Caza Kicks Off Drilling Ops at N.M. Prospect

Caza Oil & Gas, Inc. announced that drilling has commenced on the Company's Forehand Ranch Prospect ("Forehand Ranch") in Eddy County, New Mexico. The Forehand Ranch 27 State Com No. 1H horizontal well is the initial test well at Forehand Ranch.

Forehand Ranch Prospect, Eddy County, New Mexico. As stated above, the Forehand Ranch 27 State Com No. 1H horizontal well has commenced drilling. The well will be drilled to a total vertical depth of approximately 9,200 feet with a total measured depth of approximately 11,929 feet. The primary target is the 2nd Bone Spring Sand at a vertical depth of approximately 7,450 feet subsurface with potential secondary targets in the Delaware, Lower Brushy Canyon, Avalon Shale, 1st and 3rd Bone Spring Sands and Wolfcamp.

Caza has a 54.83% working interest before pay-out (42.02% net revenue interest) and a 63.00% working interest after pay-out (48.27% net revenue interest) in the Forehand Ranch 27 State Com No. 1H well.

Copperline Prospect, Lea County, New Mexico. The Caza Ridge 14 State No. 3H horizontal well is drilling ahead at a measured depth of approximately 12,027 feet in the horizontal section of the well. As previously announced, the horizontal section is being drilled through the primary objective Lower 3rd Bone Spring Sand to a total measured depth of approximately 15,780 feet. Once the horizontal section is complete, the well will be fracture stimulated, and the market will be updated accordingly.

Caza has a 45% working interest (35.213% net revenue interest) before payout and a 58.75% working interest (45.972% net revenue interest) after payout in the Caza Ridge 14 State No. 3H well.

Quail Ridge Prospect, Lea County, New Mexico. The Quail "16" State No. 3H horizontal well was successfully fracture stimulated in the 3rd Bone Spring Sand beginning on September 11, 2012, and is currently flowing back hydrocarbons and frac fluids at a gross rate of approximately 2,100 barrels per day on a 26/64 inch adjustable choke. The well has averaged 663 barrels of oil and 604 thousand cubic feet of natural gas (Mcf) per day over the past eight days, which is 764 barrels of oil equivalent. The peak rate day to date was 712 barrels of oil and 623 Mcf, which equals 816 barrels of oil equivalent.

This is a very positive result and is significant to Caza, because the well offsets the Company's Lynch property. Although Caza's non-operated participation interest is small, this well has helped to de-risk the Company's acreage position and provide us with valuable information for future drilling at Lynch.

Caza has a 0.25% working interest (0.1875% net revenue interest) in the Quail "16" State No. 3H well.

The Bone Spring formation in Lea and Eddy Counties, New Mexico, contains multiple potential pay zones for oil and liquids-rich natural gas. Caza's current prospects in the horizontal Bone Spring play are Lynch, Forehand Ranch, Lennox, Copperline, Mad River, Azotea Mesa, Bradley 29, Two Mesas and Quail Ridge. The Company has acquired approximately 3,300 net acres in the play to date. Leasing and drilling activity continues to increase in the play and initial producing well rates continue to improve with technological advances in drilling and frac designs. The Company is well positioned in the play, and management continues to monitor opportunities to build on Caza's current acreage position.

W. Michael Ford, Chief Executive Officer commented:

"We are very pleased to have commenced drilling operations on the Forehand Ranch prospect. This will be our second operated test well with a material participation interest in the exciting Bone Spring horizontal oil play in southeast New Mexico."

"At Copperline, drilling continues on the horizontal section of the Caza Ridge well. As previously announced, log and core data from the well have confirmed the presence of multiple potential pay zones containing oil and liquids-rich natural gas. We look forward to completing the horizontal section of the well and scheduling a frac job in the near future."

"We are also very pleased with the result of the Quail State well and are excited about future drilling on our Lynch property, which is in the adjacent section. This is a very good result and has provided Caza with valuable information in this area."


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