--ADDS SHARE PRICE AND BROKER COMMENT--
Caza Oil & Gas (LON:CAZA, CVE:CAZ) revealed the significant financial impact of rising production as it reported a year-on-year 489% increase in revenues in the second quarter.
Sales of US$6.3mln produced earnings before interest tax and depreciation of US$3.3mln – which compared to a loss of US$824,891 in the comparable period of 2013 and represents a 65% jump on the prior quarter.
Caza said oil and natural gas liquids production increased 495% to 65,823 barrels in the period.
Daily production currently stands at 1,315 barrels, which is ahead of forecast.
The operating net back (the amount the group receives for its oil and gas) more than doubled year on year to US$57.84 a barrel from US$22.24, while it was paid an average US$92.89 a barrel.
Caza’s has assets in Texas and the Louisiana Gulf Coast, although its focus is its Bone Spring properties in New Mexico.
The group plans four new wells by the year-end and in June it raised US$10mln to fund this programme.
“The company's continued successes in the Bone Spring play and the recent equity infusion have the company poised for further growth in the second half of 2014, which should continue to generate material value for the Company and our shareholders," said chief executive Michael Ford.
The shares rose 6% to 19.15p and are up 120% to date. However broker Cenkos, which reckons the stock is worth 32p, believes there is much further to go.
“We believe that Caza continues to trade at a substantial discount to RENAV [risked exploration net asset value,” it told investors.
“We are somewhat surprised that the discount has not unwound on the back of the recent Bone Spring success.
“With the transformational potential across the portfolio, we believe the time is ripe for a rerating of the stock.
“Caza is fully funded for the planned drilling programme into 2015, and has headroom available on the Apollo facility, and is fully funded for the planned 2014 well programme.”