2 Feb 2012 07:00
February 2, 2012
Caza Oil & Gas, Inc.
CAZA OIL & GAS PROVIDES OPERATIONAL UPDATE
HOUSTON, TEXAS (Marketwire - February 2, 2012) - Caza Oil & Gas, Inc. ("Caza" or the "Company") (TSX:CAZ) (AIM:CAZA), the exploration, appraisal, development and production company, is pleased to provide an operational update.
Hite Offset Property, Caza McMillan #1, Wharton County, Texas. As previously announced, re-entry operations on the Caza McMillan #1 well to test the Yegua 9,650 sand have been successful. The well has been placed online, all frac fluids have been recovered and production rates are being maintained at 1.13 million cubic feet of natural gas, 45 barrels of oil and 14 barrels of water per day on a 12/64th choke. After performing a detailed reservoir study, the well is producing as modeled, and management believes the current rates represent the most efficient and effective production rates for the Yegua 9,650 reservoir.
Caza currently has a 42.53% working interest and a 31.05% net revenue interest in the Caza McMillan #1 well.
San Jacinto Property, Midland County, Texas. As previously announced, the Caza Elkins 3401 and 3402 wells have been successfully completed and placed into production. The wells have combined to produce approximately 15,000 barrels of oil and 23 million cubic feet of natural gas since August 2011.
Caza did not include the Spraberry Formation in the original completion of the 3401 well and has scheduled to perforate and stimulate the Spraberry interval on February 3rd, 2012. Management is very pleased with the performance of the wells and expects the additional Spraberry interval to contribute reserves and increase production on the property. The Spraberry stimulation is the last phase of Caza's engineering evaluation and completion/commingling of each pay zone in these wells. Although the operations took some time, management believes they have added value to the cash flow, reserves and future development/exploitation of the property. Caza has five additional proven undeveloped locations on the San Jacinto property.
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.
Lynch Property, Mud Slide Slim 15 Federal #1 Well, Lea County, New Mexico. The Mud Slide Slim 15 Federal #1 well on Caza's Lynch Property was completed in July 2008, as a 13,513 foot vertical Morrow gas well and has remained on production since then. Potential pay zones behind pipe in the well included: Delaware, Avalon Shale, and 1st and 3rd Bone Spring Sands.
Horizontal drilling activity in the general vicinity of the well in the emerging Bone Spring horizontal oil play has been increasing steadily over the last eighteen months. The Bone Spring Formation contains several pay zones from approximately 8,000-11,000 feet including the Avalon Shale and 1st, 2nd and 3rd Bone Spring Sands, which are oil and liquids-rich. Successful results in this play have caused an increase in leasing at the State and Federal lease sales in New Mexico. The majority of activity in the Bone Spring horizontal play has been driven by large independent producers such as Concho Resources, Cimarex Energy, Devon Energy, Yates Petroleum Corporation and Chesapeake Energy Corporation. As of October 2011, the top fifty producing horizontal wells in the Bone Spring Formation in Lea and Eddy Counties, New Mexico, averaged a maximum, one month rate of 758 barrels of oil equivalent per day. The average, six month cumulative production rate, using the same fifty wells through October 2011, was 79,230 barrels of oil equivalent.
As a result of this successful horizontal activity in the Bone Spring, Caza recently conducted extensive stimulation and production tests on each of the Bone Spring zones in the Mud Slide Slim well. The tests have shown each zone of interest, the Avalon Shale and 1st and 3rd Bone Spring Sands, to be commercially productive and therefore viable horizontal targets. Caza has now comingled the zones mentioned above and is pleased to announce that the well has produced at a peak daily rate of 159 barrels of oil per day and is currently producing 73 barrels of oil per day using a pumping unit. Caza's Lynch Property leases comprise approximately 320 gross acres.
Caza currently has a 40% working interest and a 32% net revenue interest in the property and the well.
Caza's Fourth Quarter 2011 Average Net Daily Production. Based on Company gauge reports, Caza's unaudited Fourth Quarter 2011, average, net, daily production increased from Third Quarter 2011 figures to 277 barrels of oil equivalent per day. Based on actual Third Quarter sales, Caza's Third Quarter 2011, average, net, daily production was 233 barrels of oil equivalent per day. This represents a quarter-to-quarter increase of approximately 19%.
W. Michael Ford, Chief Executive Officer commented:
"I am very pleased with the progress the Company continues to make. Caza's net production continues to climb as our wells clean up following the completions executed late last year. The recent re-completion of the Mud Slide Slim well in the Bone Spring Formation has further improved our production profile at a relatively low cost to the Company. More importantly, we are very excited about the Bone Spring Formation and the potential for further horizontal drilling within our lease blocks. We are currently evaluating the production potential of the Bone Spring horizontal play and how it might impact our current New Mexico acreage position. This may also impact our 2012 drill plan when evaluated against the rest of our prospect/property inventory. Caza intends to target these oil and liquids-rich opportunities within our inventory, while continuing to assess the most effective way to increase reserves, production and long term value for shareholders."
About Caza
Caza is engaged in the acquisition, exploration, development and production of hydrocarbons in the following regions of the United States of America through its subsidiary, Caza Petroleum, Inc.: Texas and Louisiana Gulf Coast (on-shore), and the Permian Basin (West Texas and Southeast New Mexico).
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 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", "strongly", and similar expressions. Information regarding future operations and results relating to the Caza McMillan #1 well, the Yegua formation, the Caza Elkins 3401 and 3402 wells, the Spraberry Formation, the Mud Slide Slim 15 Federal #1 well, Bone Spring Formation, Avalon Shale and 1st, 2nd and 3rd Bone Spring Sands, reserves and revenue increases and the costs and risks associated therewith, and other information relating to future production activities or operations contained in this news release constitutes forward-looking information within the meaning of securities laws.
Implicit in this information are assumptions regarding: the technical and commercial viability of the Caza McMillan #1 well, the Caza Elkins 3401 and 3402 wells, the Mud Slide Slim 15 Federal #1 well, the timing and results of production operations, projected revenue and expenses and well performance. Specifically, the Company has assumed that the wells and/or activities will produce positive results. These assumptions, although considered reasonable by the Company, 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 operating and drilling risks and general economic, market and business condition risk and actual results could differ materially from a conclusion, forecast or projection in the forward-looking information. In addition, the geotechnical analysis and engineering to be conducted in respect of the wells is not complete. Future flow rates from the wells may vary, perhaps materially, and the wells may prove to be technically or economically unviable. Any future flow rates will be subject to the risks and uncertainties set out herein.
Information regarding historical production from the Bone Spring Formation by third party wells was obtained from drillinginfo and is good through October 2011. Such source is independent and the information may not have been prepared in accordance with the Canadian Oil and Gas Evaluation Handbook. Such information has been provided for information purposes only. Actual production from the Company's wells located in the Bone Spring Formation may differ materially and readers should not assume that production from the Company's wells will be consistent with the historical production experienced by third parties as disclosed in this press release.
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.