US focused oil and gas group Caza Oil & Gas (LON:CAZA) reported this morning that initial production was under way from its O.B. Ranch #1 exploratory well, which lies on its licence over the Bongo prospect in Wharton County, Texas. The well was fracture stimulated earlier this month and while fracture fluid is still being recovered, initial production rates on a 10/64ths choke at 6,788 pounds per square inch flowing tubing pressure are 2.65 million cubic feet of natural gas per day and 311 barrels of oil per day.

The O.B. Ranch #1 well reached a total depth of 16,280 feet on August 10, 2010, with high resolution electric log analysis indicating the well encountered in excess of 100 feet of net potential pay in the Eocene, Cook Mountain sand formation between 12,400-12,900 feet. The company has said this could represent a potentially significant discovery of natural gas and natural gas condensate. Caza has a 43.28% working interest and an approximate 32.03% net revenue interest in the well.

W. Michael Ford, Caza’s chief executive, said: “We are very pleased with the initial production results on the O.B. Ranch #1 well and have plans to develop the Bongo Prospect in due course beginning in 2011.”

Last week Caza closed an £18.9m placing priced at 42p per share in order to speed up the drilling programme for an initial three development wells on the Bongo property and one additional exploration test in the Cook Mountain play – pending the successful fracture stimulation of the OB Ranch #1 well. Click here to read a Stockopedia interview with Caza’s chairman, John McGoldrick.

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