News

December 22, 2009

Caza Oil & Gas Suffers As Its Wolfcamp Wells Under-Perform

The newsflow from Caza Oil & Gas took a turn for the worst last week as the dual TSX and AIM-quoted company reported worse-than-expected production rates from the first two wells in its drilling campaign in New Mexico. This is disappointing as there were high hopes for the Wolfcamp oil play, where the company believed horizontal drilling would deliver high flow rates and where it recently increased its acreage position by 135 per cent to more than 19,000 gross acres. Shares in the company slumped almost 19 per cent on the news to trade at 7.5 pence per share in London.

The disappointment was more keenly felt because those early high hopes seemed justified when the first two wells, Moore Bailout 11 State -1 and Lucky Penny 10 State-1, were quickly declared discoveries, then fracced and placed on production.  The wells are still cleaning up after the fraccing operation but output does seem to have stabilized at around 20 barrels per day per well, far short of the 150 bpd seen shortly after being put into production.

Neither well was an easy drill and the...