News Column

Caza Oil & Gas Announces First Quarter Results and Provides Operational Update

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HOUSTON, TEXAS -- (Marketwired) -- 05/13/13 -- 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 March 31, 2013.

Unaudited First Quarter Financial Results

-- Caza's oil and natural gas liquids (NGL) production increased 18% to 13,820 bbls for the three-month period ended March 31, 2013, from 11,723 bbls for the comparative period in 2012. The Company's oil and NGL production decreased 15% to 13,820 compared to 16,300 bbls in Q4 2012.-- The Company's oil and NGL production has increased to 68% of the Company's combined oil and natural gas production in Q1 2013 from 41% in Q1 2012. As the Company continues to focus on increasing its oil and NGL production, natural gas production figures will likely continue to decline due to normal production declines associated with the Company's historic natural gas wells. As new oil and liquids-rich wells continue to be brought online this trend will eventually be reversed due to the production of associated natural gas by these wells.-- Due in part to mechanical issues at a third party operated processing facility in Lea County, New Mexico (NM), a significant portion of Caza's natural gas and natural gas liquids production was not sold for 61 out of 90 days in the quarter. These issues along with natural decline rates curtailed the Company's natural gas figures for the quarter. Caza's natural gas production decreased 60% to 39,742 Mcf for the three-month period ended March 31, 2013, from 99,563 Mcf for the comparative period in 2012. Caza's Q1 2013 natural gas production of 39,742 Mcf represents a decrease of 47% compared to 74,498 Mcf in Q4 2012. Repairs have recently been successful and operations have been restored to the facility, which should help Caza's production efficiencies for oil, NGLs and natural gas in this area moving forward.-- The average oil price received by Caza decreased 13% to $86.41 per bbl during the three-month period ended March 31, 2013, from $98.76 per bbl during the comparative period in 2012. The average natural gas price received by Caza increased 26% to $3.30 per Mcf during the three-month period ended March 31, 2013, from $2.62 per Mcf during the comparative period in 2012.-- The average combined price received by Caza in Q1 2013 increased 13.72% to $62.58 per Boe compared to $55.03 per Boe in Q4 2012.-- Caza's revenues from oil and gas sales decreased 8% to $1,279,296 for the three-month period ended March 31, 2013, from $1,392,729 for the comparative period in 2012. Caza's Q1 2013 revenues of $1,279,296 represent a decrease of 19.04% to $1,279,296 compared to $1,580,214 in Q4 2012.-- Caza had a cash balance of $6,029,591 as of March 31, 2013, as compared to $6,809,640 at December 31, 2012.



First Quarter Operational Results and Recent Events

-- The initial well at the Roja property in Lea County, NM, the Madera 17 Fed #1H horizontal Brushy Canyon well operated by OXY USA Inc. ("OXY"), is currently drilling the horizontal section of the well. The pilot hole was drilled and logs were obtained on or around April 29, 2013. Based on analysis of the log data, Caza elected to participate with OXY and is currently drilling the lateral section of the Well through the primary objective Lower Brushy Canyon interval centered at a vertical depth of 9,288 feet to a total measured depth of approximately 13,568 feet. Once the horizontal section is complete, the well will be fracture stimulated, and the market will be updated accordingly. Caza has a 20.00% working interest (16.00% net revenue interest) in the Madera 17 Fed #1H well and the Roja property.-- Caza has also received the well election for the OXY operated Madera 35 Fed #1H horizontal well. This well will be the initial well on the Madera property in Lea County, NM. Caza plans to participate with OXY in the well. Caza has a 20% working interest (16% net revenue interest) in the Madera 35 Fed #1H well and the Madera property.-- The fracture stimulation ("frac") on the Lennox State Unit 32 #2H horizontal Bone Spring well began on May 6, 2013. Caza plans to frac the lateral section of the well in multiple stages. Once completed, the well will be flowed back to establish initial production rates and the market will be updated accordingly. Caza has a 40.00% working interest before payout (31.88% net revenue interest) and a 50.00% working interest after payout (39.85% net revenue interest) in the Lennox State Unit 32 #2H well and will participate with a 50.00% working interest in all subsequent wells drilled on the Lennox property.-- Caza recently installed a temporary submersible pump in the Caza Ridge 14 State No. 3H well. Management is happy with the performance of this well, but believes the addition of the submersible pump will help maintain more consistent levels of both oil and natural gas production until the well can be placed on a permanent artificial lift system.-- The Cimarex Energy Company operated Chaparral 33 Federal #3H horizontal Bone Spring well in Lea County, NM, began production on December 8, 2012. In the first thirty days the well averaged 843 bbls/d of oil and 539 Mcf/d. In 142 production days through April 29, 2013, the well has produced 79,641 bbls of oil, 58,531 Mcf and 47,744 bbls of water. Participation in this well will provide Caza with valuable information, which will assist in planning future Caza operated wells in Lea County, NM. Caza has a 1.6% working interest (1.2% net revenue interest) in the Chaparral 33 Federal #3H well.



W. Michael Ford, Chief Executive Officer commented:

"We are pleased to provide our financial and operational results for the first quarter of 2013. Our oil and NGL volumes now comprise 68% of the Company's combined oil and natural gas production. Increasing the ratio of oil and NGL production versus natural gas production has been a primary focus for the Company for the past two years, and we expect this trend to continue in 2013 with more Bone Spring play wells coming online."

"The Company's overall production figures were down for this quarter due in part to a key third party operated production facility in Lea County, NM being shut down for a significant portion of the quarter. This is an example of how the New Mexico Oil Conservation Division (NMOCD) website may be a misleading source for production information when used in isolation. The facility has been repaired and is now fully operational. Having the production facility operational along with the installation of a submersible pump on the Caza Ridge well should have an immediate effect on the Company's production efficiencies in this area. These efficiencies coupled with additional Bone Spring play wells coming online, should also help to increase the Company's overall production figures beginning in Q2 2013."

"Along those lines, we are also very happy to report that the completion has begun on the Lennox well, and we hope to have the well flowing back in the near future. Also, OXY's drilling of the initial Brushy Canyon well on the Roja property ahead of schedule was welcome news. We believe the Roja/Madera area is highly prospective for Brushy Canyon and Bone Spring reserves, and we look forward to participating in the drilling of OXY's second well in this area on the Madera property in the very near future. Finally, the Chaparral well, although not considered material, is a very good result and bodes well for future drilling on other Company Bone Spring prospects in Lea County."

"I am very pleased with the Company's progress in the Bone Spring play. This area has been a primary focus for the Company and has the potential to generate material value creation for our shareholders."

Copies of the Company's unaudited financial statements for the first quarter ended March 31, 2013, 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.: Permian Basin (West Texas and Southeast New Mexico) and Texas and Louisiana Gulf Coast (on-shore).

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 certain wells may not be 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.

GLOSSARY OF ABBREVIATIONS

bbl one barrel, each barrel representing 34.972 Imperial gallons or 42 U.S. gallonsbbls/d barrels per dayBoe barrels of crude oil equivalent derived by converting natural gas to crude oil in the ratio of six thousand cubic feet of natural gas to one barrel of crude oilBoe/d barrels of crude equivalent per dayMcf one thousand cubic feet of natural gasMcf/d one thousand cubic feet of natural gas per dayMcfe one thousand cubic feet of natural gas equivalent derived by converting crude oil to natural gas in the ratio of one barrel of oil into six thousand cubic feet of natural gasNGL natural gas liquids



The term boe may be misleading, particularly if used in isolation. A boe conversion of six thousand cubic feet per one 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.

Caza Oil & Gas, Inc.Condensed Consolidated Statement of Financial Position(Unaudited) March 31, December 31,(In United States dollars) 2013 2012----------------------------------------------------------------------------AssetsCurrent Cash and cash equivalents $ 6,029,591 $ 6,809,640 Restricted cash (Note 8) 416,048 - Accounts receivable 1,762,132 3,854,146 Prepaid and other 429,227 368,745 ---------------------------- 8,636,998 11,032,531Other assets 145,798 98,336Exploration and evaluation assets (Note 2) 7,849,811 10,085,746Petroleum and natural gas properties and equipment (Note 3) 24,826,833 20,552,077 ---------------------------- $ 41,459,440 $ 41,768,690 ----------------------------LiabilitiesCurrent Accounts payable and accrued liabilities $ 8,908,136 $ 8,645,896 Derivative liability (Note 8) 110,000 - Notes payable 1,615,227 1,941,476 Decommissioning liabilities (Note 4) 210,000 210,696 ---------------------------- 10,843,363 10,798,068Decommissioning liabilities (Note 4) 813,639 757,102 ---------------------------- 11,657,002 11,555,170Shareholders' EquityShare capital 75,765,677 75,064,216Warrants 82,499 89,674Shre based compensation reserve 9,855,829 9,648,162Deficit (54,433,074) (53,298,407) ----------------------------Equity attributable to owners of the Company 31,270,931 31,503,645Non-controlling interests (1,468,493) (1,290,125) ----------------------------Total equity 29,802,438 30,213,520 ---------------------------- $ 41,459,440 $ 41,768,690 ----------------------------See accompanying notes to the condensed consolidated financial statementsCaza Oil & Gas, Inc.Condensed Consolidated Statements of Net Loss and Comprehensive Loss(Unaudited)For the three month periods ended March 31,(in United States dollars) 2013 2012----------------------------------------------------------------------------Revenues Petroleum and natural gas $ 1,279,296 $ 1,392,729 Interest income 122 299 ---------------------------- 1,279,418 1,393,028 ----------------------------Expenses Production 434,017 420,759 General and administrative 1,418,157 1,365,879 Depletion, depreciation and amortization (Note 3) 574,914 781,864 Financing costs 110,365 4,133 Other expense (income) 55,000 (176,004) Development and production impairment (Note 3) - 2,688,506 ---------------------------- 2,592,453 5,085,137 ----------------------------Net loss and comprehensive loss for the period (1,313,035) (3,692,109) ----------------------------Attributable to: Owners of the Company (1,134,667) (3,180,472) Non-controlling interests (178,368) (511,637) ---------------------------- $ (1,313,035) $ (3,692,109) ----------------------------Net loss per share - basic and diluted $ (0.01) $ (0.02) ----------------------------Weighted average shares outstanding - basic and diluted(1) 165,867,263 164,743,667 ----------------------------(1) All options and warrants have been excluded from the diluted loss pershare computation as they are anti-dilutiveSee accompanying notes to the condensed consolidated financial statementsCaza Oil & Gas, Inc.Condensed Consolidated Statement of Cash Flows(Unaudited)For the three month periods ended March 31,(in United States dollars) 2013 2012----------------------------------------------------------------------------OPERATING Net loss for the period $(1,313,035) $(3,692,109) Adjustments for items not affecting cash: Depletion, depreciation and amortization 574,914 781,864 Unwinding of the discount 5,513 4,133 Share-based compensation 207,667 45,595 Development and production impairment (Note 3) - 2,688,506 Non-cash financing costs 102,262 - Other expense (income) 55,000 (176,004) Interest income (122) (299) Changes in non-cash working capital (Note 7a) 1,395,753 240,093 -------------------------- Cash flows from (used in) operating activities 1,027,952 (108,221) --------------------------FINANCING Repayment of notes payable and finance costs (137,500) - Proceeds from issuance of common shares 465,450 - Interest received 122 299 Changes in non-cash working capital (47,462) - -------------------------- Cash flow from financing activities 280,610 299 --------------------------INVESTING Exploration and evaluation expenditures (Note 2) (2,614,503) (1,167,108) Development and production expenditures (Note 3) (9,018) (798,650) Purchase of office furniture and equipment (Note 3) (1,250) (1,944) Joint interest billings partner reimbursements 61,364 1,028,828 Restricted cash (416,048) - Changes in non-cash working capital (Note 7a) 890,844 (924,679) -------------------------- Cash flows used in investing activities (2,088,611) (1,863,553) --------------------------DECREASE IN CASH AND CASH EQUIVALENTS (780,049) (1,971,475)CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD 6,809,640 10,204,176 --------------------------CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 6,029,591 $ 8,232,701--------------------------------------------------------------------------------------------------------------------------------------------------------See accompanying notes to the condensed consolidated financial statementsCaza Oil & Gas, Inc.Condensed Consolidated Statement of Changes in Equity(Unaudited)For the three month periods ended March 31,(in United States Dollars) 2013 2012----------------------------------------------------------------------------Share Capital Balance, beginning of period $ 75,064,216 $ 75,064,216 Common shares issued 701,461 - ---------------------------- Balance, end of period $ 75,765,677 $ 75,064,216 ----------------------------Warrants Balance, beginning of period $ 89,674 $ - Issuance costs 7,175 - ---------------------------- Balance, end of period $ 82,499 $ - ----------------------------Share based compensation reserve Balance, beginning of period $ 9,648,162 $ 9,430,656 Share based compensation 207,667 45,595 ---------------------------- Balance, end of period $ 9,855,829 $ 9,476,251 ----------------------------Deficit Balance, beginning of period $(52,298,407) $(42,747,681) Net loss allocated to owners of the Company (1,134,667) (3,180,472) ---------------------------- Balance, end of period $(54,433,074) $(45,928,153) ----------------------------Non-controlling Interests Balance, beginning of period $ (1,290,125) $ 407,148 Net loss allocated to non-controlling interests (178,368) (511,637) ---------------------------- Balance, end of period $ (1,468,493) $ (104,489) ----------------------------Total Shareholders' Equity $ 29,802,438 $ 38,507,825 ---------------------------- ----------------------------See accompanying notes to the condensed consolidated financial statements



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, 2012, which outline the Company's significant accounting policies in Note 2 thereto, as well as the Company's critical accounting judgments 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 9, 2013.

Changes in Accounting Policies

As disclosed in the December 31, 2012 consolidated financial statements, effective January 1, 2013, Caza adopted IFRS 10 "Consolidated Financial Statements", IFRS 11 "Joint Arrangements, IFRS 12 "Disclosure of Interests in Other Entities", and the amendments to IAS 28 "Investments in Associates and Joint Ventures".

There were no changes to the consolidated financial statements or the consolidation process as a result of adoption of IFRS 10. IFRS 11 classifies interests in joint arrangements as joint ventures or joint operations depending on the rights and obligations of the parties in the arrangement. Caza performed a review of interests in joint arrangements and concluded that shared wells operate as joint operations and accordingly there is no change in the accounting for these assets as a result of adoption of this standard. As a result, there were no changes as a result of the adoption of IFRS 12 as well.

Furthermore Caza was also required to adopt IFRS 13 "Fair Value Measurements," amendments to IAS 1 "Presentation of Financial Statements," amendments to IFRS 7 "Financial Instruments: Disclosures." There were no material changes as a result of the adoption of these standards.

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

---------------------------------------------------------------------------- March 31, December 31, 2013 2012----------------------------------------------------------------------------Balance, beginning of the period $10,085,746 $ 4,941,256Additions to exploration and evaluation assets 2,664,831 10,464,696Transfers to petroleum and natural gas properties (4,900,766) (4,417,633)Disposals of assets - (272,989)Joint interest billings partner reimbursements - (436,649)Exploration and evaluation impairment - (192,935)----------------------------------------------------------------------------Balance, end of the period $ 7,849,811 $10,085,746--------------------------------------------------------------------------------------------------------------------------------------------------------



During the period ended March 31, 2013, the Company added $2,664,831 of exploration and evaluation costs to E&E relating to the Lennox 33 State #2H well drilled in the Bone Spring play in New Mexico. The Company also transferred $4,900,766 to the Petroleum and natural gas properties and equipment relating to the Forehand Ranch 27 State #1H well that was completed during the period ended March 31, 2013.

3. Petroleum and natural gas properties and equipment

---------------------------------------------------------------------------- Development & Production Corporate Assets Assets Total----------------------------------------------------------------------------CostBalance, December 31, 2012 $43,849,877 $828,826 $44,678,703 Additions 9,018 1,250 10,268 Disposals - - - Transfers from E&E 4,900,766 - 4,900,766 Other (61,364) - (61,364)----------------------------------------------------------------------------Balance, March 31, 2013 $48,698,297 $830,076 $49,528,373------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Development & Production Corporate Assets Assets Total----------------------------------------------------------------------------Accumulated Depletion and Depreciation----------------------------------------------------------------------------Balance, December 31, 2012 $23,345,971 $780,655 $24,126,626Depletion and depreciation 564,078 10,836 574,914Impairment - - -----------------------------------------------------------------------------Balance, March 31, 2013 $23,910,049 $791,491 $24,701,540--------------------------------------------------------------------------------------------------------------------------------------------------------Carrying amountsAt December 31, 2012 $20,503,906 $ 48,171 $20,552,077At March 31, 2013 $24,788,248 $ 38,585 $24,826,833--------------------------------------------------------------------------------------------------------------------------------------------------------



Future development costs of proved undeveloped reserves of $43,388,000 were included in the depletion calculation at March 31, 2013 and December 31, 2012. The Company did not note any indications of impairment as at March 31, 2013.

There were no impairment indicators as of March 31, 2013. During the three months ended March 31, 2012, the Company recorded an impairment $2,688,506 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.

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 petroleum and natural gas properties:

Year ended March 31, December 31, 2013 2012 ----------- ------------Decommissioning liabilities, beginning of the period $ 967,798 $1,052,091Obligations incurred 50,328 74,899Revision in estimated cash flows and discount rate - 181,776Obligations settled - (355,954)Unwinding of the discount 5,513 14,986 ----------- ------------Decommissioning liabilities, end of the period $1,023,639 $ 967,798Current portion 210,000 210,696 ----------- ------------Long-term decommissioning liabilities $ 813,639 $ 757,102 ----------- ------------



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 $1,522,206 (December 31, 2012 - $1,415,507). The obligation was calculated using a risk free discount rate of 2.5 percent (2012 - 2.5 percent) and an inflation rate of 3 percent (2012 - 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 2013 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 $nil in joint interest partner receivables as at March 31, 2013 (December 31, 2012 - $ 6,336).

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.

6. Commitments and Contingencies

As of March 31, 2013, the Company is committed under operating leases for its offices and corporate apartment in the following aggregate minimum lease payments which are shown below:

2013 $271,9652014 $258,0752015 $184,402



7. Supplementary Information

a. net change in non-cash working capital March 31, March 31, 2013 2012----------------------------------------------------------------------------Provided by (used in)---------------------------------------------------Accounts receivable $2,092,014 $ 1,371,899Prepaid and other (115,119) 86,218Accounts payable and accrued liabilities 262,240 (2,142,703) ------------------------- $2,239,135 $ (684,586) -------------------------Summary of changesOperating $1,395,753 $ 240,093Financing (47,462) -Investing 890,844 (924,679) ------------------------- $2,239,135 $ (684,586) -------------------------(b) supplementary cash flow information March 31, 2013 March 31, 2012----------------------------------------------------------------------------Interest paid $ - $ -Interest received 122 299(c) cash and cash equivalents March 31, December 31, 2013 2012----------------------------------------------------------------------------Cash on deposit $5,293,636 $6,073,807Money market instruments 735,955 735,833 --------------------------Cash and cash equivalents $6,029,591 $6,809,640 -------------------------- --------------------------



The money market instruments bear interest at a rate of 0.060% as at March 31, 2013 (December 31, 2012 - 0.082%).

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, 2013, the Company sold 68.32% (March 31, 2012 - 78.39%) 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, 2013, the Company had overdue accounts receivable from certain joint interest partners of $ 687 which were outstanding for greater than 60 days and $148,085 that were outstanding for greater than 90 days. At March 31, 2013, the Company's two largest joint interest partners represented approximately 8% and 7% of the Company's receivable balance (March 31, 2012 26% and 8% 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, restricted cash accounts receivable and deposits.

Other Financial Instruments

The Company entered into an Equity Adjustment Agreement with Global Master SPV Ltd., an investment fund managed by Yorkville Advisors Global, LP in conjunction with its Standby Equity Distribution Agreement dated November 23, 2012 with Yorkville. Pursuant to the Agreement, during the three months ended March 31, 2013, the Company issued 3,846,154 common shares to Yorkville at a price of GBP 0.13 per share for aggregate proceeds of GBP 500,000 (US$756,451).

Under the terms of the Agreement, if on February 28, 2014 the common share market price (determined as 95% of the average daily volume weighted average price of common shares (VWAP) during the preceding 22 trading days) is greater than GBP 0.13, then Yorkville will pay to the Company the difference multiplied by the number of New Common Shares, and if the market price is less than GBP 0.13 then the Company will pay to Yorkville the difference multiplied by the number of New Common Shares. The fair value of this derivative was calculated at the date of issuance using inputs as of that date and at March 31, 2013 using inputs as of March 31, 2013, including the share price, the strike price and the estimated volatility over the remaining term. The fair value of $110,000 has been included within current liabilities on the statement of financial position, and the change in fair value of $55,000 since the date of issuance is included in other expenses in the consolidated statement of net loss.

The Company has deposited in escrow GBP 275,000 (US$ - $416,048) as security for this contingent payment obligation, which has been recorded within restricted cash on the consolidated statement of financial position.

Fair Value of Financial Instruments

The Company has determined that the fair values of the financial instruments consisting of cash and cash equivalents, restricted cash, accounts receivable, deposits and accounts payable are not materially different from the carrying values of such instruments reported on the consolidated statement of financial position due to their short-term nature. At March 31, 2013, the fair value of the notes payable is $1,615,227.

IFRS establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are described below:

-- Level 1: Values based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.-- Level 2: Values based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability.-- Level 3: Values based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.



The Company's cash and cash equivalents and restricted cash, which are classified as fair value through profit or loss, are categorized as Level 1 financial instruments.

The Company's notes payable are categorized as Level 2 financial instruments and were recorded at fair valued on issuance using a market interest rate for similar debt issued without the warrants attached. The Company's derivative as described above under "Other Financial Instruments" is also a Level 2 financial instrument.

All other financial assets are classified as loans or receivables and are accounted for on an amortized cost basis. All financial liabilities are classified as other liabilities. There are no financial assets on the consolidated statement of financial position that have been designated as available-for-sale. There have been no changes to the aforementioned classifications during the periods presented.

9. Subsequent Event

On April 8, 2013 Caza issued 4,948,682 common shares to Yorkville at a price of GBP 0.101037 per share.

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



Contacts:
Caza Oil & Gas, Inc.
Michael Ford
CEO
+1 432 682 7424

Caza Oil & Gas, Inc.
John McGoldrick
Chairman
+65 9731 7471 (Singapore)
www.cazapetro.com

Cenkos Securities plc
Jon Fitzpatrick
+44 20 7397 8900 (London)

Cenkos Securities plc
Neil McDonald
+44 131 220 6939 (Edinburgh)

VSA Capital Limited
Andrew Raca
+44 20 3005 5004

VSA Capital Limited
Malcolm Graham-Wood
+44 20 3005 5012

M:Communications
Chris McMahon
+44 20 7920 2330