Caza Oil & Gas (LON:CAZA, TSE:CAZ) has opted out of a proposed joint venture in Reeves County, Texas, as it continues to manage capital spending amid lower oil prices.
The deal with Clayton Williams Energy, agreed in November, would have required Caza to pay for 75% of drilling costs for an initial commitment well.
In line with the group’s strategy to manage capital and focus spending only on near-term obligations the company decided not to proceed with the project.
Chief executive Mike Ford said Caza sought a revised arrangement with Clayton Williams Energy but a new deal was not possible.
“The original agreement with Clayton Williams represented an opportunistic and innovative transaction and one which was potentially transformational for the company, tripling its current net leasehold position,”
“However, the original deal terms are no longer commercially viable in the current oil price environment.”
“Management continues to focus on applying capital in an effective manner to deliver appropriate returns for shareholders and Caza remains in a good position with very good assets in Lea and Eddy Counties, New Mexico, and with no pressing lease obligations.”