Caza Oil & Gas reports gas discovery at Bongo prospect

Caza Oil & Gas, Inc. (TSX:CAZ, LON:CAZA)has reported that drilling of the Bongo, O.B. Ranch #1 Well (Well) in Wharton County, Texas, has been completed and has intersected hydrocarbon-bearing sands with potentially significant gas and condensate between 12,400’ and 12,900’ depth.

The well reached total depth of 16,280 feet on August 10, 2010 having encountered Yegua, Cook Mountain and Wilcox sands. Preliminary drilling and log data indicated hydrocarbon-bearing sands in a shallower horizon of the Well.

Logging results and gas shows while drilling clearly indicated that hydrocarbon-bearing sands were encountered in the Eocene, Cook Mountain sand formation between 12,400-12,900 feet and represent a potentially significant discovery.
High resolution electric log analysis indicates the well encountered in excess of 100 feet of net potential pay. The analysis indicates that the Cook Mountain sandstone interval should be productive in the well.

Importantly, Caza's seismic data indicates several development locations that could increase reserves and revenues at moderate costs and manageable risk levels.

Additionally, log and seismic data indicate the well penetrated the margins of a Yegua anomaly at approximately 10,200 feet that may hold additional high-value potential.

William Ford, CEO of Caza said “we are delighted to have made what appears to be a significant discovery in the Cook Mountain formation, which was penetrated on the flank of a seismically defined trap that covers approximately 600 acres."

"The net pay calculated from high resolution log analysis indicates the presence of substantial volumes of hydrocarbons. In addition we have the upside potential of the Yegua formation and are examining its potential.” Westhouse Securities featured the company in its 'Daily Oil & Gas Filter', saying today's statement is a very positive update from Caza. "Although the Wilcox sands are not commercial in this location, the discovery of over 100 feet of net potential pay in the Cook Mountain formation exceeds all pre-drill expectations. Yet as it is still very early, flow rate and volume data are not available, making valuation difficult," Westhouse added.

The partners in the well have agreed to move up the wellbore and perform production tests starting at a depth of approximately 12,500 feet, in the Cook Mountain section. Completion of the well will involve perforating the wellbore across multiple intervals in the Cook Mountain and flow-testing the Well.

Caza expects to optimise production rates by fracture stimulation across the full pay section. Due to current market conditions, lead times for fracturing equipment may be as long as 60 days. A further announcement will be made following the fracture procedure.

Verus Investments (ASX:VIL) has an initial 12.5% participation interest in Bongo O.B. Ranch #1Well. Once a decision is made to move to production, all participating parties must contribute to the set-up costs and Verus’ interest will revert to an ongoing 9.375% working interest for any further drilling, appraisal and development costs on the Bongo prospect.

Andrew McIlwain, Verus chairman said “in an industry where exploration drilling success typically ranges from 10% to 20%, Verus has now managed to achieve a 100% strike rate in two discoveries from two wells at both Fausse Point and Bongo this year.”

“Whilst the final potential of this discovery will take some time to test and quantify, undoubtedly, as with our success at Fausse Point, this is the best outcome that Verus shareholders could have wished for.”