Caza Oil & Gas (TSX: CAZ; AIM: CAZA) responded to lower gas prices by growing production and cutting expenses to bring down pretax losses for full year 2009, while shifting focus on its oil exploration projects.
Caza’s production volumes rose 28% during the year to end-December, while revenues were down 27% due to the declines in gas prices. However, while revenues decreased by less than US$1 million from US$3.35 million to US$2.45 million, expenses were cut from US$8.3 million to US$6.2 million, resulting in a pre-tax loss of US$3.7 million compared to US$4.65 million in 2008. Losses per share declined from 0.04 pence to 0.03 pence.
NPV (net present value) of future net revenue attributable to proved reserves stood at US$17.9 million, while proved and probable reserves were estimated at US$76.1 million at 31 December 2009. Caza’s 2P (proven and probable) oil and gas reserves currently stand at 26.68 Bcfe (billion cubic feet gas equivalent), while 3P (2P+possible) reserves stand at 93.6 Bcfe.
Cash and working capital amounted to US$9.26 million and US$8.37 million respectively, compared to US$14.1 million and US$10.8 million at the end of 2008.
A significant portion of these funds will be used to finance drilling operations, Caza said, adding that the current cash reserves would allow it to grow its revenues and reserves.
The company is currently focused on its projects in Texas and Louisiana and is drilling the Matthys-McMillan GU #2 well in the Wharton West Field. Caza intends to continue developing its position in the field depending on the outcome of this well.
“Approximately 2.2 miles south of the Matthys-McMillan property, we have staked the test well on the Bongo prospect, which is planned to commence drilling in June, subject to partner approvals. Management believes that this prospect could yield significant reserves and looks forward to drilling the test well,” said chief executive of Caza Oil & Gas Michael Ford.
Subject to further farm out agreements, Caza plans to drill at least two tests in Louisiana, one further test in Texas and one test on its Wolfberry position in the Permian basin during 2010.
Disclosure: The author holds no positions in the company