US explorer Caza Oil and Gas has drawn an advance of $10million to rev up its five-tier drilling campaign in New Mexico.
The transaction with Apollo Investment Management consisted of an aggregate of $45million from the facility, in return for Apollo purchasing up to $50million of Caza’s senior secured notes.
The company is looking to use the proceeds to fund development drilling at West Copperline, Gramma Ridge, Forehand Ranch, Marathon Road and Jazzmaster assets in the Permian Basin.
Forehand Ranch development drilling will concentrate on the Cherry Canyon formation, while development drilling on the other properties will focus on the Bone Spring formation, Caza said in a statement.
The announcement comes shortly after Caza reported a booming first quarter of the year, with an EBITDA increase of 695% to £2,139,210 from last year’s $359,546 – which the company attributed primarily to its Bone Spring development.
“In order to continue building on our success over this past year, we plan to use our existing Apollo facility to fund development drilling in the Bone Spring play in Lea and Eddy Counties, New Mexico,” said Michael Ford, chief executive of Caza Oil & Gas.
“As demonstrated, the Bone Spring play offers meaningful and consistent opportunities to increase the Company’s production, cashflow and reserves, which should continue to translate into shareholder value from this area.”