----Adds share price and broker comment----
Caza Oil & Gas (LON:CAZA, TSE:CAZ) said completion of the Lennox well in the Bone Spring play in New Mexico had started, as it reported first quarter results and an operational update.
Fracking of the Lennox State Unit 32 No. 2H horizontal well began on May 6 and the firm hopes to have the well, which last month confirmed multiple potential pay zones, flowing back in the "near future".
The oil firm also revealed it increased production of oil and natural gas liquids (NGL) by 18% to 13,820 barrels (bbls) in the three months to March 31 compared to 11,723 bbls for the same period last year.
Increasing the ratio of oil and NGL production compared to natural gas has been one of Caza's main priorities for the last two years and it expects this to continue as more Bone Springs wells come online.
Natural gas production decreased 60% to 39,742 Mcf (million cubic feet) for the three months compared to 99,563 Mcf for the same period last year, partly due to mechanical issues at a third party operated processing facility in Lea County, New Mexico.
However, operations have now been restored, which should help the company's production figure beginning in the second quarter, it added.
Revenues from oil and gas sales decreased 8% to US$1,279,296 for the three months compared to US $1,392,729 in 2012.
After the statement, broker Cenkos said it believed that the increase in production from the Bone Spring play in 2013 should go some way towards moving Caza towards profitability.
"We are encouraged by the results of the recent wells in New Mexico and believe there will be an uplift in production over the course of the year," it said
The broker keeps its 'buy' rating for the shares and has a price target of 28p.
Caza shares rose 4.17% today to stand at 9.375p.
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