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Q&A: Caza Oil pleased with flow rates at Bone Spring

Last updated: 04:28 21 Mar 2014 EDT, First published: 05:28 21 Mar 2014 EDT

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Caza Oil and Gas (LON:CAZA) shares has just revealed its latest success in the Bone Spring play in New Mexico.  Mike Ford is the company’s chief executive and explains more about its progess.

Mike Ford: The results on our West Copperline property are very exciting.

The first well that we drilled, our 1H well, targeted the second Bone Spring sand.  That well came on with flow rates of around 1,000 barrels a day equivalent, and is still producing quite nicely.

A second well, the 3H well, targeted the third Bone Spring sand and we announced today a flow of 1,108 barrels a day equivalent. 

3H is only a week into its flowback and that was a peak rate and as the well cleans up and over the course of the next six months, we fully expect the production rates on the well to react similarly as all the wells do; it is going to slowly fall off.

PI: The two wells tested so far have shown similar rates of flow in their initial results; are you expecting the same consistency in the remaining wells to be drilled in the property?

MF: We believe the results will similar on all the wells that we drill here. 

We are currently drilling the 2H well, which is targeting the second Bone Spring sand, so it's just a direct offset to the first well. 

That well should hit target depth in a week or so and we have it scheduled for fracture stimulation sometime in early April.

PI: The share price remains under pressure, although I know there are estimates of targets on the share price of more than three times where the stock is at the moment. Any thoughts on what's happening?

MF: We have a strong retail holding in the company, and it’s really been quite shocking actually that we haven't seen a significant climb in the share price with the kind of results that the company’s producing.

PI: When do you see production getting to a level where you can be self-sustaining, or have you reached that already?

MF: It all has to do with the acceleration of the drilling programme. Our production has grown nicely and if we want to control the drilling schedule, we could drill out of cash flow, but in order to accelerate drilling we do have plans to continue utilising our Apollo facility.

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