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Based in The Woodlands, Texas, Caza Oil & Gas, Inc. is engaged in the acquisition, exploration, development and production of hydrocarbons in the Texas Gulf Coast, South Louisiana, Southeast New Mexico and the Permian Basin of West Texas regions of the United States through its subsidiary, Caza Petroleum. Caza Oil & Gas, Inc. is listing on both AIM, a market operated by London Stock Exchange plc, and the Toronto Stock Exchange.
Caza Oil & Gas chairman thinks market reaction after Marian Baker #1 well results ‘overdone’
It has been a roller-coaster day for investors in Caza Oil & Gas (LON:CAZA, TSE:CAZ) as they’ve digested some rather disappointing results from the Marian Baker #1 well on the Arran prospect in Louisiana.
After determining that none of the sands are likely to be productive at commercial rates, Caza wants to plug and abandon the well.
The shares tumbled more than 30 per cent on the news, which according to chairman John McGoldrick is an overreaction.
With US$30 million raised at the end of last year, Caza is fully funded for an aggressive 2011 drilling programme which is largely unaffected by the dry hole at Arran, he told Proactive Investors.
It includes the exciting OB-Ranch in South Texas, as well a number of targets across the Permian Basin in West Texas and New Mexico.
Indeed, the results collated from Marian Baker may in fact provide a vital source of sub-surface information that will help guide future drilling in the area.
The company had slated to drill the Tiree and Lewis prospects this year.
“It (Arran) is a data point, and there are very few of them at this depth and in this region,” McGoldrick said.
“So the results are very useful in their own context, particularly when you have a thousand square miles of data and a bunch of prospects.
“It will help some of them in a positive way and it helps our portfolio management, but quite how this is going to play out we don’t know at the moment.”
With the well being drilled to a total depth of 15,462 feet, the Marian Baker log data revealed that the targeted Middle Frio section between 12,500 and 15,462 feet had extremely low porosity and permeability.
Meanwhile, the shallower sands in the Upper Frio sections between 9,600 and 12,200 feet appear to be wet, Caza said.
“The stuff we are doing in South Texas is quite obviously unaffected by this,” McGoldrick said.
“The same goes for what’s happening in the Permian Basin.
“For a small company we have actually had a good, diverse portfolio of assets.
“The market reaction has been a bit of an overreaction. We came into this year with over US$30 million so our cash position is really strong.”
Although the AVO data was promising for Arran, there was only ever a 30 per cent chance of success, according to chief executive Michael Ford.
“Any data recovered from a good or bad well reduces the risk for any subsequent well. As you get more and more data it allows you to narrow down the targets you drill.”
