Oil barrel Articel 18/11/10

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Oil barrel Articel 18/11/10

Post  Jammy_D on Thu Nov 18, 2010 7:51 am

November 18, 2010
Caza Oil & Gas Raises £18 Million To Accelerate Its Drilling Plans In Texas And Louisiana




The last three months have been quite a ride for followers of Caza Oil & Gas, with the share price enjoying an autumnal surge on the back of successful wells in Texas. This week the AIM- and TSX-quoted E&P announced a placing to raise almost £19 million. The placing was priced at 42 pence per placing share, a discount of 8.9 per cent on the previous month. The over-subscribed placing was quite dilutive at 27.4 per cent of the enlarged share capital but will nonetheless be welcomed as it gives Caza the financial headroom to accelerate drilling plans in Texas and up its exposure to two potentially material prospects in Louisiana.




High on the priority list is the Bongo property in Wharton County in Texas, where the success of the first well, O.B. Ranch-1, found more than 100 feet of net potential pay in the Eocene Cook Mountain sands between 12,400-12,900 feet, exceeding pre-drill expectations for this formation The well, in which Caza has a 43.28 per cent working interest and 32.03 per cent net revenue interest, is being fracced and will be flow tested in the coming weeks – this will be a key test of what could be “a potentially significant” discovery of natural gas and natural gas condensate in the heart of Texas.

Little wonder Caza is keen to build on this success. Should the frac job work at OB Ranch-1, then the company plans to drill an additional exploration well to test the Cook Mountain play. It also intends to accelerate the drilling of three initial development wells to quickly monetise what could be a very material find.
Some of the funds will also be used to acquire more equity in the Arran and Tiree prospects in the Bolmex trend in southwest Louisiana. Arran will be drilled later this year when the Marian Baker -1 well will drill to 16,000 feet to target a prospect with four-way closure which Netherland, Sewell & Associates have given a gross best estimate ofunrisked prospective resources of 176.8 bcf of and 3 million barrels of oil. Caza currently has a 25 per cent working interest before casing point, a 35.94 per cent working interest after casing point and a net revenue interest of 26.24 per cent.

Success at Arran would de-risk Tiree, which lies on the other side of a fault. Tiree carries an unrisked prospective resource estimate of 75.6 bcf and 1.4 million barrels of oil and will be drilled in Q1 to 16,000 feet. The equity split here is a 25 per cent working interest before casing point, a 32.81 per cent working interest after casing point and a net revenue interest of 23.95 per cent.

There’s another Bolmex trend prospect on the books: Lewis. Leasing is underway here but the company hopes to drill in Q2 2011 to test a prospect with a gross best estimate of 42.2 bcf and 0.8 million barrels of unrisked prospective resources.

Caza spotted these potentially company-making prospects by using its 3D data set, which spans 8,000 square miles and is comprised of lots of smaller surveys bought from distressed sellers in 2004 that the Caza team has integrated and reprocessed to give a unique – and uniquely cost-effective - view of these lands.

Some of the placing funds will also be used to workover several of Caza’s producing Permian Basin wells, undertake a limited development programme at the Windham Wolfberry property in Upton County, Texas, the scene of recent discoveries, and re-enter a Yegua target on the Matthys-McMillan property in Wharton County. This work should help grow production levels in the near term, to help fund further exploration and development activity on what is shaping up to be a very promising portfolio.

Jammy_D

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