Indosuez, and Reliant Energy International,formerly Houston Industries Energy, where he worked on project financing forpower projects in South America, as well as other regions. In 1997, he joinedBurlington Resources and worked in areas such as international finance,strategic planning, business development, and governmental affairs. In thelatter capacity, Mr. Gilliard was a lead editor on the National PetroleumCouncil’s 1999 and 2003 landmark studies on natural gas. He holds a Bachelor’sDegree in Chemical Engineering from Texas A&M University and a master’sdegree in business administration from theUniversity of Houston.

**Gordon Gray, Director.**  Mr. Gray became a Director of BPZ uponconsummation of the merger with Navidec, Inc. in September 2004. Since 1982,Mr. Gray has served as President of Allied Crude Purchasing, Inc., a privatelyowned transportation company, which purchases crude oil at the well site andtransports it by truck or pipeline to sales points throughout Texas and EasternNew Mexico. Mr. Gray has owned and operated oil production and oil fieldservice businesses for over 30 years. His activities are centered in thePermian Basin area of West Texas.

**John J. Lendrum, III, Director.** Mr. Lendrum became aDirector of BPZ in July 2005. Mr. Lendrum was appointed in April 2005 asPresident, Chief Operating Officer and a Director of Torch Energy AdvisorsIncorporated (“Torch”), a Houston-based company which specializes in theexploitation and development of oil and gas properties, mid-stream gas assets,and well servicing. From 1993 to 2005, Mr. Lendrum founded and served asPresident of Rockport Resources Capital Corporation, which focused on providingcapital to the energy industry. During this period, he was also a principal inStar Natural Gas Company, a privately-held company with mid-stream natural gasassets. Previously, Mr. Lendrum served as Executive Vice President and ChiefFinancial Officer of Torch and in senior financial and business developmentroles with the Torch managed companies of Nuevo Energy Company, Energy AssetsInternational and Bellwether Exploration. Mr. Lendrum began his career with theinternational public accounting firm of KPMG Peat Marwick, and he earned a BBAin Finance and completed his graduate studies in Accounting Theory at theUniversity of Texas at Austin. Mr. Lendrum serves as Chairman of the Company’sAudit Committee.

**E. Barger Miller, III, Director.**  Mr. Miller became a Director of BPZ in July2005. Mr. Miller has served since 1990 as Chairman and CEO of E.B. Miller &Co., a privately held company which provides project planning and businessdevelopment services for energy and power companies, primarily in LatinAmerica. He was recently involved in a large power transaction in Ecuador and adownstream project in Bolivia. Mr. Miller has over 40 years of broad-based experiencein the energy industry, including positions as CEO of Minden Oil & Gas,Inc., a public exploration and production company, and investment bankingpositions with Graber, Miller, Ronn & Co. and Charterhouse Japhet. He beganhis career with Exxon Corporation. Mr. Miller holds a master’s degree in businessadministration fromNorthwestern University and a B.S. in Chemistry, with a minor in PetroleumEngineering, from Stanford University. Mr. Miller serves as Chairman of theCompany’s Nominating Committee.

**Dennis G. Strauch, Director.**  Mr. Strauch became a Director of BPZ in July2005. Mr. Strauch has served since 2001 as Managing General Partner of DelmarHoldings, LP, a private firm which manages U.S. oil and gas properties. From

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1992 to2001, Mr. Strauch held various positions, including President and CEO, withZarara Oil and Gas Limited and its predecessors. Zarara, a publicly tradedcompany in the US and UK, had international oil and gas operations in Africa,the Middle East, the Far East and South America. Mr. Strauch has over 30 yearsexperience in the oil and gas industry with extensive international anddomestic technical experience in the areas of acquisitions, reservoirengineering and economic evaluations. He began his career with Schlumberger andhas served in senior management and technical positions with ARAMCO,Petro-Lewis, Whiting Petroleum and Geodyne Resources. Mr. Strauch holds a master’s degree in businessadministrationfrom the University of Denver and a degree in Geophysics from the ColoradoSchool of Mines. Mr. Strauch is a Registered Professional Engineer in the Stateof Colorado. Mr. Strauch serves as Chairman of the Company’s CompensationCommittee.

**The Audit Committee**

The Company’s standing Audit Committee of the Board ofDirectors consists of John J. Lendrum, III, E. Barger Miller, III, and DennisG. Strauch.  The Audit Committeeoperates pursuant to a written charter which is available on the Company’swebsite at *www.bpzenergy.com/corporate_governance.html*.In accordance with the American Stock Exchange listing standards, the charteraddresses the purpose, duties and responsibilities of the Audit Committee.

The Board hasdetermined that all of the members of the Audit Committee meet the AmericanStock Exchange standards of independence and financial literacy, and the SEC’srequirements with respect to independence of listed company audit committeemembers. The Board has determined that at least one member of the AuditCommittee, John J. Lendrum, III, meets the SEC’s definition of an “auditcommittee financial expert.”

**Section 16(a) -Beneficial Ownership Reporting Compliance**

Section 16(a) ofthe Securities and Exchange Act of 1934, as amended, requires our officers anddirectors, as well as persons who own more than ten percent (10%) of aregistered class of the Company’s equity securities to file initial reports ofbeneficial ownership on Form 3 and changes in ownership on Forms 4 or 5with the SEC.  Such executive officers,directors and 10% shareholders are also required by SEC rules to furnishthe Company with copies of all Section 16(a) forms they file.

To our knowledge, allreports which were required to be filed pursuant to Section 16(a) ofthe Exchange Act for the year ended December 31, 2006 were filed on a timelybasis, except for Randall D. Keys, John J. Lendrum, E. Barger Miller and DennisG. Strauch, who each filed a late Form 4 to report a grant of stock or options.

**Code of Ethics**

The Company has adopted acode of ethics for its executive officers (the “Code of Ethics”) that relatesto standards that are reasonably designed to deter wrongdoing and to promote:

(1)                                  Honestand ethical conduct, including the ethical handling of actual or apparentconflicts of interest between personal and professional relationships;

(2)                                  Full,fair, accurate, timely and understandable disclosure in reports and documentsthat are filed with, or submitted to, the SEC and in other publiccommunications made by an issuer;

(3)                                  Compliancewith applicable governmental laws, rules and regulations;

(4)                                  Theprompt internal reporting of violations of the code to an appropriate person orpersons identified in the code; and

(5)                                  Accountabilityfor adherence to the code.

The Company’s Codeof Ethics for executive officers is available as Exhibit 14.1 to Form 10-KSB/Afor the year ended December 31, 2005, filed with the SEC on September 26, 2006and is also available on the Company’s website at *www.bpzenergy.com/corporate_governance.html*.

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**ITEM 11.**                      EXECUTIVE COMPENSATION

**CompensationDiscussion and Analysis**

***CompensationObjectives***

The primary objectives of the Company’s executivecompensation program are to attract and retain key executives, to stimulatemanagement’s efforts on our behalf in a way that supports our business plan andto align management’s incentives with the long-term interests of the Companyand its shareholders.  Decisions on salary adjustments and compensationawards for executive officers have been made by the entire Board ofDirectors.  Because of the early stage of our activities since the merger,the Compensation Committee has not met separately from the Board of Directorsto review salary adjustments and compensation awards since its formation inAugust 2005.  Beginning in 2007, the Compensation Committee willseparately review the compensation and benefits of our executive officers,establish and review general policies related to our compensation and benefitsand administer the BPZ Energy, Inc. 2005 Long-Term Incentive Compensation Plan(the “LTIP” or “Plan”).

Board meetings involving consideration of compensationadjustments and awards for executive officers typically have included, for allor a portion of each meeting, not only the board members but also our chiefexecutive officer and our principal financial officer.  For compensationdecisions relating to executive officers other than our chief executive officerand principal financial officer, the chief executive officer and principalfinancial officer typically make recommendations and review them with thechairman of the Compensation Committee and the other members of thecommittee.  The Board of Directors, in conjunction with input from theCompensation Committee members, then considers the recommendations from thechief executive officer and principal financial officer.

The Company has engaged the Achilles Group as itsindependent human resources consultants.  The recommendations from thechief executive officer and principal financial officer on the base salary ofexecutive officers is based upon a report prepared by the Achilles Group thatcompares the base salary of our executive officers to the market range of basesalaries for executives in companies of similar size and industry.

Under Section 162(m) of the Tax Code, compensation inexcess of $1 million paid to a chief executive officer or to any of the fourother most highly compensated officers generally cannot be deducted. TheCompensation Committee has determined the Company’s compensation practices andpolicies are not currently affected by this limitation.

***Elements of Compensation***

The Company’s executive compensation program consistsof the following basic components: base salary, long-term incentives pursuantto the BPZ Energy, Inc. LTIP, limited perquisites and in some cases a cashbonus.  Each component of the compensation program serves a particularpurpose.  Base salary is primarily designed to reward current and pastperformance, and may be adjusted from time to time to realign salaries withmarket levels.  Cash bonuses may also be granted to reward individual contributionsand superior job performance.  Grants of long-term incentives areprimarily designed to tie a portion of each executive’s compensation tolong-term future performance.  In addition, executives participate in thebenefit plans and programs that are generally available to all employees of theCompany.  Although our Board does review total compensation, we do notbelieve that significant compensation derived from one component ofcompensation should negate or reduce compensation from another component.

*BaseSalary.*  The Board of Directors and CompensationCommittee reviews the base salary of each executive officer. In determining theappropriate level of compensation for each executive officer, the Board basedon the recommendation of the Compensation Committee, evaluates the executive’sperformance as it relates the Company’s goals, objectives and strategicbusiness plan and reviews the report from the Company’s consultants oncompensation data from similar companies.

*Long-TermIncentive Compensation.*  In determining the long-termincentive component of our executive officers’ compensation in 2006, the Boardof Directors based on the recommendation of the Compensation Committee,reviewed the equity compensation of each employee, including executiveofficers, made adjustments as appropriate so that employees within the samelevel of the Company had a comparable equity stake in the Company.  Ourexecutive officers are eligible to receive awards under the Company’sLTIP.  The LTIP permits the Board of Directors to award eligibleemployees, directors and consultants with incentive options, non-statutorystock options, stock appreciation rights, restricted stock grants, stock grantsand performance shares. Awards to executive officers under the LTIP havegenerally consisted of restricted stock grants, incentive options or acombination thereof.

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The LTIP permits the Board of Directors to awardeligible employees, directors and consultants with incentive-based andnon-incentive-based compensation. The maximum number of shares of stock of theCompany that may be subject to incentives under the Plan, including withoutlimitation incentive options, is 4,000,000 shares, and such shares shall bereserved at all times until issued under the Plan. Of such amount, no more than1,600,000 shares in the aggregate shall be eligible for the issuance ofperformance shares, stock grants, restricted stock grants and other stock-basedincentives. The LTIP will be administered and managed within the discretion ofCompensation Committee of the Company or, in the absence of such committee, bythe Board of Directors. Incentives under the LTIP may be granted to eligibleemployees, directors or consultants in any one or a combination of incentiveoptions, non-statutory stock options, stock appreciation rights, restrictedstock grants, stock grants and performance shares. As of December 31, 2006,there were 1,156,000 shares available to be granted by the Company under theLTIP.

*CashBonus*.  The Board of Directors may determine to awardcash bonuses to our executive officers based upon exceptional performance,although it has done so in limited circumstances due to the early stage of theCompany’s business.

*Perquisites.* We generally limit the perquisites that we make available to our executive officers. With the exception of Mr. Briens, Chief Operation Officer, perquisites toexecutive officers consist only of club membership fees, which are primarilyrelated to business purposes.  The additional perquisites received by Mr.Briens, identified in the footnotes to the Summary Compensation Table, relateto his overseas assignment.

*OtherCompensation.*  Executive officers are eligible toparticipate in all of our employee benefit plans, such as a medical, dental andlife insurance plan with 80% of the premium paid by the Company, and a 401(k)plan with Company matching contributions up to 5% of the employee’s salary, ineach case on the same basis as other employees.

***CompensationPolicies***

*Effectof Accounting and Tax Treatment. *On January 1, 2006,the Company adopted SFAS No. 123—Revised 2004, Share-Based Payment (“SFAS123(R)”), which establishes accounting for stock-based payment transactions foremployee services and goods and services received from non-employees. SFAS123(R) is a revision of SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS123”), and supersedes APB No. 25, Accounting for Stock Issued to Employees.Under the provisions of SFAS 123(R), stock-based compensation cost is measuredat the date of grant, based on the calculated fair value of the award, and isrecognized as expense over the employee’s or non-employee’s service period,which is generally the vesting period of the equity grant.  Because theCompany offers incentive stock options, non-qualified stock options and restrictedstock grants, the deductibility of a compensation award by the Company may notalways occur at the time the award is otherwise taxable to the employee.

*TimingIssues. *With the exception of significant promotionsand new hires, we intend to review equity compensation awards annuallyfollowing the availability of the financial results for the prior year. Grants were made in April 2006 for the last fiscal year. This timing enables usto consider prior year performance by the Company and the potential recipientsand our expectations for the current year. Grants to newly hired employees areeffective on the latter of the employee’s first day of employment or uponapproval of the grant by the Board of Directors.  The exercise price ofstock options is based upon the grant date fair market value, which is themarket price of our common stock on the date of grant**.**

*StockOwnership Guidelines. *The Board has not adoptedspecific stock ownership guidelines for executive officers.  Under theterms of the LTIP, however, in any given year, no individual may receiveincentives covering more than 15% of the aggregate number of shares which maybe issued pursuant to the LTIP. Except as may otherwise be permitted by the TaxCode, incentive options granted to an individual during one calendar year shallbe limited, such that at the time the incentive options are granted, the FairMarket Value (as defined in the LTIP) of the stock covered by all incentiveoptions first exercisable in any calendar year may not, in the aggregate,exceed $100,000. The maximum performance-based incentive payment to any oneindividual during one performance period is 15% of the aggregate number ofshares that may be issued pursuant to the LTIP, or if paid in cash, that numberof shares multiplied by the Fair Market Value of the stock as of the date theincentive is granted.

*Basisfor Allocation between LTIP Incentives. *Our LTIPexpressly provides for incentives to be granted to LTIP participants in theform of any one or a combination of (a) incentive options (or other statutorystock options); (b) nonstatutory stock options; (c) stock appreciation rights;(d) restricted stock grants; (e) performance shares; (f) stock grants; and (g)other stock-based incentives.  Given the recent change in the accountingtreatment for stock options changed as a result of SFAS 123R, we have concludedthat granting shares of restricted stock to employees, particularly members ofsenior management, would provide an equally motivating form of incentivecompensation while permitting us to issue fewer shares, thereby reducingpotential dilution.

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*Exerciseof Discretion*.  Pursuant to the LTIP, the CompensationCommittee retains limited discretion in connection with the payment ofperformance based compensation in cases where the defined performance goalshave not been met.    The Compensation Committee also retainsdiscretion to accelerate the vesting of unvested incentives upon an individual’stermination of employment with the Company.  The Compensation Committeedid not exercise this discretion in 2006.

*Adjustmentor Recovery of Awards upon Restatement of Company Performance*. The Company does not have a formal policy with respect to whether executiveofficers are required to return cash and equity incentive awards if therelevant performance targets upon which the awards are based are ever restatedor otherwise adjusted in a manner that would reduce the size of an award orpayment.  Under the LTIP, however, in determining the actual size of anperformance-based incentives, the Compensation Committee may reduce oreliminate the amount of the performance-based incentives earned over therelevant period, if, in its sole and absolute discretion, such reduction orelimination is appropriate.

***ChiefExecutive Officer Compensation***

Effective October 1, 2006, Mr. Zúñiga-Pflückerreceives a base salary of $180,000.  Mr. Zúñiga-Pflücker, as a formershareholder of BPZ-Texas, is entitled to receive earn-out shares on theachievement of certain reserve and production goals under the terms of theMerger Agreement.  The Board has therefore not made a separate grant oflong-term incentive awards to Mr. Zúñiga-Pflücker.

***Compensation Committee Report***

The Compensation Committee has reviewed and discussedthe Compensation Discussion and Analysis included in this report withmanagement.  Based on the CompensationCommittee’s review of and discussions with management with respect to theCompensation Discussion and Analysis, the Compensation Committee hasrecommended to the Board of Directors that the Compensation Discussion andAnalysis be included in this report.

Submittedby the Compensation Committee of the Board of Directors.
|        | * * | *Dennis G.  Strauch — Chairman of the Compensation Committee* |
|--------|----------|--------------------------------------------------------------------|
|   | * * | *E. Barger  Miller, III*                                           |
|   | * * | *Gordon Gray*                                                      |

 

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**Summary Compensation Table**

The following table sets forth the compensation forservices in all capacities to the Company for the fiscal year ended December31, 2006 of the chief executive officer, the chief financial officer and thethree most highly compensated executive officers.
| **Name and Principal Position**                                                | ** ** | **Year**   | ** ** | **Salary** | ** ** | **Bonus**  | ** ** | **Stock  Awards(3)** | ** ** | **Option  Awards(3)** | ** ** | **All Other  Compensation  (4)** | ** ** | **Total**  | ** ** |
|-----------------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|----------------------|------------|-----------------------|------------|---------------------------------------|------------|------------|------------|
| ** **                                                                                    | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **           | ** ** | ** **            | ** ** | ** **                            | ** ** | ** ** | ** ** |
| Manuel Pablo  Zúñiga-Pflücker*President, Chief Executive Officer and Director* |       | 2006       |       | $135,000   |       | $—    |       | $—              |       | $—               |       | $2,472                                |       | $137,472   |       |
| * *                                                                                      | * *   | * *   | * *   | * *   | * *   | * *   | * *   | * *             | * *   | * *              | * *   | * *                              | * *   | * *   | * *   |
| Frederic Briens*Chief Operating Officer*                                                      |       | 2006       |       | 120,000    |       | —     |       | 698,824              |       |                  |       | 113,344                               |       | 932,168    |       |
| * *                                                                                      | * *   | * *   | * *   | * *   | * *   | * *   | * *   | * *             | * *   | * *              | * *   | * *                              | * *   | * *   | * *   |
| Edward G. Caminos (1)*Vice President Finance - Chief Accounting Officer*                      |       | 2006       |       | 115,034    |       | 20,000     |       | 181,936              |       | 76,482                |       | 1,919                                 |       | 395,371    |       |
| * *                                                                                      | * *   | * *   | * *   | * *   | * *   | * *   | * *   | * *             | * *   | * *              | * *   | * *                              | * *   | * *   | * *   |
| Randall D. Keys (2)*Former Chief Financial Officer*                                           |       | 2006       |       | 60,000     |       | —     |       | 315,651              |       | —                |       | 305                                   |       | 375,956    |       |
| * *                                                                                      | * *   | * *   | * *   | * *   | * *   | * *   | * *   | * *             | * *   | * *              | * *   | * *                              | * *   | * *   | * *   |
| Dr. Fernando Zúñiga y Rivero*Director and Chairman of the Board*                    |       | 2006       |       | 120,000    |       | —     |       | —               |       | —                |       | 979                                   |       | 120,979    |       |

----

(1)             Mr.Caminos was appointed Vice President Finance and Chief Accounting Officer ofthe Company, effective October 30, 2006. Mr. Caminos served asinterim Chief Financial Officer from June 15, 2006 until October 30, 2006and as Corporate Controller of the Company from January 2005 until October30, 2006.

(2)             Mr. Keysresigned from all positions with the Company and its subsidiaries effectiveJune 15, 2006.

(3)             Allstock awards and option reported under these columns were issued under the 2005Long Term Incentive Compensation Plan.

(4)             Exceptfor Mr. Briens, amounts paid are for club membership dues.  Mr. Briensreceives additional compensation under the Company’s expatriate package whileworking in Peru, which includes school allowance; family travel expenses ofapproximately $14,400; income tax paid on Mr. Briens’ behalf of approximately$40,113; and house rent, maintenance and utilities of approximately $58,831.

7

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**2006 Grants ofPlan-Based Awards**

The following table sets forth certain informationwith respect to each grant of an award made to a named executive officer in2006 under our plans.
| ** **                                   | ** ** | ** **          | ** ** | **Estimated Future Payouts Under** | ** ** | ** ** | ** ** | ** **  | ** ** | ** **                 | ** ** | ** **           | ** ** |
|----------------------------------------------|------------|---------------------|------------|---------------------------------------------------|------------|------------|------------|-------------|------------|----------------------------|------------|----------------------|------------|
| ** **                                   | ** ** | ** **          | ** ** | **Equity Incentive Plan Awards**   | ** ** | ** ** | ** ** | ** **  | ** ** | ** **                 | ** ** | ** **           | ** ** |
| ** **                                   | ** ** | ** **          | ** ** | ** **                                        | ** ** | ** ** | ** ** | ** **  | ** ** | **All Other**         | ** ** | ** **           | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                   | ** ** | ** **          | ** ** | ** **                                        | ** ** | ** ** | ** ** | ** **  | ** ** | **Stock**                  | ** ** | ** **           | ** ** | ** ** | ** ** | **Grant Date** | ** ** |
| ** **                                   | ** ** | ** **          | ** ** | ** **                                        | ** ** | ** ** | ** ** | ** **  | ** ** | **Awards:**                | ** ** | **Awards:**          | ** ** | **Exercise or** | ** ** | **Fair Value** | ** ** |
| ** **                                   | ** ** | ** **          | ** ** | ** **                                        | ** ** | ** ** | ** ** | ** **  | ** ** | **Number of**         | ** ** | **Number of**   | ** ** | **Base** | ** ** | **And Stock** | ** ** |
| ** **                                   | ** ** | ** **          | ** ** | ** **                                        | ** ** | ** ** | ** ** | ** **  | ** ** | **Shares of**         | ** ** | **Securities**       | ** ** | **Price of** | ** ** | **and** | ** ** |
| ** **                                   | ** ** | ** **          | ** ** | **Threshold**                                     | ** ** | **Target** | ** ** | **Maximum** | ** ** | **Stock**                  | ** ** | **Underlying**       | ** ** | **Option** | ** ** | **Option** | ** ** |
| **Name**                                     | ** ** | **Grant Date** | ** ** | **(1)($)**                                        | ** ** | **(1)($)** | ** ** | **(1)($)**  | ** ** | **or Units (2)** | ** ** | **Options (3)** | ** ** | **Awards (4)($)** | ** ** | **Awards (5)($)** | ** ** |
| Manuel Pablo  Zúñiga-Pflücker |       | **—**          |       | **—**                                        |       | **—** |       | **—**  |       | **—**                 |       | **—**           |       | **—** |   | **—** |   |
|                                         |       |                |       |                                              |       |       |       |        |       |                       |       |                 |       |   |   |   |   |
| Frederic Briens                              |       | —              |       | —                                            |       | —     |       | —      |       | —                     |       | —               |       | — |   | — |   |
|                                         |       |                |       |                                              |       |       |       |        |       |                       |       |                 |       |   |   |   |   |
| Edward G. Caminos                            |       | 4/14/2006           |       | —                                            |       | —     |       | —      |       | 20,000                     |       | —               |       | — |   | 64,000 |   |
|                                         |       |                |       |                                              |       |       |       |        |       |                       |       |                 |       |   |   |   |   |
|                                         |       | 4/14/2006           |       | —                                            |       | —     |       | —      |       | —                     |       | 100,000              |       | 3.20 |   | 214,000 |   |
|                                         |       |                |       |                                              |       |       |       |        |       |                       |       |                 |       |   |   |   |   |
|                                         |       | 10/1/2006           |       | —                                            |       | —     |       | —      |       | 35,000                     |       | —               |       | — |   | 159,250 |   |
|                                         |       |                |       |                                              |       |       |       |        |       |                       |       |                 |       |   |   |   |   |
|                                         |       | 10/29/2006          |       | 154,000                                           |       | 154,000    |       | 154,000     |       | —                     |       | —               |       | — |   | — |   |
|                                         |       |                |       |                                              |       |       |       |        |       |                       |       |                 |       |   |   |   |   |
| Randall D. Keys (6)                          |       | —              |       | —                                            |       | —     |       | —      |       | —                     |       | —               |       | — |   | — |   |
|                                         |       |                |       |                                              |       |       |       |        |       |                       |       |                 |       |   |   |   |   |
| Dr. Fernando  Zúñiga y Rivero      |       | —              |       | —                                            |       | —     |       | —      |       | —                     |       | —               |       | — |   | — |   |

----

(1)             AllNon-Equity Incentive Plan Award values are based on the closing market price onthe date of grant.

(2)             Allstock awards granted to the named individuals for 2006 cliff vest two yearsfollowing the grant date.

(3)             Alloptions granted to the named individuals for 2006 vest annually over a two yearvesting period.

(4)             Theexercise price is the closing price of BPZ Common Stock on the date of grant.

(5)             Thefair value of BPZ’s stock options is computed using the Black-Scholes valuationmodel.  The fair value of BPZ’s stock awards is computed as the marketprice of BPZ common stock on the date of the grant.

(6)             Mr.Keys resigned from all positions with the Company and its subsidiarieseffective June 15, 2006; thus his 225,000 unvested contingent incentive stockaward was forfeited.  On October 29, 2006, 190,000 shares of Mr. Keyscontingent incentive stock award were reissued to Mr. Caminos in conjunction withhis new role as Vice President - Finance and Chief AccountingOfficer.   The shares vest and are issuable once the Company isentitled to receive as its proportionate share from gross production from anyoil and gas wells owned or operated by the Company not less than 2,000 barrelsof oil per day or its equivalent (approximately 12 million cubic feet of gasper day) prior to December 28, 2007.

8

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**Outstanding EquityAwards At Fiscal Year-End**

The followingtable sets forth information regarding unexercised options, stock that has notvested and equity incentive plan awards for each named executive officeroutstanding as of December 31, 2006.
| ** **                                   | ** ** | **Option Awards** | ** ** | **Stock Awards** | ** ** |
|----------------------------------------------|------------|-------------------|------------|------------------|------------|
| ** **                                   | ** ** | ** **        | ** ** | ** **       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Equity** | ** ** |
| ** **                                   | ** ** | **Equity**        | ** ** | ** **       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Equity** | ** ** | **Incentive** | ** ** |
| ** **                                   | ** ** | **Incentive**     | ** ** | ** **       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Incentive** | ** ** | **Plan** | ** ** |
| ** **                                   | ** ** | **Plan**          | ** ** | ** **       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Plan** | ** ** | **Awards:** | ** ** |
| ** **                                   | ** ** | **Awards:**       | ** ** | ** **       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **Awards:** | ** ** | **Market or** | ** ** |
| ** **                                   | ** ** | **Number**        | ** ** | ** **       | ** ** | ** ** | ** ** | ** ** | ** ** | **Market** | ** ** | **Number of** | ** ** | **Payout Value** | ** ** |
| ** **                                   | ** ** | **of**            | ** ** | ** **       | ** ** | ** ** | ** ** | **Number of** | ** ** | **Value of** | ** ** | **Unearned** | ** ** | **of Unearned** | ** ** |
| ** **                                   | ** ** | **Securities**    | ** ** | ** **       | ** ** | ** ** | ** ** | **Shares or** | ** ** | **Shares or** | ** ** | **Shares, Units** | ** ** | **Shares, Units** | ** ** |
| ** **                                   | ** ** | **Underlying**    | ** ** | ** **       | ** ** | ** ** | ** ** | **Units of** | ** ** | **Units of** | ** ** | **or Other** | ** ** | **or Other** | ** ** |
| ** **                                   | ** ** | **Unexercised**   | ** ** | **Option**       | ** ** | **Option** | ** ** | **Stock That** | ** ** | **Stock That** | ** ** | **Rights That** | ** ** | **Rights That** | ** ** |
| ** **                                   | ** ** | **Unearned**      | ** ** | **Exercise**     | ** ** | **Expiration** | ** ** | **Have Not** | ** ** | **Have Not** | ** ** | **Have Not** | ** ** | **Have Not** | ** ** |
| **Name**                                     | ** ** | **Options ($)**   | ** ** | **Price ($)(1)** | ** ** | **Date** | ** ** | **Vested($)** | ** ** | **Vested($)(2)** | ** ** | **Vested($)** | ** ** | **Vested($)(2)** | ** ** |
| Manuel Pablo  Zúñiga-Pflücker |       | —            |       | —           |       | —(4) |   | 1,399,477 |   | 5,737,856 |   | — |   | — |   |
|                                         |       |              |       |             |       |   |   |   |   |   |   |   |   |   |   |
| Frederic Briens                              |       | —            |       | —           |       | —(4) |   | 282,780 |   | 1,159,398(5) |   | 300,000 |   | 1,230,000 |   |
|                                         |       |              |       |             |       |   |   |   |   |   |   |   |   |   |   |
| Edward G.  Caminos(3)                        |       | 100,000           |       | 3.20             |       | 4/14/2016(4) |   | 225,000 |   | 922,500(6) |   | 90,000 |   | 369,000 |   |
|                                         |       |              |       |             |       |   |   |   |   |   |   |   |   |   |   |
| Randall D. Keys                              |       | —            |       | —           |       | — |   | — |   | — |   | — |   | — |   |
|                                         |       |              |       |             |       |   |   |   |   |   |   |   |   |   |   |
| Dr. Fernando Zúñiga y  Rivero      |       | —            |       | —           |       | —(4) |   | 1,399,477 |   | 5,737,856 |   | — |   | — |   |

----

(1)             Optionexercise price is computed as the closing price of BPZ common stock on the dateof grant.

(2)             Themarket or payout value is computed using the closing price of BPZ common stockat December 29, 2006.

(3)             Options vest in two equal annualinstallments beginning on the first anniversary of the date of grant, April 14, 2006.

(4)             Stockawards vest and the earn-out shares are issuable once the Company is entitledto receive as its proportionate share from gross production from any oil andgas wells owned or operated by the Company not less than 2,000 barrels of oilper day or its equivalent (approximately 12 million cubic feet of gas per day)prior to December 28, 2007.

(5)             Stock awards vest in three equalannual installments beginning on the first anniversary of the date of grant,May 16, 2005.

(6)             Stockawards cliff vest two years from the date of grant.  35,000 shares vest on May 16, 2007, 20,000shares vest on April 14, 2008 and 35,000 shares vest on October 1, 2008.

9

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**Option Exercisesand Stock Vested**

The followingtable sets forth information regarding exercise of stock options and vesting ofstock for each of the named executive officers during 2006.  There were no exercises of stock options byour named executive officers in 2006.
| ** **                                   | ** ** | **Stock Awards**                                          | ** ** |
|----------------------------------------------|------------|----------------------------------------------------------------|------------|
| **Name**                                     | ** ** | **Number of  Shares  Acquired on  Vesting (1)** | ** ** | **Value Realized  on Vesting  ($)** | ** ** |
|                                         |       |                                                           |       |   |   |
| Manuel Pablo  Zúñiga-Pflücker |       | —                                                         |       | — |   |
|                                         |       |                                                           |       |   |   |
| Frederic Briens                              |       | 150,000                                                        |       | 423,000 |   |
|                                         |       |                                                           |       |   |   |
| Edward G.  Caminos                           |       | 35,000                                                         |       | 98,700 |   |
|                                         |       |                                                           |       |   |   |
| Randall D.  Keys(2)                          |       | 150,000                                                        |       | 423,000 |   |
|                                         |       |                                                           |       |   |   |
| Dr. Fernando Zúñiga y  Rivero      |       | —                                                         |       | — |   |

----

(1)             Representsrestricted shares granted on May 15, 2005 of which Mr. Briens and Mr. Keys weregranted 450,000 shares vesting annually over a three year period and Mr.Caminos was granted 70,000 shares vesting annually over a two year period.

(2)             Mr. Keysresigned from all positions with the Company and its subsidiaries effectiveJune 15, 2006.  Consequently, theremaining unvested portion of his award, 300,000 shares, was forfeited.

**DirectorCompensation**

There arecurrently no arrangements to pay any cash compensation, such as annual retaineror meeting fees to Directors. Directors who are also employees of the Companyreceive no additional compensation for serving as directors or committeemembers. Non-employee directors are entitled to receive reimbursement forreasonable direct expenses incurred in attending meetings of the Board ofDirectors. During 2006, there were no payments of director fees to any of theDirectors. In June 2006, the Company approved a grant of 250,000 common stockoptions, vesting annually over two years from the date of grant, to each of theCompany’s three independent directors, Messrs. Lendrum, Miller andStrauch.  The following table sets forththe compensation of the Company’s directors for the last completed fiscal year.
| Name                                         | ** ** | **Fees  Earned or  Paid in  Cash  ($)** | ** ** | **Stock  Awards  ($)** | ** ** | **Option  Awards  ($)** | ** ** | **All Other  Compensation  ($)** | ** ** | **Total  ($)** | ** ** |
|----------------------------------------------|------------|---------------------------------------------------|------------|------------------------|------------|-------------------------|------------|---------------------------------------|------------|----------------|------------|
|  Dr. Fernando Zúñiga y Rivero |       | —                                            |       | —                 |       | —                  |       | —                                |       | —         |       |
|                                         |       |                                              |       |                   |       |                    |       |                                  |       |           |       |
| Manuel Pablo  Zúñiga-Pflücker |       | —                                            |       | —                 |       | —                  |       | —                                |       | —         |       |
|                                         |       |                                              |       |                   |       |                    |       |                                  |       |           |       |
| Gordon Gray                                  |       | —                                            |       | —                 |       | —                  |       | —                                |       | —         |       |
|                                         |       |                                              |       |                   |       |                    |       |                                  |       |           |       |
| John J. Lendrum,  III                        |       | —                                            |       | —                 |       | 144,734                 |       | —                                |       | 144,734        |       |
|                                         |       |                                              |       |                   |       |                    |       |                                  |       |           |       |
| E. Barger  Miller, III                       |       | —                                            |       | —                 |       | 144,734                 |       | —                                |       | 144,734        |       |
|                                         |       |                                              |       |                   |       |                    |       |                                  |       |           |       |
| Dennis G. Strauch                            |       | —                                            |       | —                 |       | 144,734                 |       | —                                |       | 144,734        |       |

 

**EmploymentAgreements, Termination of Employment and Change in Control Arrangements**

We have no employment agreements with any of our executiveofficers. Effective October 1, 2006, Mr. Zúñiga-Pflücker receives a base salaryof $180,000. At January 1, 2006, Mr. Caminos received a base salary of$115,000.  On October 1, 2006, Mr. EdwardCaminos received a base salary increase to $150,000.  Each of our other named executive officersreceives a base salary of $120,000.  Eachof our named executive officers is eligible for cash bonus compensation at

10

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thediscretion of the Board of Directors, but there is no formal plan covering suchbonuses, nor were any bonuses paid for the fiscal year ended December 31,2005.  To date, the Board of Directorshas not made a formal decision with regard to any bonus compensation for theyear ended December 31, 2006.

Under the Company’sLTIP, in the event of a change of control of the Company (as defined in thatplan), all outstanding options and restricted stock become immediatelyexercisable in full.  In addition, in theevent of a change of control, all performance shares or other performance-basedawards shall be immediately payable based upon the extent, as determined by theCompensation Committee, to which the performance goals for the performanceperiod then in progress have been met up through the date of the change incontrol or based on 100% of the value on the date of grant of the performanceshares of other performance-based award, if such amount is higher.

**Compensation Committee Interlocks and Insider Participationin Compensation Decisions**

Messrs. Strauch,Miller and Gray serve on the Compensation Committee of our Board, all of whomare “independent” under the standards of the American Stock Exchange. None of the members of the Compensation Committee was at any time during thelast fiscal year an officer or employee of the Company.  No executive officer of the Company serves asa member of the board of directors or compensation committee of any otherentity that has one or more executive officers serving as a member of our Boardof Directors or Compensation Committee.

11

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**ITEM 12.**             SECURITY OWNERSHIP OFCERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS

The following table sets forth information as of March 31,2007, except as otherwise set forth below, concerning the beneficial ownershipof the Company’sCommon Stock by each person who beneficially owns more than five percent (5%)of the Common Stock, its affiliates, and by each of the Company’s executive officers anddirectors, and by all executive officers and directors as a group.
| **Name and Address of Beneficial Owner(1)** | ** ** | **Number of Shares of  Common Stock  Beneficially Owned** | ** ** | **Percent of Beneficial  Ownership (2)** | ** ** |
|----------------------------------------------------------------------|------------|------------------------------------------------------------------------------------|------------|---------------------------------------------------------|------------|
| Gordon Gray (3)                                                      |       | 3,710,774                                                                          |       | 5.4                                                     | %          |
| Manuel Pablo Zúñiga-Pflücker                          |       | 3,304,539                                                                          |       | 4.9                                                     | %          |
| Fernando Zúñiga y Rivero (4)                               |       | 1,699,477                                                                          |       | 2.5                                                     | %          |
| Frederic Briens (5)                                                  |       | 412,348                                                                            |       | 0.6                                                     | %          |
| Edward G. Caminos (6)                                                |       | 120,000                                                                            |       | 0.2                                                     | %          |
| Edward Gilliard (7)                                                  |       | —                                                                             |       | —                                                  |       |
| Dennis G. Strauch                                                    |       | 25,000                                                                             |       | 0.0                                                     | %          |
| John J. Lendrum, III                                                 |       | —                                                                             |       | —                                                  |       |
| E. Barger Miller, III                                                |       | —                                                                             |       | —                                                  |       |
| All directors and executive officers as a group (nine  persons)      |       | 9,272,138                                                                          |       | 13.6                                                    | %          |
|                                                                 |       |                                                                               |       |                                                    |       |
| International Finance Corporation (8)                                |       | 6,500,000                                                                          |       | 9.5                                                     | %          |
| 2121  Pennsylvania Avenue, N.W.                                      |       |                                                                               |       |                                                    |       |
| Washington, DC  20433                                                |       |                                                                               |       |                                                    |       |
|                                                                 |       |                                                                               |       |                                                    |       |
| Wellington Management Company, LLP (9)                               |       | 6,259,016                                                                          |       | 9.2                                                     | %          |
| 75 State Street                                                      |       |                                                                               |       |                                                    |       |
| Boston, MA 02109                                                     |       |                                                                               |       |                                                    |       |
|                                                                 |       |                                                                               |       |                                                    |       |
| Allied Crude Purchasing, Inc. (3)                                    |       | 3,710,774                                                                          |       | 5.4                                                     | %          |
| 3900 West  Highway 180                                               |       |                                                                               |       |                                                    |       |
| Snyder, TX 79549                                                     |       |                                                                               |       |                                                    |       |

----

(1)             Exceptas indicated herein, the business address for each beneficial owner is 580Westlake Park Blvd, Suite 525, Houston, Texas 77079.

(2)             Thecalculations of percentage beneficial ownership are based on 54,497,869 sharesissued as of March 31, 2007, plus any potentially dilutive securities for eachperson or group.

(3)             Theshares reflected above as beneficially owned by Mr. Gray consist of 3,710,774shares that he beneficially owns and controls through his sole ownership ofAllied Crude Purchasing, Inc.

(4)             Thenumber of shares reflected above as beneficially owned by Dr. Zúñiga yRivero does not include 158,595 shares held of record by his wife, BlancaPflücker de Zúñiga, as Dr. Zúñiga y Rivero disclaims beneficial ownershipof these shares and (ii)1,605,062 shares held in grantor retained annuitytrusts.

(5)             Theshares reflected above include 150,000 shares of restricted stock that willvest on May 16, 2007.

(6)             AppointedVice President—Finance and Chief Accounting Officer effective October 30,2006.  The shares reflected above include35,000 shares of  restricted stock thatwill vest on May 16, 2007 and options to purchase 50,000 shares of commonstock.

(7)             AppointedVice President—Finance and Treasurer effective October 30, 2006.

(8)             Allinformation in the table with respect to International Finance Corporation (“IFC”) is basedsolely on the Schedule 13G filed by IFC with the SEC on December 28, 2006.

(9)             Allinformation in the table with respect to Wellington Management Company, LLP is based solely oninformation provided to the Company by Wellington Management Company, LLP.

12

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Rule 13d-3under the Securities Exchange Act of 1934, provides for the determination ofbeneficial owners of securities. That rule includes as beneficial owners ofsecurities, any person who directly or indirectly has, or shares, voting powerand/or investment power with respect to such securities. Rule 13d-3 alsoincludes as a beneficial owner of a security any person who has the right toacquire beneficial ownership of such security within sixty days through anymeans, including the exercise of any option, warrant or conversion of asecurity. Any securities not outstanding which are subject to such options,warrants or conversion privileges are deemed to be outstanding for the purposeof computing the percentage of outstanding securities of the class owned bysuch person. Those securities are not deemed to be outstanding for the purposeof computing the percentage of the class by any other person. Included in thistable are only those derivative securities that have exercise prices which itis reasonable to believe could be “in the money” within the next sixty days.

**ITEM 13.**             CERTAIN RELATIONSHIPSAND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

**Transactions withRelated Persons**

There have been no transactions, since the beginning of the Company’slast fiscal year, or any currently proposed transactions, in which the Companywas or is to be a participant and the amount involved exceeds $120,000, and inwhich any director or executive officer or any security holder who is known tothe Company to own of record or beneficially more than 5% of the Company’sCommon Stock, or any member of the immediate family of any of the foregoingpersons, had a material interest.

**Review, Approvalor Ratification of Transactions with Related Persons**

As provided in the charter of the Company’s AuditCommittee, it is the Company’s policy that it will not enter into anytransactions required to be disclosed under Item 404 of the SEC’s RegulationS-K unless the Audit Committee or another independent body of the Board ofDirectors first reviews and approves the transactions.

In addition, pursuant to the Company’s Code of EthicalConduct and Business Practices, all employees, officers and directors of theCompany and its subsidiaries are prohibited from engaging in any relationshipor financial interest that is an actual or potential conflict of interest withthe Company without approval.  Employees,officers and directors are required to provide written disclose to the ChiefExecutive Officer as soon as they have any knowledge of a transaction orproposed transaction with an outside individual, business or other organizationthat would create a conflict of interest or the appearance of one.

**DirectorIndependence**

We are subject tothe American Stock Exchange standards in determining whether a director isindependent. The Board of Directors considers John J. Lendrum, III, E. BargerMiller, III, Dennis G. Strauch and Gordon Gray “independent” under thestandards of the American Stock Exchange.  The Board of Directors hasestablished three committees: the Audit Committee, the Compensation Committee,and the Nominating Committee.  Allmembers of the Audit Committee are independent under the both the standards ofthe American Stock Exchange and Securities Exchange Commission rules andregulations pertaining to listed company audit committees. Although we are notrequired to have a separate Compensation Committee or Nominating Committee, wehave determined that it is in the best interests of the Company to maintain anindependent Compensation Committee and an independent Nominating Committee.  In addition to the independence standards ofthe American Stock Exchange, the Board of Directors considered stock ownershipin the Company in determining which directors are independent.

13

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**ITEM 14. PRINCIPALACCOUNTANT FEES AND SERVICES**

The following table lists the aggregate fees and costsbilled by Johnson Miller & Co., CPA’s PC for 2005 and 2006 servicesidentified below:
| ** **          | ** ** | **Amount Billed** | ** ** |
|---------------------|------------|------------------------|------------|
| ** **          | ** ** | **2006**               | ** ** | **2005** | ** ** |
|                |       |                   |       |   |   |
| Audit Fees          |       | $                      | 297,310    | (1)(2) | $ | 139,035 |   |
| Audit-Related  Fees |       | 37,233                 | (3)        | 9,027 | (3) |
| Tax Fees            |       | —                 |       | — |   |
| All Other Fees      |       | —                 |       | — |   |
| Total               |       | $                      | 334,543    |   | $ | 148,062 |   |

----

(1)             Ofthis aggregate amount, approximately $86,000 is attributable to fees billed byJohnson Miller & Co., CPA’s PC for services in connection with itsreview of our internal controls and approximately $40,000 is attributable toour S-1 registration statements.

(2)             Forfiscal years 2005 and 2004, Johnson Miller & Co., CPA’s PC did notprovide us with tax services or any other services.

(3)             Audit-relatedfees for 2006 and 2005 consist of out-of-pocket expenses.

The Board of Director’s policy is to prohibit theindependent auditor from providing any non-audit services unless the service ispermitted under applicable law and is pre-approved by the Audit Committee orthe full Board of Directors if there is no separate Audit Committee.

During the fiscal year ended December 31, 2006, theBoard of Directors approved all of the “audit-related fees.”  The Board of Directors considered whether theprovision of non-audit services by Johnson Miller & Co., CPA’s PC iscompatible with maintaining their independence and concluded that the provisionof such services does not impair their independence.

14

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**SIGNATURES**

Pursuant to therequirements of Section 13 or 15(d) of the Securities Exchange Act of1934, the Registrant has duly caused this Amendment No. 1 to Form 10-K to besigned on its behalf by the undersigned, thereunto duly authorized, on April24, 2007.
|        |   | BPZ Energy, Inc. |
|--------|--------|------------------|
|   |   |             |
|   |   |             |
|   |   | By:              | */s/ Manuel Pablo Zúñiga-Pflücker* |
|   |   |             | Manuel Pablo Zúñiga-Pflücker |
|   |   |             | President &  Chief Executive Officer |

 

S-1

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**INDEX OF EXHIBITS**
| Exhibit Number | ** ** | **Description**                                                                                                                                                                                                                                                                                                                            |
|----------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1            |       | Third Amended and Restated Articles of Incorporation  of BPZ Energy, Inc. (incorporated by reference to Exhibit 3.1 to  BPZ Energy, Inc.’s Registration Statement on Form SB-2 Amendment  No. 2 (SEC File No. 333-122816)).                                                                                  |
|           |       |                                                                                                                                                                                                                                                                                                                                       |
| 3.2            |       | Amended and Restated Bylaws (incorporated by  reference to Exhibit 3.2 to the Company’s Form SB-2 (SEC File  No. 333-14497) filed on October 18, 1996).                                                                                                                                                           |
|           |       |                                                                                                                                                                                                                                                                                                                                       |
| 3.3            |       | Amendment to Second Amended and Restated Articles of  Incorporation of Navidec, Inc. (incorporated by reference to  Exhibit 3.4 to the Company’s Form SB-2 (SEC File No. 333-122816)  filed on February 14, 2005).                                                                                           |
|           |       |                                                                                                                                                                                                                                                                                                                                       |
| 4.1            |       | Form of Certificate for Common Stock of BPZ  Energy, Inc., a Colorado corporation (incorporated by reference to  Exhibit 4.1 to the Company’s Form SB-2 (SEC File No. 333-122816)  filed on February 14, 2005).                                                                                         |
|           |       |                                                                                                                                                                                                                                                                                                                                       |
| 4.2            |       | BPZ Energy, Inc. 2005 Long-Term Incentive  Compensation Plan (incorporated by reference to Exhibit 4.1 to the Company’s  Form S-8 (SEC File No. 333- 126388) filed on July 5, 2005).                                                                                                                                             |
|           |       |                                                                                                                                                                                                                                                                                                                                       |
| 10.1           |       | Merger Agreement between Navidec, Inc. and  BPZ, Inc. dated July 8, 2004 (incorporated by reference to  Exhibit 10.1 from the Company’s Form 8-K filed July 13,  2004).                                                                                                                                 |
|           |       |                                                                                                                                                                                                                                                                                                                                       |
| 10.2           |       | Closing Agreement between Navidec, Inc. and  BPZ, Inc. dated September 8, 2004(incorporated by reference to  Exhibit 10.1 from the Company’s Form 8-K filed  September 14, 2004).                                                                                                                       |
|           |       |                                                                                                                                                                                                                                                                                                                                       |
| 10.3           |       | Business Consulting Agreement dated July 8,  2004 by and between BPZ Energy, Inc., a Colorado corporation, and Navidec  Financial Services, Inc., a Colorado corporation (incorporated by  reference to Exhibit 10.3 to the Company’s Form SB-2 (SEC  File No. 333-122816) filed on February 14, 2005). |
|           |       |                                                                                                                                                                                                                                                                                                                                       |
| 10.4           |       | License Contract from the Government of Peru for  Block Z-1 dated November 30, 2001 (incorporated by reference to  Exhibit 10.5 to the Company’s Form SB-2 (SEC File  No. 333-122816) filed on February 14, 2005).                                                                                           |
|           |       |                                                                                                                                                                                                                                                                                                                                       |
| 10.5           |       | Amendment to License Contract from the Government of  Peru for Block Z-1 dated February 3, 2005 (incorporated by  reference to Exhibit 10.5 of the Company’s Annual Report on Form 10-KSB  for the year ended December 31, 2004).                                                                                 |
|           |       |                                                                                                                                                                                                                                                                                                                                       |
| 10.6           |       | License Contract from the Government of Peru for  Block XIX dated December 12, 2003 (incorporated by reference to  Exhibit 10.6 to the Company’s Form SB-2 (SEC File  No. 333-122816) filed on February 14, 2005).                                                                                           |
|           |       |                                                                                                                                                                                                                                                                                                                                       |
| 10.7           |       | Technical Evaluation Agreement from the Government  of Peru for Area VI dated December 12, 2003 (incorporated by reference  to Exhibit 10.7 to the Company’s Form SB-2 (SEC File  No. 333-122816) filed on February 14, 2005).                                                                               |
|           |       |                                                                                                                                                                                                                                                                                                                                       |
| 10.8           |       | Promotional Technical Evaluation Agreement from the  Government of Peru for Area XVI dated December 12, 2003 (incorporated by  reference to Exhibit 10.8 to the Company’s Form SB-2 (SEC  File No. 333-122816) filed on February 14, 2005).                                                                  |
|           |       |                                                                                                                                                                                                                                                                                                                                       |
| 14.1           |       | Code of Ethics for Executive Officers (incorporated  by reference to Exhibit 14.1 to Form 10-KSB/A filed on September 26, 2006).                                                                                                                                                                                                           |
|           |       |                                                                                                                                                                                                                                                                                                                                       |
| 21.1           |       | Subsidiaries of the Registrant (previously filed).                                                                                                                                                                                                                                                                                         |
|           |       |                                                                                                                                                                                                                                                                                                                                       |
| 23.1           |       | Consent of Independent Registered Public Accounting  Firm (previously filed).                                                                                                                                                                                                                                                              |
| 31.1           |       | Certification of the Chief Executive Officer  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed  herewith).                                                                                                                                                                                                           |
|           |       |                                                                                                                                                                                                                                                                                                                                       |
| 31.2           |       | Certification of the Vice President — Finance and  Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley  Act of 2002. (filed herewith).                                                                                                                                                                        |

 

E-1

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| Exhibit Number | ** ** | **Description**                                                                                                                                                                                                           |
|----------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **     |       |                                                                                                                                                                                                                      |
| 32.1           |       | Certification of the Chief Executive Officer pursuant  to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002. (previously filed).                                     |
|           |       |                                                                                                                                                                                                                      |
| 32.2           |       | Certification of the Vice President — Finance and  Chief Accounting Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant  to Section 906 of the Sarbanes-Oxley Act of 2002. (previously  filed). |

 

E-2

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