9 Apr 2009 09:00
9 April 2009
Caza Oil & Gas, Inc. ("Caza" or the "Company")
New Exploration and Growth Initiative
Houston, April 9 2009. Caza Oil & Gas, Inc. (TSX: CAZ) (AIM: CAZA) announced today that, through its subsidiary Caza Petroleum Inc., it has entered into a definitive participation agreement (the "Agreement") with Endeavour International Corporation (NYSE-Alt:END) (LSE:ENDV) ("Endeavour") to participate in a jointly established exploration and development program in the United States. The exploration and development program will primarily focus on Caza's existing onshore acreage position and portfolio of identified opportunities throughout Texas, Louisiana and New Mexico.
Endeavour and Caza are currently finalizing a proposed work program and related budget for the prospects and opportunities which the parties intend to pursue. Endeavour expects to fund the established work program over the next two years, and further expects to participate in up to nine exploration and appraisal wells during 2009.
Under the terms of the Agreement, Endeavour has the right to participate in assets presented to it in its sole discretion. With respect to those assets in which Endeavour elects to participate, Endeavour will fund the acquisition, exploration and appraisal activity costs attributable to Caza's interest in such assets. In consideration for these payments, as well as a program fee of US$3 million per annum to be paid monthly, Endeavour will earn a 75% participating interest in any interest then owned by Caza in any particular asset in which Endeavour elects to participate.
The term of the Agreement will run for two years. However, either party may terminate the Agreement as of the end of each anniversary period by giving 60 days prior written notice. If neither party terminates the Agreement, it shall automatically renew for subsequent one-year periods.
Caza holds interests in approximately 42,000 gross acres throughout Texas, New Mexico and Louisiana. Caza believes this position contains a portfolio of exploration opportunities that fits well with Endeavour's stated strategy of building a strong foundation for growth in its emerging US focus area. The non-producing assets subject to the Agreement relate to approximately 9% of the net book value of the Company's petroleum and equipment assets, which was US$37.1 million as at December 31, 2008. Under terms of the Agreement, Caza will retain 100% interest in all its current production and proven reserves.
John McGoldrick, Executive Chairman of Caza commented:
"Caza believes that this initiative which combines Endeavour's financial strength, experience and commitment to a common business strategy, with our experienced team and portfolio of opportunities, will produce positive results for both companies over the term of the arrangement. The funding of the selected exploratory and appraisal drilling activities should allow us to accelerate the work program and reduce execution risk.
In addition, Endeavour's program fees will mitigate the ongoing financial risk in our portfolio and reduce cash outflows in Caza, therefore enabling us to maintain a positive cash balance during these difficult market conditions. It's a real win-win deal, and is in line with the strategic options stated in our year-end results announcement."
For further information please contact:
| Rich Albro, Vice President, Caza Oil & Gas, Inc. | +1 281 363 4442 |
| Sunil Sanikop / Henry Willcocks, Noble & Company Limited (Nominated Adviser and Joint Broker) | +44 (0)20 7763 2200 |
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 constituting a resource or drilling update 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.
About Caza:
Caza is engaged in the acquisition, exploration, development and production of hydrocarbons in the Texas Gulf Coast (on-shore), south Louisiana, southeast New Mexico and the Permian Basin of west Texas regions of the United States of America through its subsidiary, Caza Petroleum, Inc. For more information, visit http://www.cazapetro.com.
ADVISORY REGARDING FORWARD-LOOKING STATEMENTS - In the interests of providing Caza shareholders and potential investors with information regarding Caza, including management's assessment of Caza's and its subsidiaries' future plans and operations, certain statements contained in this news release are forward-looking statements or information within the meaning of applicable securities legislation, collectively referred to herein as "forward-looking statements." Forward-looking statements in this news release include, but are not limited to: the work program plan to be established by Caza and Endeavour; the funding of such work program by Endeavour over the next two years; estimates of the wells to be drilled in 2009 pursuant to such work program; future reductions in cash outflows and the ability of Caza to maintain a positive cash balance; the ability to accelerate Caza's work program and reduce execution risk; future economic and operating performance; anticipated growth and success of resource plays; anticipated costs; anticipated capital investment in 2009 and the allocation thereof; and anticipated capital and operating cost efficiencies; anticipated growth in hydrocarbon production; forecast cash flow for 2009.
Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur, which may cause the company's actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things: Endeavour's willingness to fund the work program over the next two years, volatility of and assumptions regarding oil and gas prices; assumptions based upon the company's current guidance; fluctuations in currency exchange and interest rates; product supply and demand; market competition; well flow rates and the hydrocarbons ultimately recoverable from wells, operating risks, water encroachment, risks inherent in the company's marketing operations, including credit risks; imprecision of reserve estimates and estimates of recoverable quantities of oil, natural gas and liquids from resource plays and other sources not currently classified as proved; the company's ability to replace and expand oil and gas reserves; the company's ability to generate sufficient cash flow from operations to meet its current and future obligations; the company's ability to access external sources of debt and equity capital; the timing and the costs of well and pipeline construction; the company's ability to secure adequate product transportation; changes in royalty, tax, environmental and other laws or regulations or the interpretations of such laws or regulations; the risk of terrorist threats; risks associated with future lawsuits and regulatory actions made against the company; and other risks and uncertainties described from time to time in the reports and filings made with securities regulatory authorities by Caza.
Although Caza believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned that the foregoing list of important factors is not exhaustive. Furthermore, the forward-looking statements contained in this news release are made as of the date of this news release, and, except as required by law or regulation, Caza does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.