8 May 2012 07:00
May 8, 2012
Caza Oil & Gas, Inc.
CAZA OIL & GAS PROVIDES OPERATIONAL UPDATE
HOUSTON, TEXAS (Marketwire - May 8, 2012) - Caza Oil & Gas, Inc. ("Caza" or the "Company") (TSX: CAZ) (AIM: CAZA) is pleased to provide an operational update on the Company's drilling activities in southeast New Mexico.
Bradley 29 Prospect, Eddy County, New Mexico. Caza recently completed an acreage swap with Mewbourne Oil Company ("Mewbourne"), whereby Caza exchanged acreage in its Lynch Property in Lea County, New Mexico, for a position in Mewbourne's Bradley 29 and Two Mesas Properties in Eddy County, New Mexico. The trade covers the Bone Spring formation only, and sets up twelve horizontal Bone Spring locations to be drilled in 2012 and 2013. Under the trade, it was agreed that Mewbourne, one of the foremost operators in the Bone Spring play, would operate the wells.
The initial well in the program, the Bradley "29" Fed Com No. 3H horizontal well, commenced drilling operations on April 27, 2012. The primary objective is the Second Bone Spring sand at approximately 8,221 feet subsurface with a total measured depth of approximately 12,674 feet. Caza has a 20% working interest and a 15% net revenue interest in the Bradley "29" Fed Com No. 3H well.
The Bone Spring formation in Lea and Eddy Counties, New Mexico, contains multiple potential pay zones for oil and liquids-rich natural gas. Caza's current prospects in the horizontal Bone Spring play are Lynch, Forehand Ranch, Lennox, Copperline, Mad River, Bradley 29, Two Mesas and Quail Ridge. The Company has acquired approximately 4,000 net acres in the play to date. The recently released reserve report prepared by Netherland, Sewell & Associates, Inc. as of December 31, 2011, assigned 100 viable Bone Spring horizontal drilling locations to Caza's current leasehold position with total proved plus probable plus possible net reserves to the Company of 16.7 million barrels of oil equivalent ("MMboe") (proved plus probable net reserves of 9.1 MMboe). This did not include locations or reserves for the Bradley 29, Two Mesas or Quail Ridge properties.
Quail Ridge Prospect, Lea County, New Mexico. Caza recently completed a farmout arrangement with Lincoln Oil & Gas, LLC ("Lincoln"), whereby Caza reserved the option to participate in wells proposed to Lincoln for between 0.25-4% working interest. Caza does not view the financial participation to be material, however it will provide the Company access to valuable well information from highly respected operators in the horizontal Bone Spring play. This information will include, but not be limited to, very important frac designs and drill plans and will further strengthen Caza's knowledge of the play.
Drilling operations on the Quail "16" State No. 3H horizontal well, operated by Fasken Oil and Ranch, Ltd., have commenced. The primary objective is the Third Bone Spring sand at approximately 10,965 feet subsurface with a total measured depth of approximately 15,340 feet. Caza has a 0.25% working interest and an approximate 0.1875% net revenue interest in the Quail "16" State No. 3H well.
Sombrero Prospect, Lea County, New Mexico. The WC 35 State No. 1 well has reached its total depth of approximately 11,600 feet. After correlating and reviewing all log data, CML Exploration, LLC ("CML"), the operator, recommended plugging back the open hole section of the well to test the San Andres interval between 4,814-4,821 feet. This zone was oil productive east and west of the WC 35 State No. 1 location. Caza concurs with CML's recommendation and has elected to participate in the current operation. The Pennsylvanian aged Cisco objective was drill stem tested and found to be non-commercial.
As previously announced, Caza entered into a farmout agreement with CML, naming CML as operator. The prospect covers approximately 1,920 gross acres. Caza retained and is participating for a 20% working interest and an approximate 17.125% net revenue interest in the WC 35 State No. 1 well.
W. Michael Ford, Chief Executive Officer commented:
"We are very pleased to be drilling our first horizontal Bone Spring well in New Mexico with Mewbourne. Mewbourne is an accomplished operator with extensive knowledge in this basin, and we are looking forward to working with them on these projects. This will be Caza's first foray into horizontal drilling in this exciting oil and liquids-rich play. The Quail State well being drilled by Fasken, another highly respected operator, should also provide the Company with valuable information that could be used in Caza's Bone Spring drilling and completion operations later this year. We have also elected to participate in CML's proposed plug back operation on the Sombrero property well and hope to complete the well in the San Andres formation later this month."
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 +44 7796 861 892
Cenkos Securities plc
Jon Fitzpatrick +44 20 7397 8900 (London)
Beth McKiernan +44 131 220 6939 (Edinburgh)
VSA Capital Limited
Andrew Raca +44 (0)20 3005 5004
Malcolm Graham-Wood +44 (0)20 3005 5012
M:Communications
Patrick d'Ancona +44 20 7920 2330
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 drilling information to be obtained from drilling operations and intended completion operations 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.
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.
The estimates of reserves for individual project areas may not reflect the same confidence level as estimates of reserves for all properties, due to the effects of aggregation. Boe may be misleading, particularly if used in isolation. A boe conversion of six thousand cubic feet: 1 barrel 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.