Caza provided an operational update on the Company's San Jacinto property in Midland County, Texas.
Caza, as operator, announced that the Caza Elkins 3401 well in Midland County, Texas, reached a total depth of 11,854 feet on June 21, 2011. Electric logs indicate multiple potential pay sands for both oil and gas in the Clearfork, Spraberry, Wolfcamp, Strawn, Atoka and Devonian formations. Caza is currently running production casing and preparing the Caza Elkins 3401 well for further completion operations. The completion procedure will include a fracture stimulation program.
The rig has been released and will be moved to the Caza Elkins 3402 well location. The positive results associated with the Caza Elkins 3401 well have caused Caza to revise the target depth on the Caza Elkins 3402 well from 10,500 feet, as previously announced, to approximately 11,800 feet in order to test the Devonian formation. The well should take approximately 30 days to reach the target depth.
Frac crews are extremely busy and therefore difficult to schedule in this area. Given positive results on the Caza Elkins 3402 well, the Company anticipates the initial fracture stimulation procedures on both the Caza Elkins 3401 and 3402 wells to be performed sequentially this August. Given the current environment regarding frac crews, the Company believes that performing these operations sequentially is the most expeditious and economically prudent way forward.
The San Jacinto property covers approximately 480 acres with five proven undeveloped locations, including the Caza Elkins 3401 and 3402 locations. Caza has a 100% working interest before completion and an 85% working interest after completion in the Caza Elkins 3401 well with a 63.75% net revenue interest. In all subsequent wells on the San Jacinto property, including the Caza Elkins 3402 well, Caza will have a 75% working interest and a 56.25% net revenue interest.
W. Michael Ford, Caza's Chief Executive Officer commented, "We are very pleased with the results of the Caza Elkins 3401 well on the San Jacinto property. Log data suggests that the potential pay sections are better than anticipated and we look forward to drilling the Caza Elkins 3402 well and developing this project in due course."
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