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Thursday, 28 March 2013
Caza Oil & Gas mulls new financing
Caza Oil & Gas (LON:CAZA, TSE:CAZ) said it is actively considering new sources of financing as it looks to optimise its work programme and drive economies of scale.
The Texas-based company also reported it had pared its losses considerably from US$23.3mln in 2011 to US$12.2mln in the last year, with net loss per share being cut in half.
Revenues rose 22% to five million dollars from US$4.1mln previously, as average production volumes jumped 19% to 285 barrels of oil equivalent per day.
Quarterly revenues for the three month period to the end of December increased 31% to US$1.6mln.
Chief executive Michael Ford said the firm was pleased with its progress in 2012.
"The latter portion of the year was particularly positive with material increases in both production and revenues," he said.
The company's near term intention is to continue to participate in three or four wells a year funded from production revenues, existing cash resources and currently available financing.
However, the firm's management believes that accelerating and expanding this drilling programme will significantly increase both production and cash flows, which will optimize the work programme and drive economies of scale.
"The company and its advisers have been actively considering alternative sources of capital, including a review of possible joint-venture and strategic financing partner options and other debt instruments, which will provide the company with sufficient leverage and capital to adequately exploit the opportunity but mitigate material equity dilution during the 'value accretion' drilling phase," its statement said.
Subject to the availability of appropriate financing, Caza's objective is to embark on an accelerated and expanded drilling programme in the Bone Spring play over the next two years.
Broker Cenkos said at current levels, Caza was trading at a substantial discount to risk exploration net asset value (RENAV).
"However, we believe that the unlocking of the Bone Spring play and the transformational increase in production should go some way to restoring market confidence in the stock," it said in a note.
Cenkos has a price target of 30p and has a 'buy' recommendation on Caza.
The firm's shares are currently changing hands at 10.1p.