With the recent offshore pre-salt oil discoveries in Brazil and the ongoing Colombian oil boom, oil exploration and production in South America is firmly on investors' radars. This has seen a number of micro and small-cap exploration and production companies commence operations in the region and the boom spread to neighboring Ecuador and Peru. One of these companies is BPZ Resources (BPZ), a small-cap oil exploration and production company operating in Peru and Ecuador and domiciled in the U.S. with its head office in Houston, Texas.
Investing in micro and small-cap oil exploration and production companies is fraught with risk for investors, typically because they lack the resources to weather a sustained fall in the oil price...