Caza O&G provided an update on the O.B. Ranch #1 well (the "Well") on the Bongo prospect in Wharton County, Texas.
The Well reached total depth of 16,280 feet on August 10, 2010 having encountered Yegua, Cook Mountain and Wilcox sands. As announced on July 27, 2010, preliminary drilling and log data indicated hydrocarbon-bearing sands in a shallower horizon of the Well.
Logging results and shows while drilling clearly indicate that hydrocarbon-bearing sands were encountered in the Eocene, Cook Mountain sand formation between 12,400-12,900 feet and represent a potentially significant discovery of natural gas and natural gas condensate. High resolution electric log analysis indicates the Well encountered in excess of 100 feet of net potential pay. The analysis indicates that the Cook Mountain sandstone interval should be productive in the Well. Importantly, Caza's seismic data indicates several development locations that could increase reserves and revenues at moderate costs and manageable risk levels.
Additionally, log and seismic data indicate the Well penetrated the margins of a Yegua anomaly at approximately 10,200 feet that may hold additional high-value potential.
The Well also encountered multiple Wilcox sands between 13,930-16,280 feet. Well log analysis confirms the sand to be gas bearing but also indicates extremely low permeability throughout the penetrated Wilcox section. Caza has analyzed all data collected from the Well and has determined that the Wilcox section is unlikely to be productive at commercial rates.
The Company has sought and received approval from its partners in the Well to move up the wellbore and perform production tests starting at a depth of approximately 12,500 feet in the Cook Mountain section. Completion of the Well will involve perforating the wellbore across multiple intervals in the Cook Mountain and flow-testing the Well. Caza expects to optimize production rates by employing fracture stimulation across the full pay section. Due to current market conditions, lead times for fracturing equipment may be as long as 60 days. A further announcement will be made following the fracture procedure.
Caza has a 40% working interest before completion and a 42.24% working interest after completion (approximate net revenue interest 30%) in the Well.
Mike Ford, Chief Executive Officer of the Company, commented, "We are delighted to have made what appears to be a significant discovery in the Cook Mountain formation, which was penetrated on the flank of a seismically defined trap that covers approximately 600 acres. The net pay calculated from high resolution log analysis indicates the presence of substantial volumes of hydrocarbons. In addition we have the upside potential of the Yegua formation and are examining its potential."
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