AIM-listed Caza Oil & Gas has entered into a note purchase agreement with Apollo Investment Corporation, an investment fund managed by Apollo Investment Management, through which Apollo Investment Management has agreed to purchase up to 50m dollars of senior secured notes of Caza Oil & Gas.
The company reported that it received $20m at the closing of the agreement and could draw additional advances of up to $30m in aggregate at its discretion during the following 15 months, subject to conditions.
It added that it expected to use the proceeds from the sale of the notes to fund an initial program to drill up to 12 oil and gas wells on its Bone Spring properties located in Lea and Eddy Counties in southeastern New Mexico over the next 12 months.
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Upon completion of the initial programme, the company said it planned a second program to drill 12 additional oil and gas wells in the Bone Spring play, with such program to be funded from the proceeds of a subsequent sale of notes pursuant to the agreement.
Michael Ford, Chief Executive Officer of Caza Oil & Gas, said: "We are extremely pleased to announce this financing facility with Apollo. We made significant progress in 2012, laying the groundwork for continued success in the Bone Spring play in Lea and Eddy Counties, New Mexico.
"However, in order to efficiently and properly advance the company's prospects and properties in the play, additional financing of proper size and scope was needed."
He added: "The company intends to utilize the Apollo facility to embark on an accelerated and expanded drilling program in the Bone Spring play over the next two years. We believe this facility provides a substantial opportunity for the company to achieve material production, revenue and reserve growth along with meaningful shareholder returns within this timeframe."
Caza Oil & Gas' share price was up 23.61% to 11.12p at 09:33 on Friday.
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