It is another emphatic success for the company in the Bone Springs play.
At Caza’s 62.5% owned West Copperline property alone there are now four “very strong” production wells in operations. Across Caza's portfolio 24 wells have now been successful.
"This is another excellent result at West Copperline and continues the company's success in the Bone Spring play,” said chief executive Mike Ford.
“As we drill additional wells in the play, we continue to refine our operations. This has resulted in efficiencies that have allowed us to drill wells faster and cheaper, which improves the economics of each well. We have also begun to tailor our fracs to fit specific reservoir characteristics with improved results.
“These subtle changes continue to increase our success and cost efficiency in the play, which creates additional value for the company and our shareholders.”
The well, tagged West Copperline 4H, was drilled to a measured depth of 16,015 feet and was completed in the 3rd Bone Spring sand interval and following fracture stimulation began producing under controlled flowback.
It has had a peak 24 hour production rate of 1,598 barrels oil equivalent, comprising 1,220 barrels oil and 2.27mln cubic feet of gas.
Like the other wells on the property, 4H also encountered hydrocarbons in other intervals.
West Copperline comprises two contiguous 160 acre tracts which constitute the western half of Section 29, the other half is known as the Broadcaster property. Here Caza has a non-operated 25% stake and a drill programme is currently underway.
The Broadcaster 29 Fed #3H development well is a direct offset to the West Copperline wells.
Drilling is currently at 10,800 feet in the vertical section, and the operator is preparing to drill the lateral section.
Elsewhere in the play, Caza has a 52.5% stake in the Gamma Ridge property where a well (tagged 27-2H) has now reached target depth six days ahead of schedule. Fracture stimulation will begin next week.
Caza separately announced that has voluntarily repaid the remainder of a US$4.3mln convertible loan early.
The facility was provided by Yorkville Advisors’ Global Master fund.
Ford said: “We're pleased to announce the termination of this Loan. The capital associated with the Loan provided us with the needed financial flexibility to deploy capital in the Bone Spring Play, which has been beneficial to the company and our shareholders."
Ashley Kelty, analyst at City broker Cenkos, says Caza’s production will continue to grow materially in the second half of the year via drill programmes in the Bone Springs.
“The successful well at West Copperline continues the successful run of results over recent months and is greatly encouraging for Caza,” the analyst said in a note.
“This well marks the 24th successful Bone Spring wells drilled across the Caza portfolio. We believe the company is on the cusp of transformational growth from the potential offered by the stacked Bone Spring play, given that more than 300 potential well locations across the acreage held have been identified.”
Repeating a ‘buy’ recommendation, with a 31p price target, Kelty described Caza as “an opportunity for investors seeking exposure to the Bone Spring outside of the majors.”