HOUSTON, TEXAS--(Marketwire - Oct 3, 2012) - Caza Oil & Gas, Inc. ("Caza" or the "Company") (CAZ.TO)(CAZA.L) is pleased to announce that drilling has commenced on the Company''s Forehand Ranch Prospect ("Forehand Ranch") in Eddy County, New Mexico. The Forehand Ranch 27 State Com No. 1H horizontal well is the initial test well at Forehand Ranch.
Forehand Ranch Prospect, Eddy County, New Mexico. As stated above, the Forehand Ranch 27 State Com No. 1H horizontal well has commenced drilling. The well will be drilled to a total vertical depth of approximately 9,200 feet with a total measured depth of approximately 11,929 feet. The primary target is the 2nd Bone Spring Sand at a vertical depth of approximately 7,450 feet subsurface with potential secondary targets in the Delaware, Lower Brushy Canyon, Avalon Shale, 1st and 3rd Bone Spring Sands and Wolfcamp.
Caza has a 54.83% working interest before pay-out (42.02% net revenue interest) and a 63.00% working interest after pay-out (48.27% net revenue interest) in the Forehand Ranch 27 State Com No. 1H well.
Copperline Prospect, Lea County, New Mexico. The Caza Ridge 14 State No. 3H horizontal well is drilling ahead at a measured depth of approximately 12,027 feet in the horizontal section of the well. As previously announced, the horizontal section is being drilled through the primary objective Lower 3rd Bone Spring Sand to a total measured depth of approximately 15,780 feet. Once the horizontal section is complete, the well will be fracture stimulated, and the market will be updated accordingly.
Caza has a 45% working interest (35.213% net revenue interest) before payout and a 58.75% working interest (45.972% net revenue interest) after payout in the Caza Ridge 14 State No. 3H well.
Quail Ridge Prospect, Lea County, New Mexico. The Quail "16" State No. 3H horizontal well was successfully fracture stimulated in the 3rd Bone Spring Sand beginning on September 11, 2012, and is currently flowing back hydrocarbons and frac fluids at a gross rate of approximately 2,100 barrels (bbls) per day on a 26/64 inch adjustable choke. The well has averaged 663 bbls of oil and 604 thousand cubic feet of natural gas (Mcf) per day over the past eight days, which is 764 bbls of oil equivalent (Boe). The peak rate day to date was 712 bbls of oil and 623 Mcf, which equals 816 Boe.
This is a very positive result and is significant to Caza, because the well offsets the Company''s Lynch property. Although Caza''s non-operated participation interest is small, this well has helped to de-risk the Company''s acreage position and provide us with valuable information for future drilling at Lynch.
Caza has a 0.25% working interest (0.1875% net revenue interest) in the Quail "16" State 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, Azotea Mesa, Bradley 29, Two Mesas and Quail Ridge. The Company has acquired approximately 3,300 net acres in the play to date. Leasing and drilling activity continues to increase in the play and initial producing well rates continue to improve with technological advances in drilling and frac designs. The Company is well positioned in the play, and management continues to monitor opportunities to build on Caza''s current acreage position.
W. Michael Ford, Chief Executive Officer commented:
"We are very pleased to have commenced drilling operations on the Forehand Ranch prospect. This will be our second operated test well with a material participation interest in the exciting Bone Spring horizontal oil play in southeast New Mexico."
"At Copperline, drilling continues on the horizontal section of the Caza Ridge well. As previously announced, log and core data from the well have confirmed the presence of multiple potential pay zones containing oil and liquids-rich natural gas. We look forward to completing the horizontal section of the well and scheduling a frac job in the near future."
"We are also very pleased with the result of the Quail State well and are excited about future drilling on our Lynch property, which is in the adjacent section. This is a very good result and has provided Caza with valuable information in this area."
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", "looks to be" and similar expressions. In particular, anticipated working interests and net revenue interests, 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. Testing of the wells described in this press release has not been completed, and the tests disclosed herein are not necessarily indicative of long-term performance or of ultimate recovery.
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.
Information in this news release regarding areas in the Bone Spring Formation in which the Company does not have an interest may not have been prepared by a qualified reserves evaluator or auditor in accordance with the Canadian Oil & Gas Evaluators Handbook. Such information relates to areas which are proximate to areas in which the Company has or intends to acquire an interest and has been provided so that readers may better understand oil and gas activities in areas in which the Company operates or plans to operate. There is no warranty, express or implied, that the results of the Company will be consistent with such information. The Company''s results may differ materially and readers should not assume the Company''s results will be consistent with those of other operators or use such information for any purpose other than as specified herein.
GLOSSARY OF ABBREVIATIONS
In this announcement the abbreviations set forth below have the following meanings:
bbl - one barrel, each barrel representing 34.972 Imperial gallons or 42 U.S. gallons
Mcf - one thousand cubic feet of natural gas
Boe - barrels of crude oil equivalent, derived by converting natural gas to crude oil in the ratio of six thousand cubic feet of natural gas to one barrel of crude oil
Boe may be misleading, particularly if used in isolation. A Boe conversion of 6 Mcf: 1 bbl of crude oil 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.