Caza Oil & Gas (LSE:CAZA) the AIM listed, Texas-based company that engages in the acquisition, exploration, development and production of hydrocarbons in the US this morning announced that it had acquiredadditional acreage in the heart of the Bone Spring Play. Its share price is currently up 2.6%
Under theexploration and development agreement, Caza willacquire a lease comprising 480 gross acres in the heart of the Bone Spring Play. The new property, which is close to the companys existing Marathon Road Property, will be called East Marathon Road. Drilling operations should start within the week, with the initial well tobe named the Igloo 19 State #2H (19-2H well) planned as a horizontal third Bone Spring test well.
The company also provided operational updates on some of its other properties, starting with its Broadcaster Property, which it reports produced a peak 24 gross rate of 2,830 barrels (bbls) of oil equivalent on 17 September, and has since produced at a 25 day average gross rate of 1,696bbls of oil equivalent.
Theintended total measured depth of approximately 15,545 feet was reached in CazasLennox 32 State Unit #4H horizontal Bone Spring well on 18 September. However, Caza says that due tounusually high levels of rainfall across New Mexico all of its field operations in the area are now running behind schedule, which has necessitated postponing thefracture stimulation scheduled for 6 October until 16 October.
Caza says that its Marathon Road 15 OB Fed #1H horizontal Bone Spring well a direct offset to the very successful Marathon Road 15 PA Fed #1H is currentlydrilling ahead at approximately 2,000 feet vertical depth.
And the company reportsthat three shallow vertical wells have so far been drilled and fracture stimulated on itsForehand Ranch Property. Caza says that whilst it doesnt consider these Forehand Ranch wells as being significant to itsoverall production in the Bone Spring Play, they are strategically important, as they are cheaper to drill than the deeper horizontal wells, andany established production from them holds the leases to all depths.
Cazas management also says that itbelieves that, in addition to the producing Bone Spring Sands, the even deeper Wolfcamp formations are also prospective for oil and liquids-rich natural gas on this property.
Finally, the companysays that it completed the sale of its historical Wharton County Texas production on September 19, for$1.6m, and that itwillreinvest the proceeds of this sale inits oil and liquids-rich Bone Spring drilling program.
Commenting on the announcements, CEOW. Michael Ford said:
We are very pleased to announce the recent acquisition of the East Marathon Road lease and anticipate drilling operations to commence soon on the property. This is a highly active area in the Bone Spring Play that will hopefully generate good results for the Company and our shareholders.
We are also happy to report that the actual peak rate on the Broadcaster well was higher than the rate previously announced, and we are equally pleased with the excellent performance of the well through the first month of production. We anticipate drilling of the second Broadcaster well to commence in late Q4 2014.
At 19.5p, Cazas share price is up 115% on this time last year, versus a 5.6% fall in the value of the AIM All-Share index. And Caza is beating the index over the longer term, too, with a share price increase of 86% over the past fives years, compared with 9.7% gain by the AIM All-Share.
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Jon Wallis has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
