Caza Oil & Gas Suffers As Its Wolfcamp Wells Under-Perform

The newsflow from Caza Oil & Gas took a turn for the worst last week as the dual TSX and AIM-quoted company reported worse-than-expected production rates from the first two wells in its drilling campaign in New Mexico. This is disappointing as there were high hopes for the Wolfcamp oil play, where the company believed horizontal drilling would deliver high flow rates and where it recently increased its acreage position by 135 per cent to more than 19,000 gross acres. Shares in the company slumped almost 19 per cent on the news to trade at 7.5 pence per share in London.
The disappointment was more keenly felt because those early high hopes seemed justified when the first two wells, Moore Bailout 11 State -1 and Lucky Penny 10 State-1, were quickly declared discoveries, then fracced and placed on production. The wells are still cleaning up after the fraccing operation but output does seem to have stabilized at around 20 barrels per day per well, far short of the 150 bpd seen shortly after being put into production.

Neither well was an easy drill and the horizontal sections 2,100 feet at Moore Bailout and 1,800 feet at Lucky Penny are much shorter than the planned lateral of 4,000 feet. Talks are now underway among the joint venture partners (Caza has a 12.5 per cent working interest and 9.375 per cent net revenue interest alongside partners Endeavour International and Wise Oil & Gas) about how best to increase production rates: one option is to re-enter the wells and drill additional laterals that would then be stimulated using a multi-stage packer isolation system. Its a question, however, of how much the partners are prepared to invest in wells that have are massively under-performing.

In fact, current production rate is actually worse than the typical 30 bpd that can be achieved from the Wolfcamp using conventional and much cheaper - vertical wells. The hope was that lateral wells and new fracturing techniques would deliver much higher rates: speaking at an oilbarrel.com event in June, company chairman John McGoldrick highlighted a horizontal well drilled by a nearby operator which flowed 1,755 bpd and 1 million cubic feet per day of gas from this trend.

This proves horizontal drilling in the Wolfcamp can deliver strong flow rates Caza just now has to prove this is possible on its lands. There is certainly still much to play for, with the third and fourth wells in the campaign underway. The Bada Bing 23 State-1 horizontal well will be fracture stimulated within the next 20 to 30 days and completion operations on the Moore Cowbell 27 State-1 well are expected early in the new year. The company takes heart from the fact that the Bada Bing well successfully drilled its full lateral length of 4,000 feet. Investors will be keen for a positive result from this well to regain some strength in the share price following the recent disappointing production numbers.

We are still very optimistic about this play and gained valuable information while drilling and completing the first two wells, said CEI Mike Ford. We are hopeful that the results of the next wells drilled will be in line with expectations and set up future development opportunities."

The disappointing production figures show that even low-risk business models can throw up unpleasant surprises: there are no guarantees in the oil business. Caza was founded in 2006 to target untapped opportunities in the prolific oil and gas producing regions of New Mexico, Texas and Louisiana. This is a low cost, low risk business, with the company targeting multiple pay horizons in well-established areas, close to existing infrastructure and well out of the way of hurricane activity.

Caza has modest production, around 200 boepd (mainly gas, which isnt great news in the current price climate), and was cash flow positive in Q3. The economics are helped by an April 2009 farm-in deal with Houston-based Endeavour International, which has given the AIM company the financial firepower to accelerate the drilling of its prospect inventory.

Under the terms of the deal, Endeavour will pay 100 per cent of the costs through to first production to earn 75 per cent of Cazas interest in a range of projects. New York- and London-listed Endeavour will also pay a programme fee of US$3 million per annum, which will be paid in monthly installments. This agreement helps Caza conserve its cash, reduce risk and accelerate the drilling of up to nine wells in 2009 and early 2010. The big risk is whether that drilling plan will deliver the resultsthe early months of 2010 should provide some indication as news from the Bada Bing and Moore Cowbell wells comes in.

Here is the official release on AIM now. 400 barrels of oil per day coming as up well.

http://www.investegate.co.uk/Article.aspx?id=201012150700189724X

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Caza are presenting in London on the 13th January!

Full details - http://www.proactiveinvestors.co.uk/register/event_details/98

These events take place in mayfair, in a superb location, and offer the opportunity to meet the CEo's, and other investors, in a friendly and informal atmosphere!

All are welcome, and all events are FREE to attend.

CAZA looking very strong today, RNS on spud on monday possible

Regretfully found I could not trade this stock with HSBC - b nuisance as I had done much research and was up for it - Good luck Andy - long time no speak

Regretfully found I could not trade this stock with HSBC - b nuisance as I had done much research and was up for it - Good luck Andy - long time no speak (sorry cant seem to cancel this duplicate!)

reason for rising........

on the way up after pausing around the 50p for a while and breaking out
profit taking at the moment

http://www.proactiveinvestors.co.uk/companies/ceo_focus/638/john-mcgoldrick-of-caza-oil-gas-says-last-years-huge-share-price-could-be-repeated-.html

HOUSTON, TEXAS Caza Oil & Gas, Inc. ("Caza" or the "Company") (TSX: CAZ) (AIM: CAZA) is pleased to announce that drilling has commenced on the Company's Arran Prospect ("Arran") in Acadia Parish, Louisiana. The Marian Baker #1 well commenced drilling on Sunday, January 16, 2011, and is the initial test well on Arran.



Arran is a significant, 3-D seismically defined prospect supported by AVO data within a proven play fairway. The Marian Baker #1 well is designed to drill to a total depth of approximately 16,000 feet and is expected to encounter multiple, potential, hydrocarbon bearing reservoir sections. It is expected to take approximately 60 days to reach the proposed total depth.



Caza has a 25% working interest before casing point and a 35.94% working interest after casing point in the Marian Baker #1 well with an approximate net revenue interest of 26.24%.

Looks like they've drilled 130ft already:

http://sonlite.dnr.state.la.us/sundown/cart_prod/cart_con_wellinfo2?p_wsn=242437

January 19, 2011
Caza Oil & Gas Announces That After Delays It Has Started Drilling On Its Arran Prospect In Louisiana -- Its Most Ambitious Venture To Date


Caza Oil & Gas, the TSX and AIM listed junior has announced that drilling has started on the companys Arran Prospect in Acadia Parish, Louisiana. The delayed Marian Baker #1 well was spudded on January 16 2011, and is the initial well on Arran. Investors in Caza will welcome the news since, if successful; the Arran well could portend a meaningful step-up in production for the group as well as de-risk other prospects.
As we have reported Caza unlike other small E & Ps from Australia, the UK and Canadian, which have gone to the US to make their fortunes, has eschewed going for non-conventional gas prospects like shale projects. It has instead backed conventional targets. It is a strategy which is clearly working well for Caza.

By revisiting known low-risk discoveries which have not been exploited and concentrating at first on the so-called low lying fruit, the company got into production in 2009. In the third quarter 2010 Caza was able to report progress on the Hite Offset Prospect/Matthys-McMillan Gas Unit #2 well in Wharton County, Texas. There were also advances with the Windham Wolfberry Prospect in Upton County, Texas.

In a quarterly report Caza said that production was 77.7 million cubic feet equivalent (cfe) for the three month period ended September 30 2010. The Windham Wolfberry prospect continued to be in the news in the fourth quarter. In October the Caza 162-1 well was to test the western portion of the prospect. Success at Windham would spearhead a development programme on the lease, which has the potential for 16 wells on 80 acre spacing. The volumes involved arent huge each well is expected to produce around 80 barrels per day or 120,000 barrels in all but profitable enough at current oil prices. Caza has a 25 per cent working interest and 18.75 per cent net revenue interest in each well.

More significant is the Bongo prospect in Wharton County,Texas. Bongo represents a significant step up from the low lying fruit. The O.B.Ranch #1 well on the possible 108 bcf prospect started drilling in the final quarter of 2010.In mid -December the company said: As previously announced, Caza began the completion procedure on the O.B. Ranch #1 well on November 13. Initial production rates on a 10/64ths choke at 6,788 pounds per square inch flowing tubing pressure were 2.65 million cubic feet of natural gas per day and 311 barrels of oil per day. Caza has a 43.28 per cent working interest and an approximate 32.03 per cent net revenue interest in the well.

Caza has plans to develop the Bongo prospect this year and has the wherewithal to do this since in mid-November the company announced a placing to raise almost 19 million.The over-subscribed placing was quite dilutive at 27.4 per cent of the enlarged share capital but was welcome since it gives the company headroom to accelerate drilling plans not only in Texas but also in Louisiana.

For, if the O.B.Ranch#1 well on the Bongo prospect was a step up from the likes of the Windham Wolfberry drilling, then Arran in Louisiana could be a further step up from Bongo. The company regards Arran as a multi-segment prospect, with prospective reservoirs supported by AVO data within a proven play fairway. The Marion Baker #1 well is expected to encounter multiple, potential, hydrocarbon bearing reservoir sections and is expected to take approximately 60 days to reach the proposed total depth of approximately 16,000 feet. Netherland, Sewell & Associates, independent reservoir engineers, have given a gross best estimate of unrisked prospective resources of 176.8 bcf and 3 million barrels of oil. Caza currently has a 25 per cent working interest before casing point, a 35.94 per cent working interest after casing point and a net revenue interest of 26.24 per cent.

Success at Arran would de-risk the Tiree prosp

http://www.oilbarrel.com/nc/news/display_news/article/caza-oil-gas-announces-that-after-delays-it-has-started-drilling-on-its-arran-prospect-in-louisian/771.html

Caza Oil & Gas Announces That After Delays It Has Started Drilling On Its Arran Prospect In Louisiana -- Its Most Ambitious Venture To Date





Caza Oil & Gas, the TSX and AIM listed junior has announced that drilling has started on the companys Arran Prospect in Acadia Parish, Louisiana. The delayed Marian Baker #1 well was spudded on January 16 2011, and is the initial well on Arran. Investors in Caza will welcome the news since, if successful; the Arran well could portend a meaningful step-up in production for the group as well as de-risk other prospects.
As we have reported Caza unlike other small E & Ps from Australia, the UK and Canadian, which have gone to the US to make their fortunes, has eschewed going for non-conventional gas prospects like shale projects. It has instead backed conventional targets. It is a strategy which is clearly working well for Caza.

By revisiting known low-risk discoveries which have not been exploited and concentrating at first on the so-called low lying fruit, the company got into production in 2009. In the third quarter 2010 Caza was able to report progress on the Hite Offset Prospect/Matthys-McMillan Gas Unit #2 well in Wharton County, Texas. There were also advances with the Windham Wolfberry Prospect in Upton County, Texas.

In a quarterly report Caza said that production was 77.7 million cubic feet equivalent (cfe) for the three month period ended September 30 2010. The Windham Wolfberry prospect continued to be in the news in the fourth quarter. In October the Caza 162-1 well was to test the western portion of the prospect. Success at Windham would spearhead a development programme on the lease, which has the potential for 16 wells on 80 acre spacing. The volumes involved arent huge each well is expected to produce around 80 barrels per day or 120,000 barrels in all but profitable enough at current oil prices. Caza has a 25 per cent working interest and 18.75 per cent net revenue interest in each well.

More significant is the Bongo prospect in Wharton County,Texas. Bongo represents a significant step up from the low lying fruit. The O.B.Ranch #1 well on the possible 108 bcf prospect started drilling in the final quarter of 2010.In mid -December the company said: As previously announced, Caza began the completion procedure on the O.B. Ranch #1 well on November 13. Initial production rates on a 10/64ths choke at 6,788 pounds per square inch flowing tubing pressure were 2.65 million cubic feet of natural gas per day and 311 barrels of oil per day. Caza has a 43.28 per cent working interest and an approximate 32.03 per cent net revenue interest in the well.

Caza has plans to develop the Bongo prospect this year and has the wherewithal to do this since in mid-November the company announced a placing to raise almost 19 million.The over-subscribed placing was quite dilutive at 27.4 per cent of the enlarged share capital but was welcome since it gives the company headroom to accelerate drilling plans not only in Texas but also in Louisiana.

For, if the O.B.Ranch#1 well on the Bongo prospect was a step up from the likes of the Windham Wolfberry drilling, then Arran in Louisiana could be a further step up from Bongo. The company regards Arran as a multi-segment prospect, with prospective reservoirs supported by AVO data within a proven play fairway. The Marion Baker #1 well is expected to encounter multiple, potential, hydrocarbon bearing reservoir sections and is expected to take approximately 60 days to reach the proposed total depth of approximately 16,000 feet. Netherland, Sewell & Associates, independent reservoir engineers, have given a gross best estimate of unrisked prospective resources of 176.8 bcf and 3 million barrels of oil. Caza currently has a 25 per cent working interest before casing point, a 35.94 per cent working interest after casing point and a net revenue interest of 26.24 per cent.

Success at Arran would de-risk the Tiree prospect, which lies on the other side of a fault. Tiree carries an unrisked prospective resource estimate of 75.6 bcf and 1.4 million barrels of oil and will be drilled in 2011. The equity split here is a 25 per cent working interest before casing point ,a 32.81 working interest after casing point and a net revenue interest of 23.95 per cent.

Michael Ford CEO of Caza says: We are very pleased to announce the commencement of drilling operations on the Arran Prospect. Arran has significant upside potential for Gaza and affirms managements focus and commitment towards high-impact activities in Texas and Louisiana.

http://www.asx.com.au/asxpdf/20110124/pdf/41wbj6z8wkhlhf.pdf

plenty going on with caza.....2nd well been drilled,Feb will be a busy month with news one to watch.


Caza Oil & GasInc. (LON:CAZA, TSX:CAZ) said development drilling has begun on the Windham prospect in Upton County, Texas. The operator commenced the drilling of the Caza 158 #2 well on January 23.

The 158 #2 is designed to drill to a total depth of approximately 11,100 feet to test the Spraberry, Wolfcamp, Penn and Atoka formations and should take approximately 35 days to drill. The prospect covers approximately 1,318 net acres and should initially be developed on 80 acre spacing.

As previously announced, the Caza 158 #1 and Caza 162 #1 wells encountered multiple, pay zones, and both wells are currently in the completion phase, which requires multiple fracture stimulations.

Caza currently has a 25.0 percnet working interest and a corresponding 18.75 percent net revenue interest in all three wells.

Caza is engaged in the acquisition, exploration, development and production of hydrocarbons in the Texas Gulf Coast (on-shore), south Louisiana, southeast New Mexico and the Permian Basin of West Texas regions of the United States of America.

Only last week, Caza said drilling had started at its Arran prospect in Acadia Parish, Louisiana. The Marian Baker #1 well is the initial test well on Arran. This well is designed to drill to a total depth of approximately 16,000 feet and is expected to encounter multiple, potential, hydrocarbon bearing reservoir sections.

Caza signalled it was ready to step up its development and exploration efforts in November 2010, when it raised 18.9 million in a placing.

Caza, as operator, is pleased to announce that the Caza Elkins 3401 well in Midland County, Texas, reached a total depth of 11,854 feet on June 21, 2011. Electric logs indicate multiple potential pay sands for both oil and gas in the Clearfork, Spraberry, Wolfcamp, Strawn, Atoka and Devonian formations. Caza is currently running production casing and preparing the Caza Elkins 3401 well for further completion operations. The completion procedure will include a fracture stimulation program.