CAZA.L Regulatory News (CAZA)

May 14, 2012

Caza Oil & Gas, Inc.

CAZA OIL & GAS ANNOUNCES FIRST QUARTER RESULTS

HOUSTON, TEXAS (Marketwire - May 14, 2012) - Caza Oil & Gas, Inc. ("Caza" or the "Company") (TSX:CAZ) (AIM:CAZA) is pleased to provide its unaudited financial results for the three-month period ended March 31, 2012.

Unaudited First Quarter Financial Results

·; Caza's production increased 18.1% to 28,317 Boe for the three-month period ended March 31, 2012, from 23,974 Boe for the comparative period in 2011. This represents an average daily production rate increase of 45 Boe/d to 311 Boe/d, as compared to 266 Boe/d for the comparative period. Caza's Q1 2012 production of 28,317 Boe represents an increase of 17.5% to 28,317 Boe compared to Q4 2011 (24,105 Boe), due to additional wells coming on line.

·; Caza's revenues from oil and gas sales increased 33.4% to $1,392,729 for the three-month period ended March 31, 2012, from $1,043,943 for the comparative period in 2011. The increase in revenues was primarily due to additional wells being brought on line since the comparative period. Despite lower prices, Caza's Q1 2012 revenues of $1,392,729 represent an increase of 15.4% to $1,392,729 compared to Q4 2011 ($1,206,649).

·; The average combined price received by Caza increased 13% to $49.18 per Boe during the three-month period ended March 31, 2012, from $43.54 per Boe during the comparative period in 2011. The average combined price received by Caza in Q1 2012 decreased 1.8% to $49.18 per Boe compared to Q4 2011 ($50.06 per Boe).

·; Caza's oil and natural gas liquids (NGL) production increased 57% to 11,723 bbls for the three-month period ended March 31, 2012, from 7,467 bbls for the comparative period in 2011. The Company's oil and NGL production has increased to 41% of the Company's combined oil and natural gas production in Q1 2012 from 31% in Q1 2011.

·; Caza had a cash balance of $8,232,701 as of March 31, 2012, as compared to $10,204,176 at December 31, 2011. Caza's working capital balance at March 31, 2012, was $7,558,545 as compared to $8,845,433 at December 31, 2011. The decrease in Caza's working capital balance primarily represents the investments made to drill the WC 35 State No. 1 well in Lea County, New Mexico, and continued operations on the Caza Elkins 3401 and 3402 wells in Midland County, Texas.

·; Caza performed an impairment test at March 31, 2012 to assess whether the carrying value of its petroleum and natural gas properties exceeds fair value. Impairment in the amount of $2,688,506 was recorded as at March 31, 2012, primarily due to changes in the estimates of expected future natural gas prices used in determining the fair value. This is strictly based on the change in estimated future natural gas prices since December 31, 2011, and would change in the event such estimates are revised upward.

W. Michael Ford, Chief Executive Officer commented:

"Caza continued its positive operational and financial performance in the first quarter of 2012, increasing both production and revenues. We also continue to increase our oil to natural gas ratio in order to take advantage of the disparity between the high price of oil and low price of natural gas. Management remains committed to delivering shareholder value by increasing production levels, cash flows and proven reserves through all available means."

"As we've recently reported, Caza swapped acreage with Mewbourne Oil Company setting up twelve additional horizontal Bone Spring locations in southeast New Mexico. Mewbourne, as operator, recently commenced drilling the Bradley "29" Fed Com No. 3H horizontal well. This is Caza's first exposure to horizontal Bone Spring drilling. The Company is increasingly enthusiastic about its position in this oil and liquids-rich play."

Copies of the Company's unaudited financial statements for the first quarter ended March 31, 2012, and the accompanying management's discussion and analysis are available on SEDAR at www.sedar.com and the Company's website at www.cazapetro.com.

About Caza

Caza is engaged in the acquisition, exploration, development and production of hydrocarbons in the following regions of the United States of America through its subsidiary, Caza Petroleum, Inc.: Texas and Louisiana Gulf Coast (on-shore), and the Permian Basin (West Texas and Southeast New Mexico).

For further information, please contact:

Caza Oil & Gas, Inc.

Michael Ford, CEO +1 432 682 7424

John McGoldrick, Chairman +44 7796 861 892

Cenkos Securities plc

Jon Fitzpatrick +44 20 7397 8900 (London)

Beth McKiernan +44 131 220 6939 (Edinburgh)

VSA Capital Limited

Andrew Raca +44 (0) 20 3005 5004

Malcolm Graham-Wood +44 (0) 20 3005 5012

M:Communications

Patrick d'Ancona +44 20 7920 2330

Chris McMahon

The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.

In accordance with AIM Rules - Guidance Note for Mining, Oil and Gas Companies, the information contained in this announcement has been reviewed and approved by Anthony B. Sam, Vice President Operations of Caza who is a Petroleum Engineer and a member of The Society of Petroleum Engineers.

ADVISORY STATEMENT

Boe may be misleading, particularly if used in isolation. A boe conversion of six thousand cubic feet: 1 barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.

Condensed Consolidated Statement of Financial Position

(Unaudited)

Condensed Consolidated Statements of Net Loss and Comprehensive Loss

(Unaudited)

Condensed Consolidated Statement of Cash Flows

 Condensed Consolidated Statement of Changes in Equity

(Unaudited)

1. Basis of Presentation

Caza Oil & Gas, Inc. ("Caza" or the "Company") was incorporated under the laws of British Columbia on June 9, 2006 for the purposes of acquiring shares of Caza Petroleum, Inc. ("Caza Petroleum"). The Company and its subsidiaries are engaged in the exploration for and the development, production and acquisition of, petroleum and natural gas reserves. The Company's common shares are listed for trading on the TSX (symbol "CAZ") and AIM stock exchanges (symbol "CAZA"). The corporate headquarters of the Company is located at 10077 Grogan's Mill Road, Suite 200, The Woodlands, Texas 77380 and the registered office of the Company is located at Suite 1700, Park Place, 666 Burrard Street Vancouver, British Columbia, V6C 2X8.

Caza's functional and presentational currency is the United States ("U.S.") dollar as the majority of its transactions are denominated in the currency.

The condensed consolidated financial statements (the "Financial Statements") were prepared in accordance with IAS 34 - Interim Financial Reporting using accounting policies consistent with International Financial Reporting Standards ("IFRS").

These Financial Statements should be read in conjunction with the Company's audited annual consolidated financial statements as at and for the year ended December 31, 2011, which outline the Company's significant accounting policies in Note 2 thereto, as well as the Company's critical accounting judgements and key sources of estimation uncertainty, which have been applied consistently in these Financial Statements. The note disclosure requirements of annual consolidated financial statements provide additional disclosures to that required for interim unaudited condensed consolidated financial statements.

These Financial Statements were approved for issuance by the Board of Directors on May 10, 2012.

2. Exploration and evaluation assets

During the year ended December 31, 2011, the Company expensed $6,339,995 of exploration and evaluation costs of which $2,594,801 related to the Marian Baker et al, No 1 drilled during the three months ended March 31, 2011 that did not encounter hydrocarbons as well as an impairment to the valuation of the Las Animas prospect in the amount of $1,146,226. The balance of the costs expensed related to other leasehold and prospect expenditures that have expired or no longer provide value for the Company.

3. Petroleum and natural gas properties and equipment

Future development costs of proved undeveloped reserves of $30,722,900 were included in the depletion calculation at March 31, 2012 and December 31, 2011. The Company performed an impairment test at March 31, 2012 to assess whether the carrying value of its petroleum and natural gas properties exceeds fair value. An impairment in the amount of $2,688,506 was required to be recorded as at March 31, 2012 primarily due to changes in the estimates of expected future natural gas prices used in determining the fair value.The March 31, 2012 impairment was recognized using a 16% discount rate (December 31, 2011 - 16%).  

4. Decommissioning Liabilities

The following table presents the reconciliation of the beginning and ending aggregate carrying amount of the obligation associated with the retirement of oil and gas properties:

The undiscounted amount of cash flows, required over the estimated reserve life of the underlying assets, to settle the obligation, adjusted for inflation, is estimated at $1,206,116 (December 31, 2011 - $1,533,283). The obligation was calculated using a risk free discount rate of 2.5 percent and an inflation rate of 3 percent. It is expected that this obligation will be funded from general Company resources at the time the costs are incurred with the majority of costs expected to occur between 2012 and 2030.

5. Related Party Transactions

The aggregate amount of expenditures made to related parties:

Singular Oil & Gas Sands, LLC ("Singular") is a related party as it is a company under common control with Zoneplan Limited, which is a significant shareholder of Caza.

Singular participates in the drilling of the Matthys McMillan Gas Unit #2 and the O B Ranch #1 and 2 wells located in Wharton County, Texas. Under the terms of that agreement, Singular paid 14.01% of the drilling costs through completion to earn a 10.23% net revenue interest on the Matthys McMillan Gas Unit #2 well and paid 12.5% of the drilling costs to earn a 6.94% net revenue interest on the O B Ranch #1 well. Under the terms of the agreement of the O B Ranch #2 Singular paid 9.375% of the drilling costs to earn approximately 6.8% net revenue interest. This participation was in the normal course of Caza's business and on the same terms and conditions to those of other joint interest partners. Singular owes the Company $536,425 in joint interest partner receivables as at March 31, 2012 (December 31, 2011 - $492,240).

All related party transactions are in the normal course of operations and have been measured at the agreed to exchange amounts, which is the amount of consideration established and agreed to by the related parties and which is comparable to those negotiated with third parties.

7. Supplementary Information

(a) net change in non-cash working capital

(b) supplementary cash flow information

(c) cash and cash equivalents

The money market instruments bear interest at a rate of 0.022% as at March 31, 2012

(December 31, 2011 - 0.033%).

8. Financial Instruments

Credit Risk

Credit risk arises when a failure by counter parties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the consolidated statement of financial position date. A majority of the Company's financial assets at the consolidated statement of financial position date arise from natural gas liquids and natural gas sales and the Company's accounts receivable that are with these customers and joint interest participants in the oil and natural gas industry. Industry standard dictates that commodity sales are settled on the 25th day of the month following the month of production. The Company's natural gas and condensate production is sold to large marketing companies. Typically, the Company's maximum credit exposure to customers is revenue from two months of sales. During the period ended March 31, 2012, the Company sold 78.39% (March 31, 2011 - 72.35%) of its natural gas and condensates to a single purchaser. These sales were conducted on transaction terms that are typical for the sale of natural gas and condensates in the United States. In addition, when joint operations are conducted on behalf of a joint interest partner relating to capital expenditures, costs of such operations are paid for in advance to the Company by way of a cash call to the partner of the operation being conducted.

Caza management assesses quarterly whether there should be any impairment of the financial assets of the Company. At March 31, 2012, the Company had overdue accounts receivable from certain joint interest partners of $86,807 which were outstanding for greater than 60 days and $72,748 that were outstanding for greater than 90 days. At March 31, 2012, the Company's two largest joint interest partners represented approximately 26% and 8% of the Company's receivable balance (March 31, 2011 12% and 9% respectively). The maximum exposure to credit risk is represented by the carrying amount on the consolidated statement of financial position of cash and cash equivalents, accounts receivable and deposits.