Caza Oil & Gas entered into a farm-out agreement with Sojitz Gulf Exploration in the Wilcox 116 Property in South Texas.
Under the terms of the agreement Sojitz has acquired a 10% interest in the Wilcox 116 Property. In return Sojitz will bear 13.33% of the drilling costs to casing point of the Jonell Cerny Gas Unit #1 test well, 11.43% of all costs from casing point to completion and 10% of all costs on the property thereafter. Sojitz will also pay U.S. $64,625 of back costs associated with this property to Caza. Casing point is the point at which operations to complete the well as a producer are commenced.
The Wilcox 116 Property is located in Wharton County, Texas. Within this property, the Cerny Well commenced drilling on January 15, 2008, and is anticipated to take up to 60 days to drill to a depth of 16,500 feet. The Cerny Well is targeting gas in the Deep Wilcox Sands, which are analogous to sands currently producing in Caza's nearby Matthys-McMillan Gas Unit #1 well. The Cerny Well, if successful, will establish numerous development locations. The dry well cost of the Cerny Well is estimated to be U.S. $8.3 million.
Caza, through its subsidiary, Caza Petroleum, Inc., is the operator of the Wilcox 116 Property and, following the disposal noted above, now holds a right to earn a 43.21% working interest (which reduces to a 37.81% working interest after completion of the initial well with a corresponding 28.35% net revenue interest).
In April 2007, Caza entered into a farm-out agreement with Sojitz on the Hite Offset Property to drill the Matthys-McMillan Well in Wharton County, Texas. Under the terms of that agreement Sojitz paid 9.86% of the drilling costs to casing point of the Matthys-McMillan Well to earn a 7.39% interest in this property thereafter.
The Hite Offset Property and Matthys-McMillan Well are located in Wharton County, Texas. Drilling began on the Matthys-McMillan Well in March 2007, and it was drilled to a depth of 17,700 feet. In September 2007 this well was perforated in the Upper Wilcox section and is currently flowing at 4.6 MMcf/d.
Caza holds a 19.62% working interest (14.32% net revenue interest) in the Hite Offset Property.
"In line with our strategy, during 2008 we intend to mainly focus our efforts on the Wharton West Wilcox area and this transaction consolidates our relationship with Sojitz following our recent collaboration on the successful Matthys-McMillan Well," Mike Ford, CEO of the company, commented.
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