Rampant drilling in Texas and particularly in New Mexico increased oil and gas production four-fold at Caza Oil & Gas (CAZA) in the first six months. Output averaged 807 barrels of oil-equivalent per day (boepd), compared to 225 boepd over the same period last year. Moreover, 78 per cent of second-quarter output was premium-priced oil and natural gas liquids, up from just 54 per cent. And the average prices received for oil and gas rose 8 and 29 per cent respectively.
The increase in production is starting to filter down to Caza’s bottom line. Adjusted cash profits climbed to $3.3m (£2m) in the second quarter, compared with $2.1m in the first quarter and losses in the corresponding periods last year.
However, financing costs of $3.1m, as well as $3.4m of non-cash depreciation and depletion charges, swung the group into a loss on a reported basis. Caza has borrowed heavily to get this far. Yet following a $10m placing in July the company is fully funded for at least its remaining drill programme in 2014.
Production has risen further since the period-end - to 1,315 boepd in July. Broker Cenkos does not publish earnings forecasts but estimates Caza’s core net asset value to be 32p a share.
CAZA OIL & GAS (CAZA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 17p | MARKET VALUE: | £40m | |
| TOUCH: | 17-17.5p | 12-MONTH HIGH: | 26p | LOW: 7p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 12¢ | NET DEBT: | 145% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2013 | 2.3 | -4.4 | -3 | nil |
| 2014 | 10.9 | -2.2 | -1 | nil |
| % change | +363 | - | - | - |
£1=$1.67 | ||||
