US exploration tiddler Caza Oil & Gas has confirmed its Lennox well in New Mexico showed a number of encouraging potential zones for oil and gas.
Drilling at the Lennox State Unit 32 2H horizontal well in southeast New Mexico delivered results that contained multiple potential pay zones for oil and liquids-rich natural gas.
AIM-listed Caza's operational update covering drilling activities across its 4,100 net acres in the region confirmed that initial producing well rates continue to improve with technological advances in drilling and fracking designs.
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Management stated that the company was "well positioned" in the region, and continued to "exploit opportunities to build on its current acreage position".
To this end, Caza acquired a new 318 acre lease in Lea County to be called the Gateway project with 100% working interest and a 77% net revenue interest and agreed to participate in a proposed drilling into the Delaware formation with fellow regional operator Occidental Petroleum (OXY) at its Roja property, which is currently scheduled for June 2013 and gives Caza a 20% working interest and 16% net revenue interest.
Chief Executive Officer Michael Ford commented that the log results from the Lennox well were in-line with expectations after initial difficulties with the original drilling rig.
"We look forward to scheduling the frac and completing the well in order to bring it online in the near future. Given success, this well will help establish a substantial development program, as the Lennox Unit contains 1,920 acres."
On the Gateway acquisition Ford added: "No reserves were assigned to this property at year-end, because it is too new. However, the company believes the lease has good reserve potential and expects to drill a test well at Gateway during 2013."
"Finally, we are looking forward to participating in the Roja well with OXY. The Delaware is another formation being successfully exploited for oil and liquids-rich natural gas as part of the broader horizontal Bone Spring play. Multiple potential pay zones are what make this play such an exciting investment proposition."
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