Caza Oil & Gas, Inc.
TSX : CAZ
AIM : CAZA

Caza Oil & Gas, Inc.

May 12, 2011 02:00 ET

Caza Oil & Gas Provides Operational Update

HOUSTON, TEXAS--(Marketwire - May 12, 2011) - Caza Oil & Gas, Inc. ("Caza" or the "Company") (TSX:CAZ)(AIM:CAZA) is pleased to provide its unaudited operational results and highlights for the three months ended March 31, 2011. The Company intends to post its unaudited financial results for the same period to SEDAR on Friday, May 13, 2011.

Unaudited First Quarter Operational Results

  • Caza's aggregate production increased 26% to 23,974 boe for the three-month period ended March 31, 2011, up from 19,073 boe in the fourth quarter of 2010. This represents an average daily production increase to 266 boe/d.
  • Caza's average lifting cost decreased to $3.26 per boe versus $6.22 per boe for the fourth quarter of 2010. This decrease in lifting costs reflected additional wells being brought on and the sale of properties with high operating costs during the last three quarters of 2010.
  • Caza is well capitalized with a cash balance of $30,829,289 as of March 31, 2011 down from $33,885,900 at December 31, 2010. The decrease in cash during the quarter ended March 31, 2011 was used to reduce the year end accounts payable, fund capital expenditures and general and administrative activities.
  • Revenues from oil & gas sales increased 41% to $1,043,943 for the three-month period ended March 31, 2011, from $742,409 for the fourth quarter of 2010. The increase in revenues from the first quarter of 2010 is a result of additional wells brought on line during 2010 and the first quarter of 2011 and the increase in commodity prices.

Operational First Quarter Highlights

  • Bongo Property, Wharton County, Texas. Caza has contracted a drilling rig for the O.B. Ranch #2 appraisal well, which will be a direct offset to the O.B. Ranch #1 discovery well. The well is targeting the Eocene, Cook Mountain interval between 12,400 and 12,900 feet, which is the stratigraphic interval producing in the O.B. Ranch #1 well, with an anticipated total depth of 13,500 feet. Data from this well will be integrated into Caza's ongoing seismic modelling effort in Wharton County, Texas, which will be used to better understand the potential size of the Cook Mountain anomaly at Bongo, as well as other potential targets in the area. Artificial lift has been installed on the OB Ranch #1 well. Caza continues to work with the well in order to establish a consistent flow rate, which may require additional remedial procedures.

    Caza has a 45.28% working interest and a 33.51% net revenue interest in the Bongo property and wells.
  • Windham Property, Upton County, Texas. Drilling operations commenced this week on the Caza 158 #3 well on the Windham property. The well has a proposed total depth of 9,850 feet and will test the Spraberry/Wolfcamp ("Wolfberry"), Penn and Strawn formations. The operator intends to perforate and stimulate all potentially productive intervals seen on the logs simultaneously within the wellbore. The 158 #3 will be the fourth well drilled on this property. Although all of the wells have produced oil and gas, the Caza 158 #1, 158 #2 and 162 #1 wells are currently at various stages in their respective fracture stimulation programs.

    Caza currently has a 25.0% working interest and an 18.75% net revenue interest in the Windham property and wells.
  • San Jacinto Property, Midland County, Texas. Caza, as operator, has contracted a drilling rig for the Caza Elkins 3401 and 3402 wells to be drilled back-to-back on the San Jacinto (Wolfberry) property. The initial test well is expected to begin drilling operations towards the end of June 2011, and will be drilled to a total depth of 11,200 feet targeting the Wolfberry, Strawn and Devonian formations, which produce oil in the immediate area. All subsequent wells, including the Caza Elkins 3402, will be drilled to approximately 10,500 feet to test the Wolfberry and Strawn formations. The property covers approximately 480 acres with five proven undeveloped locations.

    Caza has a 100% working interest before completion and an 85% working interest after completion in the first well with a 63.75% net revenue interest. In all subsequent wells on the San Jacinto property, Caza will have a 75% working interest and a 56.25% net revenue interest.
  • Sombrero Property, Lea County, New Mexico. Caza has reached agreement on a one year farmout covering rights from the surface to the base of the Canyon formation at approximately 12,250 feet subsurface with CML Exploration, LLC ("CML"), naming CML as operator, to jointly test Caza's Sombrero Prospect. The group intends to drill and test the Canyon formation, which produces oil in the area.

    The prospect covers approximately 1,920 gross acres. Caza has retained and will participate for a 20% working interest and an approximate 16.2% net revenue interest under the farmout with CML.
  • Hite Offset Property, Wharton County, Texas. Following the success of the Matthys-McMillan #2 Yegua (oil) completion on the Hite Offset property, Caza is preparing to re-enter and test the Yegua formation for oil in the formerly abandoned Carrizo W.D. McMillan #1 well, which is also located on the Hite Offset property. Caza expects operations to commence on the re-entry early in the third quarter.

    Caza currently has a 19.62% working interest and a 14.32% net revenue interest in this property.
  • Lewis Prospect, Vermilion Parish, Louisiana. After technical review, Caza has determined that Lewis is a viable prospect and plans to move the project forward.
  • Tiree Prospect, Acadia Parish, Louisiana. Caza has begun integrating valuable data gained from the Marian Baker #1 well on the Arran prospect into its technical review and seismic model. This will help Caza and its partners assess not only the viability of Tiree but also refine the seismic model for developing future drilling opportunities in this area of south Louisiana. We expect the rock physics evaluation to be delivered in the next few weeks. Following the delivery of this data, Caza will also integrate this information into the seismic model. Once this work is complete, Caza will assess the viability and timing of Tiree. At that time, Caza will update the market as to its decision.

W. Michael Ford, Chief Executive Officer commented:

"We are making progress on several fronts and are very pleased to see continuous growth in both production and revenues. When compared with the fourth quarter of 2010, the Company's aggregate production increased by 26% (on a boe basis), our oil and natural gas liquids production increased by 38%, and our revenues increased by 41%.

In addition, we are looking forward to a busy summer, as we will participate in five wells. Caza remains well funded to pursue a balanced strategy of growing production and reserves by drilling lower risk development projects coupled with higher risk exploration projects with the potential for material upside."

For further information, please contact:

In accordance with AIM Rules – Guidance Note for Mining, Oil and Gas Companies, the information contained in this announcement has been reviewed and approved by Anthony B. Sam, Vice President Operations of Caza who is a Petroleum Engineer and a member of The Society of Petroleum Engineers.

ADVISORY REGARDING FORWARD LOOKING STATEMENTS

Information in this news release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws. Such information is often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "schedule", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "intend", "could", "might", "should", "believe", "develop", "test", "anticipation" and similar expressions. In particular, information regarding the depth, timing and location of future drilling and intended production testing contained in this news release constitutes forward-looking information within the meaning of securities laws.

Implicit in this information, are assumptions regarding the success and timing of drilling operations, the intentions and elections of the operators of the wells located in the Windham property and Sombrero property areas, rig availability, projected revenue and expenses and well performance. These assumptions, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. Readers are cautioned that actual future operations, operating results and economic performance of the Company are subject to a number of risks and uncertainties, including general economic, market and business conditions and could differ materially from what is currently expected as set out above. In addition, the geotechnical analysis and engineering to be conducted in respect of the various wells is not complete. Future flow rates from the well may vary, perhaps materially, and the well may prove to be technically or economically unviable. Any future flow rates will be subject to the risks and uncertainties set out herein.

For more exhaustive information on these risks and uncertainties you should refer to the Company's most recently filed annual information form which is available at www.sedar.com and the Company's website at www.cazapetro.com. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation and do not undertake to update this information at any particular time except as may be required by securities laws.

The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.

Contact Information

  • Caza Oil & Gas, Inc.
    Michael Ford
    CEO
    +1 432 682 7424

    Caza Oil & Gas, Inc.
    John McGoldrick
    Chairman
    +1 832 573 1914/+44 7796 861 892
    www.cazapetro.com

    Cenkos Securities plc
    Jon Fitzpatrick
    +44 20 7397 8900 (London)

    Cenkos Securities plc
    Beth McKiernan
    +44 131 220 6939 (Edinburgh)

    Tavistock Communications
    Ed Portman
    +44 20 7920 3150

    Tavistock Communications
    Paul Youens
    +44 20 7920 3150