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Caza Oil & Gas eyes new drilling opportunities again

Published: 07:32 15 May 2015 BST

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"While we have taken the prudent decision to cut back on capital expenditures during this time of low oil prices, many of the company's Bone Spring properties could deliver acceptable rates of return at current price levels,” Ford said.

Caza Oil & Gas (LON:CAZA) told investors it could again look to new drilling opportunities in the Bone Springs play.

Chief executive Mike Ford revealed that Caza could drill at least one ‘obligation well’ as well as possibly seven new development wells during the rest of 2015.

"While we have taken the prudent decision to cut back on capital expenditures during this time of low oil prices, many of the company's Bone Spring properties could deliver acceptable rates of return at current price levels,” Ford said.

In a quarterly results statement Caza today revealed a significant 65% increase in oil and natural gas liquid (NGL) production for the first three months, though lower crude prices continue to be an impediment.

Earnings (EBITDA) increased 29% to US$2.7mln compared to US$2.1mln in the same period of 2014.

Caza produced a total of 73,643 barrels in the period, and ‘liquids’ accounted for 89% of Caza’s output. Natural gas production decreased 58% to 53mln cubic feet. Overall Caza’s daily group production rate averaged 917 barrels oil equivalent, a 34% gain compared with Q1 2014.

Revenue in the three months, to March 31, from oil and NGL sales fell 27% to US$3.3mln from US$4.8mln in the comparative period of 2014. It represents a 30% decline from the preceding quarter.

The average oil price received by Caza was down 56% to US$40.60 during the period, versus US$93.28 in the same period of last year. Gas prices fell too, down 35% to US$3.07 per thousand cubic feet. Caza’s combined sales price was US$40.81 per barrel oil equivalent for the period, which represents a 45% reduction on the 2014 comparative.

The company has managed its capital budget in response to the crude price downturn though the company today highlighted opportunities to expand operations.

At March 31, Caza had US$6mln of cash and equivalents and it had drawn US$45mln of its facility with Apollo Investment Management.

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