Caza Oil & Gas
www.cazapetro.com
www.cazapetro.com
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 share price fall very harsh says chairman McGoldrick
Caza Oil & Gas (LON:CAZA, TSE:CAZ) chairman John McGoldrick has described as “very harsh” the share price reaction to the company’s mixed drilling update released earlier today.
Investors were of course focusing on disappointing data from the keenly anticipated second well on the OB Ranch Project, in Wharton County, Texas.
However they overlooked a better-than-expected 88 per cent hike in production, which was boosted by the stellar performance of its wells on San Jacinto Property, in Midland County, Texas.
“Investors seem to have focused in on the disappointing news from OB Ranch versus the success from our other projects,” McGoldrick said in an interview with Proactive Investors.
“There is no doubt the OB Ranch results are a little disappointing but having said that, the wells are commercial, and there’s other formations behind pipe, such as the Frio and Yegua, that haven’t been tested yet.”
At San Jacinto, the production rates cited may be a little conservative, the Caza chairman revealed.
The two wells flowed at rate of 151 barrels of oil a day and 172,000 cubic feet of gas and 68 barrels of oil and 184,000 cubic feet of gas respectively.
“They are still producing a lot of fraccing fluid. Those wells could actually do better than what we have quoted,” said McGoldrick.
“We have got another two wells to drill there that we can get after straight away. And we’ve got another three locations to drill after that.
“If all these wells perform the way the first two are expected to, and there is no reason why they shouldn’t, because they are inside, proven undeveloped locations, we could have a sustained increase in production as we go through the next two quarters.
“This is quite powerful. It allows us to cover our costs and work up the other projects we have in Louisiana.”
The state is home to the company’s biggest disappointment to date – the Arran well, which came up dry.
Arran’s failure means the company won’t push ahead Tiree in the near term, though it hopes to drill the Lewis prospect by the end of the year.
“People forget we have a tremendous amount of 3D data, so we are continually adding new projects to our portfolio,” McGoldrick explained.
“Obviously Arran’s dry hole means Tiree looks a little riskier than it did. So we are not pushing that ahead as fast as we intended. We expect to participate in Lewis, which is an attractive, high impact property in another region of Louisiana later on this year.
“We are also capitalizing on data acquired and lessons learned from Arran to develop and assess other projects for drilling, a lot of which we can’t discuss for commercial reasons. These projects will replace the ‘sex appeal’ that was lost when Arran was dry, and we see Lewis a part of that plan.”
The flow rates from the second OB Ranch well were obviously disappointing, and the presence of fresh water has utterly perplexed the Caza team.
“To produce fresh water here is quite anomalous,” McGoldrick said. “We have got to watch these wells and try and figure it out.
“The one thing that’s clear is OB Ranch is more complicated than we first thought from just looking at the seismic, and it remains a work-in-progress.”
As at June 30 the company had US$24.5 million in the bank, which makes it one of the most financially secure oil exploration companies quoted on AIM.
And its finances are further aided by today’s production figures, which equate to US$10.9 million of annual cashflow at a US$80 a barrel oil price.
“We are certainly not short of things to do,” said McGoldrick. “And we have the money to follow them up.”
