9 Jul 2010 07:00
July 9, 2010
CAZA OIL & GAS, INC.
OPERATIONAL UPDATE
HOUSTON, TEXAS Caza Oil & Gas, Inc. ("Caza" or the "Company") (TSX: CAZ) (AIM: CAZA) provides an update on the Matthys-McMillan Gas Unit #2 development well located in the Wharton West Wilcox Field ("Matthys-McMillan #2"), the O.B. Ranch #1 well on the Bongo prospect and proposed activity at the Arran prospect in Acadia Parish, Louisiana and Windham Wolfberry ("Windham") prospect in Upton County, Texas.
As previously reported, Matthys-McMillan #2 (Caza is the operator and has a 19.61% working interest)was drilled to a total depth of 15,000'. During the course of drilling, the wellencountered multiple Wilcox sands that from log information appeared to be gas bearing. Significant pressure was encountered, which required the use of heavy drilling mud to control the well. Attempts have been made to execute a natural completion (i.e. without fracture stimulation) in four separate sand intervals within the Wilcox formation. At this time an economic flow rate has not been established. The Company's post drill evaluation indicates poor reservoir characteristics at this particular location. However, Caza is continuing to pursue further investigative work concerning the Wilcox sands.
The Company has sought and received approval from its partners in Matthys-McMillan #2 to come up the wellbore and perforate at a depth of 9,478' in the Yegua sands. Both log and seismic data indicate that the Yegua interval could be productive in the Matthys-McMillan #2. If bottom hole pressure testing indicates the Yegua interval is commercial, it will need to be fracture stimulated at a later date. Current lead times for fracturing equipment will mean this could take up to 90 days. A further announcement will be made following the completion of pressure testing.
Drilling of the O.B. Ranch #1 well on the Bongo prospect commenced on 19 June 2010, and is currently drilling at 10,300'. The well is ahead of schedule to date, and its target depth should be reached within approximately 30 days.
As previously announced, Pass Petroleum, Inc. ("Pass") has farmed in to the Company's Arran prospect. Pass is to fund 100% of the initial appraisal costs attributable to Caza's 50% working interest in the prospect to earn a 37.5% participation interest with Caza maintaining 12.5% in the first and subsequent wells. Preparatory activities are progressing well, and Caza is on track to commence drilling operations in September 2010.
In addition, as previously announced, Devon Energy Production Company, L.P. ("Devon") has farmed in to the Company's Windham prospect in Upton County, Texas. The participation agreement names Devon as operator and provides terms whereby Devon can earn 75% of Caza's 100% participation interest in the initial well. After completion of the initial well, Devon will have the right to participate for its 75% interest in all operations associated with the property, and Caza will participate for its remaining 25% interest. Caza anticipates the initial well to be commenced by September 2010.
Mike Ford, Chief Executive Officer of the Company, commented:
"The results to date on the Matthys-McMillan #2 are disappointing, however this area has multi-pay potential and we have an opportunity for a commercial completion in the Yegua formation in this well. It's important to point out that Matthys-McMillan #2 further validated the Company's regional model for potential Wilcox reservoir distribution, and we are continuing our investigative work with regard to the Wilcox sands."
"Additionally, we have some exciting projects underway. We are pleased with the drilling progress of the O.B. Ranch #1 well and look forward to drilling the Arran prospect in September 2010, and the Windham prospect, which we also anticipate being commenced in September with Devon as operator."
For further information please contact:
| Michael Ford, CEO, Caza Oil & Gas, Inc. Tim Feather/Richard Baty, Westhouse Securities Limited | +1 432 682 7424 +44 (0)20 7601 6100 |
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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.
The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.
ADVISORY REGARDING FORWARD LOOKING STATEMENTS
Information in this news release that is not current or historical factual information may constitute forward-looking statements within the meaning of securities laws. Such information is often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "prolific" and similar expressions. Information regarding future operations and results relating to the Matthys-McMillan Gas Unit #2 well, the Bongo prospect,the O.B. Ranch #1 well, the Arran prospect, the Windham prospect and other information relating to future exploration and drilling activities contained in this news release constitutes forward-looking information within the meaning of securities laws.
Implicit in this information are assumptions regarding: the timing and results of drilling and completion operations, the performance of Pass and Devon's obligations under their respective participation agreements with the Company regarding Arran and Windham prospects, including elections in connection therewith, projected revenue and expenses and well performance. Specifically, the Company has assumed that these agreements, prospects, wells and/or activities will produce positive results. These assumptions, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. Readers are cautioned that actual future operating results and economic performance of the Company are subject to a number of risks and uncertainties, including general mechanical, economic, market and business risks and conditions and could differ materially from what is currently expected as set out above. Future flow rates from wells may vary, perhaps materially, and the wells in question 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. 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 required by applicable securities laws.