Operational Update

January 17, 2011

CAZA OIL & GAS, INC. - ANNOUNCES COMMENCEMENT OF

DRILLING OPERATIONS ON ARRAN PROSPECT

HOUSTON, TEXAS Caza Oil & Gas, Inc. ("Caza" or the "Company") (TSX: CAZ) (AIM: CAZA) is pleased to announce that drilling has commenced on the Company's Arran Prospect ("Arran") in Acadia Parish, Louisiana. The Marian Baker #1 well commenced drilling on Sunday, January 16, 2011, and is the initial test well on Arran.

Arran is a significant, 3-D seismically defined prospect supported by AVO data within a proven play fairway. The Marian Baker #1 well is designed to drill to a total depth of approximately 16,000 feet and is expected to encounter multiple, potential, hydrocarbon bearing reservoir sections. It is expected to take approximately 60 days to reach the proposed total depth.

Caza has a 25% working interest before casing point and a 35.94% working interest after casing point in the Marian Baker #1 well with an approximate net revenue interest of 26.24%.

W. Michael Ford, Chief Executive Officer commented:

"We are very pleased to announce the commencement of drilling operations on the Arran Prospect. Arran has significant upside potential for Caza and affirms management's focus and commitment toward high-impact exploration activities in Texas and Louisiana."

For further information please contact:

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.

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

ADVISORY REGARDING FORWARD LOOKING STATEMENTS

Information in this news release that is not current or historical factual information may constitute forward-looking statements within the meaning of securities laws. Such information is often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "high-impact", "significant upside" and similar expressions. Information regarding the Arran Prospect, Marian Baker #1 well and/or future exploration and drilling activities contained in this news release constitutes forward-looking information within the meaning of securities laws.

Implicit in this information, particularly in respect of wells, production, flow rates and test rates are assumptions regarding projected revenue and expenses. Specifically, the Company has assumed that these wells will produce positive results. These assumptions, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. Readers are cautioned that actual future operating results and economic performance of the Company are subject to a number of risks and uncertainties, including general mechanical, economic, market and business conditions and could differ materially from what is currently expected as set out above. Future flow rates from wells may vary, perhaps materially, and the wells in question 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. 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 required by applicable securities laws.