Second Quarter Results

August 9, 2013

Caza Oil & Gas, Inc.

CAZA OIL & GAS ANNOUNCES SECOND QUARTER RESULTS

HOUSTON, TEXAS (Marketwire - August 9, 2013) - 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, 2013.

Unaudited Second Quarter Financial Results

·; Caza had a cash balance of $19,105,277 as of June 30, 2013, as compared to $6,809,640 at March 31, 2013. Caza's working capital balance at June 30, 2013, was $11,168,013 as compared to a working capital deficit of $1,850,572 at March 31, 2013, taking into account outstanding debt. The increase in Caza's working capital balance is due primarily to funds drawn against the Note Purchase Agreement between the Company and Apollo Investment Corporation in the amount of $20,000,000 and additional wells being brought online since the comparative period.

·; Caza's oil and natural gas liquids (NGL) production increased 16% to 11,059 bbls for the three-month period ended June 30, 2013, from 9,549 bbls for the comparative period in 2012. The Company's oil and NGL production has increased to 54% of the Company's combined oil and natural gas production in Q2 2013 from 38% in Q2 2012, as a result of the Company's focus toward oil and liquids rich targets.

·; Caza's production decreased 19% to 20,330 Boe for the three-month period ended June 30, 2013, from 25,107 Boe for the comparative period in 2012. This represents an average daily production rate decrease of 53 Boe/d to 223 Boe/d, as compared to 276 Boe/d for the comparative period. The decrease in production from the second quarter of 2012 was primarily due to the sale of the San Jacinto property at the end of July 2012, and in part to normal declines. The decrease in production is expected to be offset as the recently drilled Bone Spring wells are brought online in the near term.

·; Caza's revenues from oil and gas sales decreased 2% to $1,067,991 for the three-month period ended June 30, 2013, from $1,093,694 for the comparative period in 2012. The average combined price received by Caza increased 21% to $52.53 per Boe during the three-month period ended June 30, 2013 from $43.56 per Boe during the comparative period in 2012, due to higher commodity prices.

Second Quarter Recent Events

·; Caza was the winning bidder on 320 acres at the recent State of New Mexico Oil and Gas Lease Sale held on July 16, 2013. This newly acquired lease on the Company's Gramma Ridge prospect was acquired for $1.8 million dollars. The Gramma Ridge property is considered prospective in multiple zones within the Bone Spring and Wolfcamp formations. The Company intends to schedule a test well at Gramma Ridge as early as Q4 2013. The Company now has approximately 9,320 gross and 4,708 net acres in the Bone Spring play in Southeast New Mexico.

·; Caza, as the designated operator in the west half of Section 2, Township 19 South, Range 35 East in Lea County, New Mexico ("Section 2"), commenced drilling operations on the Gateway 2 State #1H horizontal well on July 22, 2013 pursuant to a trade with Marshall & Winston and OXY USA, each of whom had various interests comprising the 320 acres in the south half of Section 2, (Caza owned the 320 acre lease in the north half of Section 2). The well is currently drilling ahead at 8,641 feet. The well will be drilled to a total vertical depth of approximately 10,300 feet with a total measured depth of approximately 13,540 feet.

This trade will allow Caza to maximize its interest throughout the entire section instead of just the north half. Most importantly it allows the Company to drill the wells in a north-south orientation, which has proven to be the preferred direction in this region of the Bone Spring play, typically yielding much higher estimated ultimate recoveries of oil and natural gas. Under the trade, Caza will operate all wells drilled in the west half of Section 2 and Marshall & Winston will operate all wells drilled in the east half of Section 2. The primary target is the Bone Spring formation with potential secondary targets in the Delaware, Lower Brushy Canyon and Wolfcamp formations.

Caza has retained a 60.0% working interest (45.9% net revenue interest) in the Gateway 2 State #1H well and all subsequent wells drilled in the W/2 of Section 2 and a 40.0% working interest (30.6% net revenue interest) in any wells drilled in the E/2 of Section 2 for an average 50.0% working interest (38.25% net revenue interest) throughout the section.

·; The Company entered into a Note Purchase Agreement (the "Agreement") with Apollo Investment Corporation, an investment fund managed by Apollo Investment Management, ("Apollo") pursuant to which Apollo agreed to purchase from the Company up to US$50,000,000 of senior secured notes of the Company (the "Notes"). The Company received US$20,000,000 at the closing of the Agreement, which provides that the Company may draw additional advances of up to US$30,000,000 in aggregate at its discretion during the following 15 months, subject to specified performance and financial requirements.

The Company is currently deploying the proceeds from the Notes in the initial drilling phase to develop the following properties in Southeast New Mexico, which will include drilling 12 oil and gas wells and two salt water disposal wells, as described below:

• Lennox: two Bone Spring wells and one Lower Brushy Canyon well;

• Copperline: one Bone Spring well and one salt water disposal well;

• Gateway: one Bone Spring well;

• West Copperline: one Bone Spring well;

• Forehand Ranch: one Bone Spring well, one Ramsey well and one salt water disposal well;

• Mad River: one Bone Spring well;

• Roja*: one Lower Brushy Canyon well;

• Madera*: one Bone Spring well or one Lower Brushy Canyon well; and

• Lynch*: one Bone Spring well.

This initial drilling phase may be adjusted as mutually agreed between the Company and Apollo.

*Roja and Madera are operated by OXY USA Inc., and Lynch is operated by Mewbourne Oil Company.

Operational updates regarding the properties listed above will be provided to the market as appropriate, and the current status of each is provided below:

• Lennox: the Lennox State Unit 32 #2H well has been drilled and is producing from the 2nd Bone Spring Sand, while the Lennox State Unit 32 #4H has been permitted and is planned for Q4 2013;

• Copperline: the Caza Ridge 14 State #4H well is in the final completion phase. It has been fracture stimulated and is being produced to recover frac fluids and hydrocarbons to establish an initial producing rate, which will be disclosed in due course.;

• Gateway: the Gateway 2 State #1H Bone Spring well is drilling ahead at 8,641 feet;

• West Copperline: the West Copperline 29 Fed #1H horizontal Bone Spring test well is currently planned for September 2013;

• Forehand Ranch: the Forehand Ranch 27 State #3 vertical well is currently planned for Q3 2013, and will test the Ramsey Sand at approximately 2,500 feet;

• Mad River: the Mad River 13 State #1H horizontal (Bone Spring or Brushy Canyon) test well is currently planned for Q4 2013;

• Roja: the Madera 17 Fed #1H Lower Brushy Canyon well has been fracture stimulated, was shut in for a period and placed on rod pump and is in the final completion phase;

• Madera: the Madera 35 Fed #1H 3rd Bone Spring well has reached its intended total measured depth and is being prepared for fracture stimulation;

• Lynch: the Company is pushing for a Bone Spring development well to be commenced in Q4 2013.

W. Michael Ford, Chief Executive Officer commented:

"We are very pleased with operations on the various wells we have drilling, producing or being completed in the Bone Spring play. We have recently been successful in enhancing some of our historical production in Wharton County, Texas, through workover operations. These operations coupled with bringing new Bone Spring wells online in the very near future, and continuing to do so throughout the remainder of 2013, should begin to be reflected by improved production and cash flow figures in the next quarter."

"Our current financial numbers are still being skewed from the sale of the San Jacinto property, which results in a negative impact on the comparative figures from 2012, that may continue through the end of Q3 (2013), which is when San Jacinto was sold last year. Despite this, the Company is on track to replace and surpass losses from San Jacinto in very short order and continue this upward trend with the Company's current sustained drilling program continuing to boost production and cash flows and enhance reserves and shareholder value into the foreseeable future."

"Along these lines, we are happy to be drilling at Gateway and finalizing the completions on the OXY operated Madera wells and at Copperline on the Company operated Caza Ridge 14 State #4 well. We are excited to get these wells online and producing in the very near future. The Caza Ridge well appears to be a very good well, and we look forward to updating the market once initial rates for oil and natural gas are established. Also, our recent lease acquisition has improved the Company's acreage position in the Bone Spring play and has increased our net position in the play to approximately 4,700 acres with an estimated 270 drilling locations."

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

For further information, please contact:

Caza Oil & Gas, Inc.

Michael Ford, CEO +1 432 682 7424

John McGoldrick, Chairman +65 9731 7471 (Singapore)

Cenkos Securities plc

Jon Fitzpatrick +44 20 7397 8900 (London)

Neil McDonald +44 131 220 6939 (Edinburgh)

VSA Capital Limited

Andrew Raca +44 20 3005 5004

Malcolm Graham-Wood +44 20 3005 5012

VIGO Communications

Chris McMahon +44 20 7016 9572

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", "appears" and similar expressions. In particular, information regarding the depth, timing and location of future drilling, the initial drilling phase, completion operations, intended production testing, well optimization, future production rates, reserves or cash flow, 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

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.

Condensed Consolidated Statements of Financial Position

(Unaudited)

Condensed Consolidated Statements of Net Loss and Comprehensive Loss

(Unaudited)

Condensed Consolidated Statements of Cash Flows

See accompanying notes to the condensed consolidated financial statements

 Condensed Consolidated Statements of Changes in Equity

(Unaudited)

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 August 8, 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")

During the period ended June 30, 2013, the Company added $7,689,284 of exploration and evaluation costs to E&E relating to the Lennox 33 State #2H and Caza Ridge 14 State #4H wells drilled in the Bone Spring play in New Mexico. The Company also transferred $4,984,334 to the Petroleum and natural gas properties and equipment relating to the Lennox 33 State #2H well that was completed during the second quarter of 2013. During the six months ended June 30, 2013 the Company expensed $740,677 associated with the expiration of leasehold costs.

3. Petroleum and natural gas properties and equipment

Future development costs of proved undeveloped reserves of $43,388,000 were included in the depletion calculation at June 30, 2013 and December 31, 2012. The Company did not note any indications of impairment as at June 30, 2013.  

There were no impairment indicators as of June 30, 2013. During the three months ended March 31, 2012, the Company recorded an impairment of $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:

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 $1,379,989 (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 $23,195 in joint interest partner receivables as at June 30, 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.

The Company is required under the Apollo Note Agreement to convey a proportionately reducible 2% overriding royalty interest in each lease acquired by Caza using proceeds advanced under this agreement. These amounts are not payable until such a time that these leases produce petroleum and natural gas revenues. See Note 8 for additional information.

7. Supplementary Information

(a) net change in non-cash working capital (six months ended):

(b) supplementary cash flow information

(c) cash and cash equivalents

The money market instruments bear interest at a rate of 0.020% as at June 30, 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 three and six month periods ended June 30, 2013, the Company sold 66.96% and 61.6%, respectively (2012 - 77.75% and 78.11%, respectively) 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, 2013, the Company had overdue accounts receivable from certain joint interest partners of $14,646 which were outstanding for greater than 60 days and $61,746 that were outstanding for greater than 90 days; management believes these amounts are collectible and not impaired. During the three month period ended June 30, 2013 the Company expensed $12,478 of uncollectable receivables. At June 30, 2013, the Company's two largest joint interest partners represented approximately 23% and 13% of the Company's receivable balance (June 30, 2012 - 24% and 4% 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

Equity Facility

The Company entered into an Equity Adjustment Agreement (the "Adjustment Agreement") on March 5, 2013 with Global Master SPV Ltd., an investment fund managed by Yorkville Advisors Global, LP in conjunction with its Standby Equity Distribution Agreement (the "SEDA Agreement") dated November 23, 2012 with Yorkville. Pursuant to the Adjustment Agreement, during the three months ended March 31, 2013, the Company issued 3,846,154 common shares to Yorkville at a price of £0.13 per share for aggregate proceeds of £500,000 (US$756,451).

Under the terms of the Adjustment 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 £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 £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 June 30, 2013 using inputs as of June 30, 2013, including the share price, the strike price and the estimated volatility over the remaining term. The derivative liability is classified as a financial instrument measured at fair value though profit or loss. The fair value of the derivative liability amounting $38,187 as of June 30, 2013 has been included within current liabilities on the consolidated statement of financial position, and the change in fair value of $71,813 since the date of issuance is included in other expenses in the consolidated statement of net loss and comprehensive loss.

The Company has deposited in escrow £275,000 (US$ - $418,220) as security for this contingent payment obligation, which has been recorded within restricted cash on the consolidated statements of financial position.

The outstanding balance of the notes payable relating to the SEDA Agreement as of June 30, 2013 was US$1,162,323 (net of unamortized transaction costs of US$193,047). These notes payable are classified as other financial liabilities and are measured at amortized cost.

Notes Payable

The Company also entered into a Note Purchase Agreement ( the" Note Agreement") dated May 23, 2013 with Apollo Investment Corporation ("the Note Holder"), an investment fund managed by Apollo Investment Management, pursuant to which the Note Holder has agreed to purchase from the Company up to US$50,000,000 of its senior secured notes. The Company received US$20,000,000 at the closing of the Note Agreement ("Tranche A Apollo Note") and the Company may draw additional advances up to US$30,000,000 until August 23, 2014, if at the time of the advance, the Company meets the specified minimum production and drilling cost requirements for previous wells drilled under the program that were financed with funding from the Note Purchase Agreement. In addition to these funds, the Company will have the ability to reinvest cash flow from program wells back into the drilling program.

In connection with the Tranche A Apollo Note, the Company incurred a total of US$1,487,412 in transaction costs (consisting of US$1,359,912 in issuance costs and US$127,500 relating to the fair value of the 2% overriding royalty conveyed at the closing of the Note Purchase Agreement). In addition, the Company also incurred structuring fees of US$440,000 in connection with the Note Purchase Agreement. The Tranche A Apollo Note is classified as other financial liabilities and is measured at amortized cost.

The outstanding balance of the Tranche A Apollo Note as at June 30, 2013 was US$18,145,650 (net of unamortized transaction costs US$1,854,350). This outstanding balance matures on May 23, 2017. The Tranche A Apollo Note bears interest at a floating rate of one-month LIBOR (with a floor of 2%) plus 10% per annum, payable monthly. In an event of default under the Note Purchase Agreement, additional interest will be payable at a default rate of 5% per annum, but only during the period of default.

The Company is required to comply with financial covenants, which are tested quarterly, providing for specified interest coverage ratios beginning in the quarter ending September 30, 2013, and asset coverage ratios and minimum production, beginning in the quarter ending March 31, 2014. Furthermore, the Company is required to maintain a limit on expenditures for general and administrative costs. Any outstanding balances in the Note Purchase Agreement may be prepaid at the option of the Company at any time at premiums that vary over time. The Note Purchase Agreement is also subject to a mandatory prepayment from the proceeds of the sale of assets and from funds received from transactions outside of the ordinary course of business. Additionally, if in any period the Company fails to comply with any financial or performance covenants, certain mandatory payments are required. Outstanding balances under the Note Purchase Agreement are secured by first-priority security interests in all of the Company's assets.

In addition to the 2% overriding royalty interest conveyed at the closing of the Note Purchase Agreement in its properties in Eddy and Lea Counties, New Mexico, the Company is also required to convey a proportionately reducible 2% overriding royalty interest in each lease acquired by Caza using proceeds from the Note Purchase Agreement. These amounts are not payable until such a time that these leases produce petroleum and natural gas revenues.

Upon full repayment of Tranche A Apollo Note, the overriding royalty interests will convert to a 25% net profits interest in each property, proportionately reduced to reflect the Company's working interest as provided in the Agreement, which will reduce to a 12.5% net profits interest at such time as the Note Holder achieves specified investment criteria pursuant to the Note Purchase Agreement. The Note Agreement provides for customary events of default. Additionally, an event of default would occur upon a change of control of the Company, which consists of (i) a shareholder acquiring more than 35% of the Company's outstanding Common Shares, (ii) a change in the composition of the board of directors by more than ⅓ during a 12-month period or (iii) a termination of service by any three of the five executive officers of the Company.

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. The fair values of other financial instruments are discussed below.

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 issued in 2012 were categorized as Level 2 financial instruments and were recorded at fair value on issuance using a market interest rate for similar debt issued without the warrants attached. The notes payable issued pursuant to the Note Purchase Agreement as described above were categorized as Level 2 financial instruments and were recorded at fair value on issuance using a market interest rate for similar debt issued without the overriding royalty interest attached.

The Company's derivative liability as described above under "Other Financial Instruments - Equity facility" 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.