Operational Update

August 25, 2010

CAZA OIL & GAS, INC.

MATTHYS-MCMILLAN GAS UNIT #2 OPERATIONAL UPDATE

HOUSTON, TEXAS Caza Oil & Gas, Inc. ("Caza" or the "Company") (TSX: CAZ) (AIM: CAZA) is pleased to provide an update on the Matthys-McMillan Gas Unit #2 development well located in Wharton County, Texas (the "Well").

As previously reported, bothlog and seismic data indicated that the Yegua interval could be productive in the Well. Consequently, Caza sought and received approval from its partners to perforate at a depth of approximately 9,478 feet in the Yegua sands.

Caza completed the well in the Yegua formation and subsequently performed a fracture stimulation on August 18, 2010. Since completion of the frac, the Well has been producing a gross average of 146 barrels of condensate per day and 1.1 million cubic feet of natural gas per day. Caza plans to install permanent production equipment, including a gas lift system that may increase current production levels once installed. Caza has a 19.61% working interest and a 14.32% net revenue interest in the Well.

Mike Ford, Chief Executive Officer of the Company, commented:

"We are pleased to have positive production news on the Matthys-McMillan #2 well. The results highlight the potential for production from multiple sands in the area, which reduces our exploration risk and may provide further exploration and development opportunities on our leases. We are working towards placing the well on full production in the near future."

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", "strongly", and similar expressions. Information regarding future operations and results relating to the Well, the Yegua formation, reserves and revenue increases and the costs and risks associated therewith, and other information relating to future production activities or operations contained in this news release constitutes forward-looking information within the meaning of securities laws.

Implicit in this information, particularly in respect of the Well, oil production, gas production, and flow rates are assumptions regarding projected revenue and expenses. Specifically, the Company has assumed that the Well 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, geotechnical, engineering, operational, economic, market and business condition risks and could differ materially from what is currently expected as set out above. Future flow rates from the Well may vary, perhaps materially, and the Well 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.