Caza Cites Positive Cash Position
Caza O&G provided its unaudited financial and operational results for the three months ended March 31, 2010.
- Caza has entered into a participation agreement with Pass Petroleum, Inc. ("Pass") covering its Arran prospect located in Acadia Parish, Louisiana. The participation agreement names Caza, as operator, and requires Pass to fund 100% of the initial appraisal costs attributable to Caza's 50% working interest in the prospect to earn a 37.5% participation interest.
- Caza successfully drilled the Matthys-McMillan Gas Unit #2 development well located in the Wharton West Wilcox Field to a total depth of 15,000 feet and plans to attempt a natural completion in the near future ahead of fracture stimulating the well at a later date.
- Subsequent to the quarter end, on May 12, 2010, Caza entered into a contract with Patterson Drilling to drill the Bongo Prospect in Wharton County, Texas. The contract provides for a test well to be drilled to a total depth of 16,000 feet. Caza expects the well to commence within 45 days. Caza is in the process of farming out part of its current 65% working interest to a 40% working interest. After completion of the well, Caza will have a 42.24% working interest (approximate net revenue interest of 30%).
- General and administrative expenses were $934,395 ($203,786 net of reimbursements) for the three-month period ended March 31, 2010 down from $1,057,603 ($1,040,162 net of reimbursements) for the comparative period in 2009. Caza continued to benefit from reductions in overhead costs resulting from various initiatives introduced by management to cut general and administrative expenses.
- Caza's production decreased 6% to 106,400 Mcfe for the three-month period ended March 31, 2010, down from 113,233 Mcfe for the comparative period in 2009. A successful completion at the Matthys-McMillan Gas Unit #2 well should more than offset this decline and upcoming drilling projects, such as Arran, if successful, will expose Caza to larger reserves and increased production.
- Caza had a cash balance of $8,159,644 as of March 31, 2010, down from $9,268,547 at December 31, 2009. The decrease in Caza's cash balance primarily represents the investment made to drill the Matthys-McMillan Gas Unit #2 well.
- Revenues from oil & gas sales increased 26% to $696,665 for the three-month period ended March 31, 2010 from $553,916 for the comparative period in 2009.
W. Michael Ford, Chief Executive Officer commented, "Caza's strategy is to utilize advanced technology to de-risk large exploratory targets, reduce single project exposure through farm out arrangements and to increase the number of projects drilled. The farm out of the Arran prospect to Pass fits with this strategy. If successful, the Arran prospect will open up numerous development locations and prove up significant potential reserves for Caza. We plan to drill this prospect in the third Quarter of 2010.
"The Matthys-McMillan Gas Unit #2 is the second operated well in the Wharton West Wilcox Field for Caza. The results from the well are in line with expectations, and we look forward to placing this well on production in the near future. The information which will be gathered from the testing program planned for this well will be useful in our continued evaluation of the field and our Bongo prospect which lies approximately 1.5 miles to the south. We are pleased to have entered into a contract to drill the Bongo prospect. The prospect is a significant target, and will add significant value to the Company if successful.
"We will continue to strive to reduce costs and improve our cash flow position through the development of the Wharton West Wilcox Field and execution of our exploration program. As a result, Caza believes that its business fundamentals are sound with a positive cash position, no debt and a portfolio of prospects in proven oil and gas regions."