HOUSTON, TEXAS--(Marketwire - July 12, 2012) - Caza Oil & Gas, Inc. ("Caza" or the "Company") (CAZ.TO)(CAZA.L) is pleased to provide an operational update on the Bradley 29 Prospect in Eddy County, New Mexico, and to announce the sale of its San Jacinto Property in Midland County, Texas.
The Bradley "29" Fed Com No. 3H horizontal well (the "Well") reached total measured depth of approximately 12,690 feet in early June 2012, was successfully fracture stimulated in the 2nd Bone Spring sand on June 14th and is currently flowing back hydrocarbons and frac fluids at a gross rate of approximately 900 barrels (bbls) per day. The Well has averaged 361 bbls of oil and 524 thousand cubic feet of natural gas (Mcfg) per day over the past seven days, which is 449 bbls of oil equivalent (Boe). The peak rate day to date was 399 bbls of oil and 521 Mcfg, which equals 486 Boe, and 488 bbls of fluid. As the Well cleans up, the ratio of hydrocarbons to frac fluids continues to climb, which is expected, and this may also translate into higher producing rates for oil and gas once the majority of the frac fluid is recovered. Caza has a 20% working interest and a 15% net revenue interest in the 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, Azotea Mesa and Quail Ridge. The Company has acquired approximately 4,000 net acres in the play to date.
Caza is also pleased to announce the successful sale of the San Jacinto property, which includes the Caza Elkins 3401 and 3402 wells. Management decided to divest the property in order to take advantage of attractive Wolfberry property sale prices and enable the Company to participate in more favorable investment opportunities. The Company was able to realize a fair price at yesterday's Oil & Gas Asset Clearinghouse Auction, and the disposal will complete on or before July 31, 2012. The price received was $6.1MM and exceeded Caza's internal matrix for return on investment and capital employment. Caza intends to use the proceeds to further existing assets, specifically in the Bone Spring play in southeast New Mexico, and to pursue new opportunities in order to add additional shareholder value through continued investment in suitable properties.
The Company had 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 and the remainder of the leases, Caza had a 75% working interest and a 56.25% net revenue interest. The property is currently producing approximately 120 Boe per day net to the Company. The Company's reserve report prepared by Netherland, Sewell & Associates, Inc. dated December 31, 2011, gave the property proved reserves of 4.09 billion cubic feet of natural gas equivalent (Bcfe) and proved plus probable reserves of 5.26 Bcfe net to Caza.
Caza's management regularly conducts on-going reviews and appraisal programs with regard to both its existing asset base and new, unsolicited opportunities. Some deals present themselves in the form of asset swaps or farm-ins, while others include the potential acquisition of multiple properties and existing corporate entities. Caza remains actively involved in reviewing and grading such opportunities on an on-going basis, and management remains keen to continue growing the Company's asset base and production profile using a variety of means.
W. Michael Ford, Chief Executive Officer commented:
"We are very pleased with the successful results from the Bradley well. The producing rates are as predicted and will increase Caza's oil to gas production ratio, while adding additional cash flow and reserve value. The success at Bradley is a good start for Caza in the horizontal Bone Spring play, and the predictable nature of the play bodes well for Caza's future Bone Spring projects.
We are also very pleased with the sale of the San Jacinto property. This sale has permitted Caza to realize the increased value created at San Jacinto, which will be utilized in more favorable investment opportunities. At present, we are exploring the options and opportunities available to us, but we do intend to build on the success at the Bradley property and begin drilling the Company's Bone Spring properties in the near future. We continue to prepare Copperline, Forehand Ranch and Lennox prospects, in that order, for drilling."
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).
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.
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 the depth, timing and location of future drilling, intended completion operations, availability of funds to support the Company's drilling program, future production, future cash flow, future reserves, intended production testing, future results from wells and the Company's future working interests and net revenue interests in properties 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. In addition, the geotechnical analysis and engineering to be conducted in respect of certain wells described in this press release is not complete. Future flow rates from the Well will vary, perhaps materially, and 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 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.
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.
The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.