Caza Oil & Gas upbeat about operational progress

US operating energy junior Caza Oil & Gas (LON:CAZA TSX-V:CAZ) said the Glass Ranch disposal resulted in a 29% revenue decline in Q2, while current operational progress has remained strong with the company expecting to open up new locations and prove up large reserves.

Revenues slipped 29% to US$398,883 as production declined 32% to 82,272 Mcfe (million cubic feed equivalent) after the company sold its Glass Ranch properties. Net losses reached US$1.48 million compared to US$0.98 million in H1 2009.

Working capital balance was down from US$8.38 million to US$7.2 million, due to expenses associated with the drilling of the Matthys-McMillan Gas Unit #2 and O. B. Ranch #1 wells. General and administrative expenses were roughly the same at US$1.18 million.

On the operational front, the company has drilled the Matthys-McMillan Gas Unit #2 development well in the Wharton Wilcox field. The well was called “disappointing” with Caza currently performing perforation on the Yegua interval and preparing to run pressure tests aimed at determining the potential reserve are currently underway. The O. B. Ranch #1 well is currently drilling ahead on the Bongo prospect with drilling and log data indicating hydrocarbon bearing sands in a shallower horizon.

“Further evaluation of the shallow horizon will be necessary, but we are optimistic about the results.  The well, which was scheduled to drill in 45 days, will take slightly longer due to complications created by continued gas influx into the drilling fluid system.  We expect to reach the target depth and complete logging and testing operations within the next 15 days,” said chief executive Michael Ford.

Caza has also executed an exploration agreement with Devon Energy Production Company, naming Devon as operator, to jointly test its Windham Wolfberry prospect in Texas.

The company is currently preparing to drill the Arran prospect in Louisiana, which it said would expose it to large reserves and had the potential to significantly increase its production rates. Operations are expected to commence operations in September this year. Drilling of Windham Wolfberry is also set to begin in Q3.

Caza said its farm-outs of the Arran and Windham Wolfberry fit its strategy of gaining exposure to “large, high-impact opportunities” and managing its financial exposure through farm-outs and industry partnerships.

“If successful, these projects have the potential to open up numerous development locations and prove up significant reserves for Caza,” said Ford.

http://www.proactiveinvestors.co.uk/companies/news/19821/caza-oil-gas-upbeat-about-operational-progress-19821.html