Caza O&G Optimistic about Yegua Formation
Caza O&G provided an update on the Matthys-McMillan Gas Unit #2 development well located in the Wharton West Wilcox Field, the O.B. Ranch #1 well on the Bongo prospect and proposed activity at the Arran prospect in Acadia Parish, Louisiana and Windham Wolfberry prospect in Upton County, Texas.
As previously reported, Matthys-McMillan #2 (Caza is the operator and has a 19.61% working interest) was drilled to a total depth of 15,000'. During the course of drilling, the well encountered multiple Wilcox sands that from log information appeared to be gas bearing. Significant pressure was encountered, which required the use of heavy drilling mud to control the well. Attempts have been made to execute a natural completion (i.e. without fracture stimulation) in four separate sand intervals within the Wilcox formation. At this time an economic flow rate has not been established. The Company's post drill evaluation indicates poor reservoir characteristics at this particular location. However, Caza is continuing to pursue further investigative work concerning the Wilcox sands.
The Company has sought and received approval from its partners in Matthys-McMillan #2 to come up the wellbore and perforate at a depth of 9,478' in the Yegua sands. Both log and seismic data indicate that the Yegua interval could be productive in the Matthys-McMillan #2. If bottom hole pressure testing indicates the Yegua interval is commercial, it will need to be fracture stimulated at a later date. Current lead times for fracturing equipment will mean this could take up to 90 days. A further announcement will be made following the completion of pressure testing.
Drilling of the O.B. Ranch #1 well on the Bongo prospect commenced on 19 June 2010, and is currently drilling at 10,300'. The well is ahead of schedule to date, and its target depth should be reached within approximately 30 days.
As previously announced, Pass Petroleum has farmed in to the Company's Arran prospect. Pass is 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 with Caza maintaining 12.5% in the first and subsequent wells. Preparatory activities are progressing well, and Caza is on track to commence drilling operations in September 2010.
In addition, as previously announced, Devon has farmed in to the Company's Windham prospect in Upton County, Texas. The participation agreement names Devon as operator and provides terms whereby Devon can earn 75% of Caza's 100% participation interest in the initial well. After completion of the initial well, Devon will have the right to participate for its 75% interest in all operations associated with the property, and Caza will participate for its remaining 25% interest. Caza anticipates the initial well to be commenced by September 2010.
Mike Ford, Chief Executive Officer of the Company, commented, "The results to date on the Matthys-McMillan #2 are disappointing, however this area has multi-pay potential and we have an opportunity for a commercial completion in the Yegua formation in this well. It's important to point out that Matthys-McMillan #2 further validated the Company's regional model for potential Wilcox reservoir distribution, and we are continuing our investigative work with regard to the Wilcox sands."
"Additionally, we have some exciting projects underway. We are pleased with the drilling progress of the O.B. Ranch #1 well and look forward to drilling the Arran prospect in September 2010, and the Windham prospect, which we also anticipate being commenced in September with Devon as operator."