CAZA.L Regulatory News (CAZA)

August 10, 2012

Caza Oil & Gas, Inc.

CAZA OIL & GAS ANNOUNCES SECOND QUARTER RESULTS

AND PROVIDES OPERATIONAL UPDATE

HOUSTON, TEXAS (Marketwire - August 10, 2012) - Caza Oil & Gas, Inc. ("Caza" or the "Company") (TSX:CAZ) (AIM:CAZA), is pleased to provide its unaudited financial and operational results for the three-months ended June 30, 2012.

Unaudited Second Quarter Financial Results

·; Caza's production increased 38% to 25,107 Boe for the three-month period ended June 30, 2012, from 18,130 Boe for the comparative period in 2011. This represents an average daily production rate increase of 77 Boe/d to 276 Boe/d, as compared to 199 Boe/d for the comparative period.

·; Caza's revenues from oil and gas sales increased 30% to $1,093,694 for the three-month period ended June 30, 2012, from $843,836 for the comparative period in 2011. The increase in revenues was primarily due to additional wells being brought on line since the comparative period.

·; The average combined price received by Caza decreased 6% to $43.56 per Boe during the three-month period ended June 30, 2012, from $46.54 per Boe during the comparative period in 2011, due to lower commodity prices.

·; Caza's oil and natural gas liquids (NGL) production increased 86% to 9,546 bbls for the three-month period ended June 30, 2012, from 5,138 bbls for the comparative period in 2011. The Company's oil and NGL production has increased to 38% of the Company's combined oil and natural gas production in Q2 2012 from 28% in Q2 2011, further mitigating the low US gas price.

·; Caza had a cash balance of $4,715,163 as of June 30, 2012, as compared to $8,232,701 at March 31, 2012. Caza's working capital balance at June 30, 2012, was $4,908,143 as compared to $7,558,545 at March 31, 2012. The decrease in Caza's working capital balance is due primarily to the investment made to drill the Bradley 29 Fed Com #3H well in Eddy County, New Mexico, and operational costs incurred on the Caza Elkins 3401 and 3402 wells in Midland County, Texas. This cash balance does not include the proceeds of $6.1MM from the sale of the San Jacinto property, which occurred in Q3 2012, as previously announced.

Second Quarter Operational Results and Recent Events

·; The Bradley "29" Fed Com No. 3H horizontal well reached total measured depth of approximately 12,690 feet in early June 2012, was successfully fracture stimulated in the 2nd Bone Spring sand on June 14, 2012, and reached a peak producing rate day of 399 bbls of oil and 521 Mcfg, which equals 486 Boe, with 488 bbls of water. The production profile and all costs associated with drilling, completing and producing this well are as projected and meet the Company's pre-drill expectations. Caza has a 20% working interest and a 15% net revenue interest in the Bradley "29" Fed Com No. 3H well.

·; The Quail "16" State No. 3H horizontal well, operated by Fasken Oil and Ranch, Ltd. ("Fasken") commenced drilling in April with a primary horizontal objective in the 3rd Bone Spring sand at a vertical depth of approximately 10,965 feet subsurface. The well recently reached total measured depth at approximately 14,987 feet. The well had multiple oil and gas shows while drilling in the Delaware, Avalon Shale, and 1st, 2nd and 3rd Bone Spring sands. Caza has a 0.25% working interest and an approximate 0.1875% net revenue interest in the Quail "16" State No. 3H well.

·; The CML Exploration, LLC operated WC 35 State No. 1 well was perforated in the San Andres interval between 4,814-4,821 feet in May 2012, and has recently been fracture stimulated. The well has limited fluid entry and is currently producing on pump at approximately 3 bbls of fluid per day with 60% oil cut. Caza has a 20% working interest and an approximate 17.125% net revenue interest in the WC 35 State No. 1 well.

·; The Company recently announced the successful sale of the San Jacinto property, which includes the Caza Elkins 3401 and 3402 wells. The price received was $6.1MM and exceeded Caza's internal matrix for return on investment and capital employment. Caza intends to use the proceeds to further existing assets, specifically in the Bone Spring play in southeast New Mexico, and progress other opportunities.

·; Caza is pleased to announce that it has signed a rig contract to drill the Caza Ridge 14 State #3H horizontal test well on its Copperline Prospect in Lea County, New Mexico. The well will be drilled to a total vertical depth of approximately 11,500 feet with a total measured depth of approximately 15,730 feet. The primary target is the 3rd Bone Spring sand at a vertical depth of approximately 11,315 feet subsurface. Well site preparation has already started, and the well is currently scheduled to spud in mid-August. Caza intends to participate with a 57.5% working interest and an approximate 45.0% net revenue interest in the Caza Ridge 14 State #3H well.

W. Michael Ford, Chief Executive Officer commented:

"Caza continued its positive operational and financial performance in the second quarter of 2012, increasing both production and revenues."

"The recent sale of the San Jacinto property has opened several doors for the Company, especially on the exploration front. Management intends to use a portion of the proceeds to drill the upcoming test well on our Copperline prospect. This will be Caza's first Company operated horizontal Bone Spring well. We are also preparing the drill site at the Company's Forehand Ranch property in Eddy County, New Mexico for drilling in mid-September 2012."

"While we do not view our participation in the Quail Ridge well to be material, the well does offset Caza's Lynch property and, if successful, will help de-risk our acreage as well as provide us with valuable information for future drilling at Lynch and in the horizontal Bone Spring play in general. This information along with our recent success at the Bradley 29 well and positive reports coming from elsewhere in this oil and liquids-rich play have management increasingly enthusiastic about drilling the Bone Spring projects in the Company inventory. In addition to Copperline, Forehand Ranch, Quail Ridge and Bradley 29, Caza has five other horizontal Bone Spring prospects under lease including, Lynch, Lennox, Mad River, Two Mesas and Azotea Mesa. This gives the Company approximately 4,000 net acres in the play to date. As 2012 operations progress, we look forward to updating the market on the Company's exploration and production activities."

Copies of the Company's unaudited financial statements for the second quarter ended June 30, 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

Information in this news release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws. Such information is often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "schedule", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "intend", "could", "might", "should", "believe", "develop", "test", "anticipation" and similar expressions. In particular, information regarding the depth, timing and location of future drilling, intended production testing and the Company's future working interests and net revenue interests in properties contained in this news release constitutes forward-looking information within the meaning of securities laws.

Implicit in this information, are assumptions regarding the success and timing of drilling operations, rig availability, projected revenue and expenses and well performance. These assumptions, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. Readers are cautioned that actual future operations, operating results and economic performance of the Company are subject to a number of risks and uncertainties, including general economic, market and business conditions and could differ materially from what is currently expected as set out above. In addition, the geotechnical analysis and engineering to be conducted in respect of the various wells is not complete. Future flow rates from wells may vary, perhaps materially, and wells may prove to be technically or economically unviable. Any future flow rates will be subject to the risks and uncertainties set out herein.

For more exhaustive information on these risks and uncertainties you should refer to the Company's most recently filed annual information form which is available at www.sedar.com and the Company's website at www.cazapetro.com. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation and do not undertake to update this information at any particular time except as may be required by securities laws.

Boe may be misleading, particularly if used in isolation. A Boe conversion ratio of 6 Mcf : 1 bbl 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 August 8, 2012.

2. Exploration and evaluation assets ("E&E")

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 June 30, 2012 and December 31, 2011. The Company did not note any indications of impairment as at June 30, 2012. 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%).  

On July 18, 2012 the Company sold the San Jacinto property consisting of the Caza Elkins 3401 and 3402 wells (see Note 9). The capitalized costs and accumulated depletion associated with these properties have been re-classed to assets held for sale.

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 $1,224,619 (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 $531,756 in joint interest partner receivables as at June 30, 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 0.07% as at June 30, 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 June 30, 2012, the Company sold 78.11% (June 30, 2011 - 67.77%) 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 June 30, 2012, the Company had overdue accounts receivable from certain joint interest partners of $29,872 which were outstanding for greater than 60 days and $543,079 that were outstanding for greater than 90 days. At June 30, 2012, the Company's two largest joint interest partners represented approximately 24% and 4% of the Company's receivable balance (June 30, 2011 36% and 7% 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.

9. Subsequent Event

On July 18, 2012, the Company sold the San Jacinto property which includes the Caza Elkins 3401 and 3402 wells for consideration of $6,100,000. The Company had an 85% working interest in the Caza Elkins 3401 with a 63.75% net revenue interest. In all subsequent wells on the San Jacinto property, including the Caza Elkins 3402 well and the remainder of the leases, Caza had a 75% working interest and a 56.25% net revenue interest. The closing date of the transaction was July 31, 2012.