www.cazapetro.com
Based in The Woodlands, Texas, Caza Oil & Gas, Inc. is engaged in the acquisition, exploration, development and production of hydrocarbons in the Texas Gulf Coast, South Louisiana, Southeast New Mexico and the Permian Basin of West Texas regions of the United States through its subsidiary, Caza Petroleum. Caza Oil & Gas, Inc. is listing on both AIM, a market operated by London Stock Exchange plc, and the Toronto Stock Exchange.
Caza Oil & Gas agrees 1st 3 test wells financed by Endeavour
Caza Oil & Gas Inc. (TSX: CAZ; AIM: CAZA) has agreed the first three wells relating to the April 2009 participation agreement with Endeavour International Corp (NYSE: END; LSE: ENDV) which will allow Endeavour to earn 75 percent of the interest in return for putting up the finance related to Caza’s interest.
In a separate statement, Caza reported results for the first quarter to March 31 2009, which saw a 30 percent rise in production to 113.2 million cubic feet equivalent from 87.05 million a year earlier.
Endeavour has agreed to fund the drilling of three wells located in the emerging Abo-Wolfcamp trend in New Mexico, named Lucky Penny 10 State #1, Bada Bing 23 State #1 and Moore Bailout 11 State #1, to be operated by Caza which has scheduled the wells to be drilled back-to-back beginning on or about May 20 2009.
Caza acquired a 50 percent working interest in these projects in conjunction with its exploration agreement with Wise Oil & Gas No. 8 Ltd.
Under the Endeavour agreement, Caza currently has a 12.5 percent carried working interest through first commercial production on each of the three wells with a corresponding net revenue interest in Lucky Penny and Moore Bailout of 9.375 percent each, and 10.156 percent in Bada Bing.
Lucky Penny is the initial test well on the Moore Cap #2 prospect, which comprises 960 gross acres in Lea County, New Mexico. The Lucky Penny well will test the Abo/Wolfcamp formation at a true vertical depth of 8,500 feet.
Bada Bing is the first test well on the 1,800 gross acre Bada Bing prospect and will test the Abo/Wolfcamp formation at a true vertical depth of 8,800 feet. Finally, Moore Bailout is to be the first well on the 1,920 gross acre Moore Cap #1 prospect and will test Abo-Wolfcamp at 8,400 feet.
In addition to these prospects and initial wells, the agreed work program and budget currently includes six additional prospects for potential drilling and testing in 2009, including Moore Cap #3, Las Animas, Bongo, Soledad Creek, and Round Tank prospects.
The 2009 drilling program is focused on prospects that have ample exposure to upside. The Endeavour agreement will enable up to nine wells to be drilled in 2009, and fits with Caza's current strategy to conserve capital, reduce single project exposure and increase the number of projects drilled in a given period.
President and CEO Michael Ford commented: “I am very pleased with the progress this year of the Company's exploratory projects, especially the work program projects being jointly pursued by Caza and Endeavour. The work program with Endeavour has been implemented quickly and has become the focus of Caza's exploration activities.”
In its first quarter report that was also released today, Caza said that in the period, it started to benefit from reductions in overhead costs resulting from various initiatives introduced to cut general and administrative expenses. Added to the benefits to its cash flow arising from the Endeavour deal, this leads it to believe that its business fundamentals are sound with a positive cash position, no debt and a portfolio of prospects in proven oil and gas regions.
Caza’s cash balance at the end of March stood at US$9.76 million.
Revenues from oil and gas sales in the first quarter fell 24 percent to US$553,916 from US$729,284 previously due to the decrease in commodity prices. Net loss widened to US$1.33 million from US$635,685.
