Diaz Announces Q2 2012 Financial Results

Diaz Resources Ltd. (TSX VENTURE:DZR) wishes to announce that it has filed on
SEDAR its Interim Financial Statements and MD&A for the six months ended June
30, 2012.


Diaz is pleased to report that for the six months ended June 30, 2012, it
increased production, revenues and cash flow from operations, compared with the
same period in the prior year. The Company's average first half production
increased to 427 BOEd from 405 BOEd while revenues increased to $3.2 million
from $2.5 million and cash flow from operations increased to $570,000 compared
with $151,000 in the prior year.


The Company's Q2 2012 revenues were derived 91% from oil production as compared
with 54% in Q2 2011. This resulted from quarterly oil production increasing to
250 bopd from 104 bopd in the prior year combined with natural gas production
declining to 825 mcfd from 1,772 mcfd in the prior year. During the quarter
approximately 50% of Diaz's natural gas production was shut-in due to uneconomic
natural gas prices.


Operations

In Q1 2012 Diaz completed a three well drilling program at Macklin, Saskatchewan
and placed the wells on production at the end of the quarter. The wells produced
at an average combined rate of 225 bopd (101 bopd net to Diaz) during Q2 2012
and have subsequently declined to 105 bopd (47 bopd net to Diaz). The Company
now has increased its number of horizontal heavy oil wells to 17 wells in total,
with 6 wells at Macklin and 11 wells at Lloydminster, Alberta.


During Q2 2012 Diaz commenced a program to increase the water handling
facilities and disposal capacity at Macklin by installing a pipeline to
transport increased volumes of water between its main oil battery and an
existing water disposal well.


The Company plans to significantly increase the total fluid production from
producing wells at Macklin which we believe will increase oil production at the
field.


Financial

The Company's Q2 2012 revenues increased to $1.5 million from $1.1 million and
cash flow from operations increased to $208,000 compared with negative $169,000
in Q2 2011. The Company had a net loss for the quarter of $749,000 compared with
a net loss of $1.2 million in Q2 2011. Net loss for the six month period was
$1.7 million compared with $1.2 million for the same period in the prior year.


Diaz incurred $371,000 of capital expenditures during the quarter compared with
$693,000 for Q2 2011. For the sixth month period, capital spending was $2.2
million compared with $1.5 million for the same period in the prior year.
Capital expenditures for the three and six month periods ended June 30, 2012,
were financed from cash flow from operations, working capital and an increase in
the Company's bank debt.


At June 30, 2012, Diaz had net current debt of $3.5 million compared with net
current debt of $1.7 million at the beginning of the year.


Future Plans

The management of Diaz is optimistic that higher total fluid production at
Macklin, made possible by the increased water handling facility which commenced
in August this year, will result in an increase in the Company's production and
cashflow. In addition, oil prices have recently improved which will give the
Company's financial results an added boost. 


However, the overall productivity of the Company's heavy oil wells, while
acceptable, have been substantially lower than anticipated when Diaz decided to
proceed with its $8.0 million secured convertible debenture issue, completed in
June 2011. As a result, the combination of higher interest costs of the
debenture and low gas prices has put the Company in a position of having limited
capital for further development of the heavy oil properties. Consequently, Diaz
is considering alternatives available to it to ensure that the Company's asset
base can be maintained and developed over time to maximize value, including
reorganization of its capital structure, possible asset sales or other
transactions.


Business Outlook

Diaz expects oil prices to remain above $90 per barrel through the balance of
2012, as demand for oil continues to be strong and distribution bottlenecks at
Cushing, Oklahoma, are now beginning to be alleviated with the reversal of the
Seaway Pipeline. The Seaway Pipeline reversal allows oil to be delivered from
Cushing to the US Gulf Coast. 


Using current heavy oil discounts, WTI prices in excess of $90 should result in
the Company realizing average prices for its heavy oil production greater than
$60 per barrel for the remainder of the year. At this price the Company believes
continued development of Diaz's heavy oil projects have positive economics.


Longer term growth will result from development of new production and reserves
from Diaz's heavy oil prospect inventory acquired over the past three years.


Diaz is an oil and gas exploration and production company based in Calgary,
Alberta. Diaz's current focus is on heavy oil exploration and development in
Alberta and Saskatchewan.