Caza Oil & Gas gears up for 2011 with new £18.9 mln funding

Caza Oil & Gas (LON:CAZA, TSX:CAZ) is ready to step up its development and exploration efforts after it raised £18.9 million, or C$30.6 million, in a conditional placing.

The company plans to accelerate the three-well development programme on the Bongo project in Texas.

It will also fund drilling across the exploration portfolio – with wells planned at Cook Mountain, in the West Texas Permian Basin, Windham Wolfberry and on the Bolmex trend in Louisiana.

“We believe our work-over program and current developments should grow production levels in the near term and the revenue generated should contribute towards further exploration and development activity,” chief executive W. Michael Ford said.

“We also intend to reprocess additional seismic data to identify further targets."

The placing sees Caza issuing 45 million shares at 42 pence to raise £18.9 million. The new shares represent 27.4 percent of the enlarged share capital. The placing was arranged by Cenkos Securities and the new shares are expected to join the AIM market on 19 November 2010.

Ford highlighted that the fundraising was oversubscribed and it comprised both existing and new investors.

The funding will support the 2011 exploration programm,e with extra drilling is being planned on the Cook Mountain play as well as a work-over program on several Permian Basin wells and a limited development programme at the Windham Wolfberry property.

Caza also plans to use the new capital to take a bigger stake in the Arran and Tiree prospects on the Bolmex trend in Louisiana. At least three wells are planned for Bolmex prospects in 2011.

A well will be drilled on the Tiree Prospect in Q1 2011, to a depth of around 16,000 feet.

Later at Arran, the Marian Baker #1 well will be drilled in Q4 2010. It will target a prospect with four-way closure at a depth of sixteen thousand feet.

Caza currently has a 25 percent stake in both Arran and Tiree and its interests will increase to 35.94 percent and 32.81 percent respectively after the planned work programmes.

Another well is planned on the Bolmex trend, with work set to get underway on the 50 percent owned Lewis prospect in Q2 2011.

Separately Caza released its third quarter results, which highlighted the company’s progress on its strategic plans.

"We are pleased with our recent operational results, which should provide future production that should more than offset recent production declines,” Ford said.  

“Our strategy of acquiring additional interests in our large, high-impact projects will expose Caza to numerous development opportunities along with significant reserves, if successful, which will provide a platform for measurable growth.”  

Due to the sale of interest in the Glass Ranch properties in June, the company’s production and revenues are around a third lower than the third quarter of 2009. 

However there have been a number of key events which have boosted its growth prospects.

The company believes that its exploration work on the Bongo prospect, in August, has unearthed a potentially significant discovery of natural gas and natural gas condensate.  

Also in August it completed and fracced the Matthys-McMillan Gas Unit #2 well, to bring new production coming on stream. 

The well has subsequently gone on to produce 146 barrels of condensate and 480,000 cubic feet of natural gas per day in October.

In October, drilling encountered multiple potential pay sands at the Windham Wolfberry Prospect. A second well was also drilled last month.