Caza O&G Reports 2Q Results
Caza O&G provided its unaudited financial and operational results for the three months ended June 30, 2010.
- Caza drilled the Matthys-McMillan Gas Unit #2 development well located in the Wharton West Wilcox Field to a total depth of 15,000 feet. Caza has plugged the well back and plans to attempt a completion in the Yegua formation. The well has been perforated at a depth of 9,478 feet and bottom hole pressure tests are underway. Caza should be able to determine potential reserve volumes from the results of the pressure tests.
- As recently announced, intermediate casing has been installed, and the O.B. Ranch #1 well is drilling ahead on the Bongo Prospect.
- In May 2010, Caza executed an exploration agreement with Devon Energy Production Company, L.P. ("Devon"), naming Devon as operator, to jointly test and develop Caza's Windham Wolfberry prospect in Upton County, Texas, covering approximately 1,318 net acres.
- Caza is currently preparing to drill the Arran prospect and, as previously announced, plans to commence operations in September 2010. The Arran prospect will expose Caza to large reserves and, if successful, has the potential to increase Caza's production rates significantly.
- General and administrative expenses were $1,178,255 ($1,068,032 net of reimbursements) for the three-month period ended June 30, 2010 as compared to $1,182,202 ($576,770 net of reimbursements) for the comparative period in 2009. The change in net general and administration costs resulted from the expiration of certain joint venture agreements that provided reductions in overhead costs.
- Caza's production decreased 32% to 82,272 Mcfe for the three-month period ended June 30, 2010, down from 121,786 Mcfe for the comparative period in 2009. The production decrease is primarily due to the sale of the Glass Ranch properties.
- Caza had a cash balance of $9,375,345 as of June 30, 2010, as compared to $8,159,644 at March 31, 2010 and $9,268,547 at December 31, 2009. Caza's working capital balance at June 30, 2010 was $7,182,271 as compared to $8,376,463 at December 31, 2009. The decrease in Caza's working capital balance primarily represents the investments made to drill the Matthys-McMillan Gas Unit #2 and O. B. Ranch #1 wells.
- Revenues from oil & gas sales decreased 29% to $398,883 for the three-month period ended June 30, 2010, down from $561,083 for the comparative period in 2009. The decrease in revenues was primarily due to the sale of the Glass Ranch properties.
W. Michael Ford, Chief Executive Officer commented, "Caza is executing its strategy of exposing the company to large, high-impact opportunities and managing its financial exposure through farm-outs and industry partnerships. Our recent farm-outs of the Arran and Windham Wolfberry prospects to Pass Petroleum and Devon, respectively, fit this strategy. If successful, these projects have the potential to open up numerous development locations and prove up significant reserves for Caza. We are currently planning to begin drilling operations at Arran in September and expect drilling operations on Windham Wolfberry to commence during the third quarter as well.
"Although the results for the Matthys-McMillan Gas Unit #2 well have been disappointing to date, the well further validated the Company's regional model for potential Wilcox sand distribution, and still has potential for financial success due to the Yegua interval. Currently, Caza has plugged the well back and perforated the Yegua interval and is preparing to run bottom hole pressure tests to determine potential reserve volumes. The results of the pressure tests should determine if a completion is warranted.
"The O.B. Ranch #1 well is currently drilling to its target depth of approximately 16,000 feet. Prior to setting intermediate casing, drilling and log data indicated 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."