Caza Oil & Gas (AIM: CAZA, TSX: CAZA) has contracted Patterson-UTI Energy Inc to drill the Matthys-McMillan Gas Unit #2 development well in the Wharton West Wilcox field in Texas, a direct offset to Caza's Matthys-McMillan Gas Unit #1 well that was completed by Caza in July 2007 and has produced approximately 2.4 bcfge (billion cubic feet of gas equivalent) to date.
The well is the second operated well in this field for Caza. The drilling operations commenced last Tuesday, 25 February 2010, and will take 60 days to drill and another 30 days to complete.
“Caza also recently participated with Forest Oil Corporation in the successful drilling and completion of the Dorothy Hite Gas Unit #3 well. The performance of the first two wells and recent improvements to natural gas prices have caused Caza to accelerate the drilling of this well, which is in line with the recent refocus on our activities in Texas and Louisiana,” said Chief Executive of Caza Oil & Gas Mike Ford.
Caza Oil & Gas is the operator of this well and has a 19.61% working interest and a corresponding 14.32% net revenue interest.
The field produced 4 Bcf (billion cubic feet) and 1.5 MMbbls (million barrels) of condensate from the Wilcox sands from its discovery in 2001 up to May 2007. The Matthys McMIllan well intersected three pay intervals between 14,500 ft (feet) and 16,550 ft. The 2P reserves for the field stand at 29.2 Bcf.
Caza’s production in Q3 2009 increased 27% from the comparative period of 2008 to 116,016 Mcfe (thousand cubic feet of gas equivalent) from wells drilled before the start of the Endeavour programme, which has been put on production along with the first well in the programme, the Lucky Penny State #1. The drilling of the next well, Bada Bing 23 State #1 was completed in December, which was followed by a fracture stimulation programme.
Endeavour International (NYSE-AMEX: END, LSE: ENDV) has the right to farm into Caza’s prospects by paying 100% of Caza’s first well on each prospect in exchange for 75% of Caza’s initial working interest, which currently amounts to 12.5% through to commercial production on each of the aforementioned four wells.
Disclosure: The author holds no positions in the company