London-listed oil and gas equities may be stuck in the doldrums - the Aim energy sector retreated 17 per cent in the first quarter of 2014 alone - but it's a completely different story across the pond. The North American oil and gas industry is booming thanks to soaring shale oil and gas production, helping share prices there ratchet upward. We suggest gaining exposure to one hot American onshore play in particular, Caza Oil & Gas (CAZA), a small Texas-based company whose shares are dual-listed on Aim and the Toronto Stock Exchange.
- Rising production
- Funding secured for drilling programme
- Substantial oil and gas reserves
- Discount to NAV
- Growing debt pile
- Pace of future drilling uncertain
What differentiates Caza from some of its riskier peers is that Caza has already proven it can extract shale oil and gas in commercial volumes from its licences in New Mexico and Texas. It has been enjoying huge success lately drilling in the 'Bone Spring' play, a series of pay zones in the Permian basin that are mostly oil- and liquids-rich. It typically partners up with other operators to reduce financial risk and is left with about a 50 per cent working interest in each well.