Caza Oil & Gas ‘very pleased’ with operations in Bone Springs play

Caza Oil & Gas (TSE:CAZ) (LON:CAZA) chief executive Mike Ford says he is very pleased with the group’s ongoing operations in the Bone Springs play.

This work involves drilling and completing wells, and adding new production.

In the second quarter Caza increased production of oil and natural gas liquids by 16% to 11,059 barrels, but overall production decreased 19% to 20,330 barrels of oil equivalent. This was largely a  result of the disposal of the San Jacinto property in July.

Revenues from oil and gas sales totalled US$1.06mln, and average sales prices were 21% higher at US$52.53 per barrel of oil equivalent.

At the end of the quarter, June 30, Caza had a cash balance of US$19.1mln.

Ford says production and cash flow will improve in the coming months.

 “We have recently been successful in enhancing some of our historical production in Wharton County, Texas, through work-over operation,” he explained.

“These operations coupled with bringing new Bone Spring wells online in the very near future, and continuing to do so throughout the remainder of 2013, should begin to be reflected by improved production and cash flow figures in the next quarter. 

"Our current financial numbers are still being skewed from the sale of the Sa Jacinto property, which results in a negative impact on the comparative figures from 2012, that may continue through the end of Q3 (2013), which is when San Jacinto was sold last year. 

“Despite this, the company is on track to replace and surpass losses from San Jacinto in very short order and continue this upward trend with the company's current sustained drilling programme continuing to boost production and cash flows and enhance reserves and shareholder value into the foreseeable future."

Ford highlights a number of specific projects which could add production in the Bone Springs play in the near future. These include the Gateway, Madera, Copperline and Caza Ridge projects.

“We are excited to get these wells online and producing in the very near future.

“The Caza Ridge well appears to be a very good well, and we look forward to updating the market  once initial rates for oil and natural gas are established.

“Also, our recent lease acquisition has improved the company's acreage position in the Bone Spring play and has increased our net position in the play to approximately 4,700 acres with an estimated 270 drilling locations."