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Caza Oil & Gas is being shown a lot of confidence as the AIM-listed firm received fresh funding to support its 2013-2014 drilling campaign.
In a statement today, Caza disclosed it has acquired funds to the tune of US$50 million through a Note Purchase Agreement with an investment firm Apollo Investment Corporation – a deal which, according to Caza’s Chief Executive, W. Michael Ford, signifies a vote of confidence in the firm.
Caza intends to use the funds to support the drilling of some 12 wells around its Bone Spring play in Southeast New Mexico, United States in the next 12 months and 12 more after that in the same area.
The company has already received US$20 million upon the completion of the contract and the remaining US$30 million can be drawn subject to the results of the first 12 wells, the announcement stated.
“Obtaining this financing is a significant step in the Company’s implementation of its stated strategy of achieving significant growth in reserves and production, thereby raising the Company’s profile in the basin, while maximizing shareholder value,” Caza stated.
Caza’s production during the first three months of the year was lower than that during the fourth quarter of 2012 and its cash position prior to the agreement will have only allowed the firm to drill three to four wells a year – a pace that may not be able to compensate the declining production of historic wells.
The wells to be drilled are located around the Bone Spring play, which Ford said during the release of the January – March report has the potential to general material value creation for the firm’s shareholders.
In London, shares of Caza spiked as high as 30% as investors welcomed the deal as a positive impression to the Texas-based oil and gas producer. By 12:00 GMT, shares were up 25% to 11.25 pence with over six million shares swapping ownership.
