Caza Oil and Gas jumped after the explorer said it had secured a big loan to cover the costs of continued drilling at its Bone Spring play in New Mexico.
The firm said entered into a six million pound Standby Equity Distribution Agreement (SEDA) and a $12m SEDA-backed Loan Agreement with YA Global Master SPV, an investment fund managed by Yorkville Advisors Global.
Caza said it had received an initial draw-down of $2.2m on the loan agreement and may draw a second advance of $1.8m at its discretion.
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Additional draw-downs may be made with the mutual agreement of the parties.
News of the deal pushed shares up 10%, meaning Caza's shares have now doubled in value over the last month.
"These facilities provide the Company with flexible funding options, which currently are a cost effective arrangement for obtaining capital to develop the company's assets," said Chief Executive W. Michael Ford.
"We believe this arrangement is an efficient way to meet our short-term capital requirements and provide an opportunity to capitalize on drilling opportunities in order to maximize shareholder value."
The loan bears interest at a rate of 9% per annum and may be prepaid without penalty.
The SEDA facility provides for Yorkville to subscribe for up to £6m of common shares over a term of three years.
The timing and amount of advances are at Caza's discretion.
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