TIDMCAZA
RNS Number : 0589P
Caza Oil & Gas, Inc.
28 September 2011
September 28, 2011
Caza Oil & Gas, Inc.
CAZA OIL & GAS PROVIDES OPERATIONAL UPDATE
HOUSTON, TEXAS (Marketwire - September 28, 2011) - Caza Oil
& Gas, Inc. ("Caza" or the "Company") (TSX:CAZ) (AIM:CAZA), the
U.S. focused exploration, appraisal, development and production
company, is pleased to provide operational results for the San
Jacinto, Bongo, Windham and Hite Offset properties.
Operational Highlights
-- Caza increases its net, daily production by approximately 88%
over Second Quarter rates from 199 boe/d to approximately 374
boe/d;
-- Caza Elkins 3401 and 3402 wells producing combined, gross
rates of 219 bbl/d of oil and 356 Mcf/d of natural gas;
-- O.B. Ranch #1 and #2 wells producing combined, gross rates of
34 bbl/d of condensate and 661 Mcf/d of natural gas;
-- Caza 158 #1, 158 #2, 158 #3 and 162 #1 wells producing
combined, gross rates of 80 bbl/d of oil and 151 Mcf/d of natural
gas;
-- All near term wells remain fully funded.
San Jacinto Property, Midland County, Texas. As previously
announced, the Caza Elkins 3401 and 3402 wells reached target
depths of 11,854 feet and 11,852 feet respectively. Log data from
both wells indicated multiple potential pay sands for both oil and
gas in the Spraberry, Dean, Wolfcamp, Strawn, Atoka and
Mississippian formations. The wells were fracture stimulated in all
potential pays, except the Spraberry, which will be stimulated at a
later date, and have been flowing back frac fluids. The wells are
currently performing better than expected and the flow back is
still ongoing. Current gross producing rates for the 3401 well are
151 bbl/d of oil and 172 Mcf/d of natural gas. Current gross
producing rates for the 3402 well are 68 bbl/d of oil and 184 Mcf/d
of natural gas. Management is very pleased with these results, as
they have exceeded expectations to date and contributed to Caza's
increased production profile.
Caza has five additional proven undeveloped locations to drill
on the San Jacinto property, and plans to drill the next two wells
in the fourth quarter. The remaining three locations should be
drilled in the first and second quarters of 2012, subject to
production results and rig availability. Caza's net cost to drill
and complete each of the remaining wells is approximately $1.95MM
per well. Caza will update the market once drilling rigs have been
secured for the next two wells.
Caza currently has an 85% working interest in the Caza Elkins
3401 well with a 63.75% net revenue interest. In all subsequent
wells on the San Jacinto property, including the Caza Elkins 3402
well, Caza will have a 75% working interest and a 56.25% net
revenue interest.
Bongo Property, Wharton County, Texas. As previously announced
the O.B. Ranch #2 well was fracture stimulated at the end of July
2011, and has been on an extended well test in order to flow back
frac fluids. The well is currently producing at gross rates of 22
bbl/d of condensate, 475 Mcf/d of natural gas and 310 bbl/d of
water.
Three potentially productive Cook Mountain sand intervals were
identified from the log data between 12,535-12,563 feet,
12,775-12,790 feet and 12,936-12,948 feet and fracture treated. The
well initially produced at gross rates of 24 bbl/d of condensate
and 1,753 Mcf/d of natural gas along with frac fluids. During the
extended well test, the well started flowing back fresh (low
salinity) formation water in addition to condensate, natural gas
and frac fluids. Fresh formation water is anomalous at these depths
in this area, and Caza has been attempting with the extended well
test, and other means, to identify and isolate its point of
ingress. The produced water in the offsetting O.B. Ranch #1 well
had higher salinity than the water produced from the O.B. Ranch #2
well. Caza recently set a plug below the upper set of perforations
in the O.B. Ranch #2 well to permanently abandon both sets of lower
perforations at the intervals between 12,775-12,790 feet and
12,936-12,948 feet in an attempt to reduce water production. This
operation has successfully reduced water production by over 50%,
while maintaining current levels of condensate and natural gas
production.
The combination of recent production data, whole core analysis,
well logs and seismic data indicate that the Cook Mountain
formation is complex in nature with sands intermittently present at
different intervals throughout the formation. Both wells are
commercial, however, production data from the O.B. Ranch #1 and #2
wells seems to indicate that the reservoir is more limited in
nature than can be seen on seismic data alone. This data, when
coupled with the fresh formation water production at O.B. Ranch #2,
has increased the commercial and technical risk of the project. The
shallower Frio and Yegua formations remain untested and behind pipe
at approximately 5,530 feet and 9,000 feet respectively. Caza has
other Cook Mountain prospects in the area that will continue to be
evaluated and ranked against other prospects in our diverse
portfolio.
Caza currently has a 45.28% working interest and an approximate
33.51% net revenue interest in the Bongo property and wells.
Windham Property, Upton County, Texas. The Caza 158 #3 well on
the Windham property reached its target depth of 9,824 feet in June
2011, and Caza elected to participate in the operator's proposal to
complete the well. The well has been fracture stimulated across all
potentially productive intervals seen on the logs, which include
the Spraberry/Wolfcamp, Penn and Strawn formations and is currently
producing at gross rates of 15 bbl/d of oil and 51 Mcf/d of natural
gas. The Caza 158 #3 was the fourth well drilled and completed on
this property. Combined gross production rates for the Caza 158 #1,
158 #2, 158 #3 and 162 #1 wells are currently 80bbl/d of oil and
151 Mcf/d of natural gas. These wells are still cleaning up and
recovering frac fluids.
Caza currently has a 25.0% working interest and an 18.75% net
revenue interest in the Windham property and wells.
Hite Offset Property, Wharton County, Texas. Caza is currently
re-entering the Caza McMillan #1 well to test the Yegua 9,650 sand.
This is the Yegua interval producing in the nearby Matthys-McMillan
#2 well on the same property. Yegua sands are shallower and easier
to predict than the Cook Mountain sands in this area, making them
more attractive to Caza from the standpoint of risk. The
Matthys-McMillan #2 has cumulative gross, Yegua production to date
of 35,320 bbls of oil and 86,550 Mcf of natural gas, and is
currently producing an average gross rate of 70 bbl/d of oil and
112 Mcf/d of natural gas. Caza hopes to have similar results from
the Caza McMillan #1 well.
Caza currently has a 42.53% working interest and a 31.05% net
revenue interest in the Caza McMillan #1 well.
Lewis Prospect, Vermilion Parish, Louisiana, and Tiree Prospect,
Acadia Parish, Louisiana. Post Arran, Caza acquired a supplemental
license to the most recent pre-stack depth migrated ("PSDM")
application covering our Bol-Mex merge data area in order to
further evaluate current prospects and leads in this area, and to
also identify new prospective areas for future leasing/drilling.
The PSDM data has helped to strengthen the technical aspects of
Lewis prospect, which we anticipate drilling with a third party
operator in late fourth quarter 2011, or early first quarter 2012,
subject to well elections and the permitting process in Louisiana.
Lewis is targeting the Discorbis formation, which is different than
that tested at Arran.
Management believes the PSDM data along with other technical
data from the Marian Baker #1 well at Arran have combined to
increase risk at Tiree, which targets the Nonion Struma formation
drilled at Arran, and therefore does not intend to drill the
property in the near term. However, several inventoried leads
(other than Lewis) have held up to technical scrutiny and new leads
have been identified, which are all being ranked and considered for
leasing/drilling.
Atchafalaya Bay, St. Mary Parish, Louisiana. Caza also acquired
a supplemental license to the most recent PSDM application covering
our Atchafalaya Bay data in order to evaluate the area for future
leasing/drilling. Several significant Cib Op discovery wells have
been drilled in this area, and Caza is currently evaluating several
Cib Op leads that are in various stages of development.
W. Michael Ford, Chief Executive Officer commented:
"We are very pleased with the continued progress of increasing
our production. The drilling results seen on the initial two wells
on the San Jacinto property are above expectations. With another 5
potential locations to be drilled and with our significant interest
in this property, we will benefit significantly from the
production, cash flow and proven reserves associated with the
wells. While the O.B. Ranch wells are commercial, they have clearly
underperformed. However, there is other Cook Mountain and Yegua
potential in the area, which continues to be evaluated. The
non-operated Windham wells are still cleaning up and have combined
with the Caza Elkins and O.B. Ranch wells to increase Caza's net
production by approximately 88%. Bringing these wells on line has
added long term production, proven reserves and additional cash
flow to Caza's already solid platform. We hope to increase
production further with the Caza McMillan #1 well and additional
drilling on the San Jacinto property in the near term, while
continuing to develop future projects of varying risk profiles in
the Permian Basin and South Louisiana. We have a good portfolio of
projects, adequate cash to execute our drilling plan, and I look
forward to updating the market on Caza's exploration and production
activities in the near future."
About Caza
Caza is engaged in the acquisition, exploration, development and
production of hydrocarbons in the Texas Gulf Coast (on-shore),
south Louisiana, southeast New Mexico and the Permian Basin of West
Texas regions of the United States of America through its
subsidiary, Caza Petroleum, Inc.
For further information, please contact:
Caza Oil & Gas, Inc.
Michael Ford, CEO +1 432 682 7424
John McGoldrick, Chairman +1 832 573 1914/+44 7796 861 892
Cenkos Securities plc
Jon Fitzpatrick +44 20 7397 8900 (London)
Beth McKiernan +44 131 220 6939 (Edinburgh)
M: Communications
Patrick d'Ancona +44 20 7920 2330 (London)
Chris McMahon
The Toronto Stock Exchange has neither approved nor disapproved
the information contained herein.
In accordance with AIM Rules - Guidance Note for Mining, Oil and
Gas Companies, the information contained in this announcement has
been reviewed and approved by Anthony B. Sam, Vice President
Operations of Caza who is a Petroleum Engineer and a member of The
Society of Petroleum Engineers.
ADVISORY STATEMENT
Information in this news release that is not current or
historical factual information may constitute forward-looking
information within the meaning of securities laws. Such information
is often, but not always, identified by the use of words such as
"seek", "anticipate", "plan", "schedule", "continue", "estimate",
"expect", "may", "will", "hope", "project", "predict", "potential",
"intend", "could", "might", "should", "believe", "develop", "test",
"anticipation" and similar expressions. In particular, information
regarding the depth, timing and location of future drilling,
intended completion operations, availability of funds to support
the Company's drilling program, future production, future cash
flow, future reserves, intended production testing, future results
from wells and the Company's future working interests and net
revenue interests in properties contained in this news release
constitutes forward-looking information within the meaning of
securities laws.
Implicit in this information, are assumptions regarding the
success and timing of drilling operations, rig availability,
projected revenue and expenses and well performance. These
assumptions, although considered reasonable by the Company at the
time of preparation, may prove to be incorrect. Readers are
cautioned that actual future operations, operating results and
economic performance of the Company are subject to a number of
risks and uncertainties, including general economic, market and
business conditions and could differ materially from what is
currently expected as set out above. In addition, the geotechnical
analysis and engineering to be conducted in respect of certain
wells described in this press release is not complete. Future flow
rates from each of the wells disclosed in this press release will
vary, perhaps materially, and may prove to be technically or
economically unviable. Any future flow rates will be subject to the
risks and uncertainties set out herein.
For more exhaustive information on these risks and uncertainties
you should refer to the Company's most recently filed annual
information form which is available at www.sedar.com and the
Company's website at www.cazapetro.com. You should not place undue
importance on forward-looking information and should not rely upon
this information as of any other date. While we may elect to, we
are under no obligation and do not undertake to update this
information at any particular time except as may be required by
securities laws.
GLOSSARY OF ABBREVIATIONS
bbl one barrel, each barrel Mcf one thousand cubic feet
representing 34.972 Imperial Mcf/d one thousand cubic feet per
gallons or 42 U.S. gallons day
bbl/d barrels per day
boe barrels of crude oil Mcfe one thousand cubic feet of
equivalent derived by natural gas equivalent
converting natural gas to derived by converting crude
crude oil in the ratio of six oil to natural gas in the
thousand cubic feet of ratio of one barrel of oil
natural gas to one barrel of into six thousand cubic feet
crude oil of natural gas
boe/d barrels of crude equivalent Mcfe/d one thousand cubic feet of
per day natural gas equivalent per
day
Mbo one thousand barrels of MMcfg one million cubic feet of
crude oil natural gas
Boe or Mcfe may be misleading, particularly if used in
isolation. A boe conversion of 6 Mcf: 1 bbl or a Mcfe conversion
ratio of 1 bbl : 6 Mcf is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the well head.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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