Caza has successfully farmed out part of its 65% working interest in the Bongo Prospect to two partners, Verus Investments and Singular O&G. Following the farmout Caza will maintain a 40% working interest in Bongo.
As previously announced Caza has entered into a contract with Patterson Drilling to drill the Bongo Prospect. The contract provides for a test well to be drilled to a total depth of 16,000 feet.
The transaction with Singular constitutes a related party transaction in accordance with Section 501 (c) of the Toronto Stock Exchange ("TSX") Rules and Rule 13 of the AIM Rules for Companies. The directors of Caza, having given notice to the TSX and having consulted with the Company's AIM Nominated Adviser, Westhouse Securities Limited, consider that the terms of the transaction are fair and reasonable insofar as the shareholders are concerned. The TSX has conditionally approved the farmout arrangement with Singular.
In addition to the farmout, the Company is pleased to announce the divestiture of its non-operated Glass Ranch property to Viejo Energy I, LLC doing business as Momentum Energy Corporation ("Momentum") for a cash consideration of $1.4 million. The Glass Ranch property comprises four producing oil wells with Momentum as operator. Caza and Momentum each had a 50% working interest in the wells. The four wells have been on production since 2008, with the last well being completed in November of 2008. The wells have slowly continued to decline, and the combined net revenue from the wells for Q1 2010 was approximately $147,000.
W. Michael Ford, Chief Executive Officer, commented, "We are pleased to announce the completion of the farmout of Bongo to Verus and Singular. Caza is now in a position to drill this potential high-impact prospect, and we expect drilling to commence within 14 days."
"Additionally, the consideration received from the sale of Glass Ranch demonstrates the inherent value within the Caza portfolio with funds realized going towards our high-impact exploration activities."
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