HOUSTON, TEXAS -- (Marketwired) -- 05/24/13 -- Caza Oil & Gas, Inc. ("Caza" or the "Company") (TSX: CAZ)(AIM: CAZA) is pleased to announce today that it has entered into a Note Purchase Agreement (the "Agreement") with Apollo Investment Corporation, an investment fund managed by Apollo Investment Management, (the "Note Holder") pursuant to which the Note Holder has agreed to purchase from the Company up to US$50,000,000 of senior secured notes of the Company (the "Notes").
The Company received US$20,000,000 at the closing of the Agreement and may draw additional advances ("Advance(s)") of up to US$30,000,000 in aggregate at its discretion during the following 15 months, subject to specified performance and financial requirements. Further details of the Notes are set out below.
The Company will 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. Upon completion of the initial program, the Company plans a second program to drill 12 additional oil and gas wells in the Bone Spring play, such program to be funded from the proceeds of a subsequent sale of Notes pursuant to the Agreement. Well locations for the program have been identified by the Company pursuant to the high-grading process described below, but the additional program will only be finalized by the Company (with the agreement of the Note Holder) following a detailed review of the well data from the initial program and upon satisfaction of certain criteria under the Agreement.
Management is focused on building a core asset base in the prolific Bone Spring play, having concluded that these assets represent a significant opportunity for the Company to deliver increased production, revenue growth and shareholder returns within an acceptable timeframe.
W. Michael Ford, Chief Executive Officer commented:
"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."
"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."
"By providing this facility, Apollo has shown confidence in the value of Caza's properties in the Bone Spring play. During our careful vetting process to find the proper financing partner, it became clear that Apollo was interested in funding Caza's drilling program in the play, but it was their willingness to work closely with management and the Board in order to tailor their financing around our specific drilling program that made Apollo's participation attractive to the Company."
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