Diaz Resources Ltd.
TSX VENTURE : DZR

Diaz Resources Ltd.

August 11, 2011 17:06 ET

Diaz Updates Lloydminster Development Program and Enters Into Farmout Agreement

CALGARY, ALBERTA--(Marketwire - Aug. 11, 2011) - Diaz Resources Ltd. (TSX VENTURE:DZR) announces today that it has successfully drilled the second well in its four well development program. The well, 106/15-18-48-1W4 encountered 620 meters of porous oil stained sand and appears to exhibit excellent reservoir qualities. This well, along with the previously announced 105/15-18-48-1W4 well will be completed next week, now that the drilling rig has been moved from the pad to the third development well at 107/15-18-48-1W4.

Diaz also announces that, with the approval of its independent Board member, it has entered into a farmout, option and participation agreement (the "Farmout Agreement") with Tuscany Energy Ltd. (TSXV: "TUS") to drill a step out well at Lloydminster, the fourth in the current program.

The Farmout Agreement pursuant to which, among other things, Tuscany will pay 75% of the drilling, completion and equipping costs (the "Test Well Drilling Costs") of a horizontal test well (the "Test Well") located on the east half of 7-48-1 W4M (the "Farmout Lands") to earn a 35% interest in the Test Well after payout (65% before payout), and an additional 35% working interest in the balance of the Farmout Lands. Diaz will pay 5% of the Test Well Drilling Costs and retain a 45% interest in the Test Well after payout (15% before payout plus a 5% to 15% convertible gross overriding royalty) and a 45% working interest in the balance of the Farmout Lands. Tuscany already holds a 20% interest in the Farmout Lands and will pay the remaining 20% of the Test Well Drilling Costs in connection therewith. The aggregate Test Well Drilling Costs are currently estimated to be $950,000, with spudding of the test well to occur on or before September 1, 2011, subject to rig availability, surface access and regulatory approval.

Under the Farmout Agreement, Diaz and Tuscany will also conduct a 3D seismic program on 31-50-4 W4M (the "Option Lands") prior to November 1, 2011, following which the parties may elect to drill an option well (the "Option Well") on the Option Lands on or before March 1, 2012 (subject to rig availability, surface access and regulatory approval), with Tuscany paying 65% of the drilling, completion and equipping costs (the "Option Well Drilling Costs") to earn a 35% interest in the Option Well after payout (65% before payout), and an additional 35% working interest in the balance of the Option Lands. Diaz will pay 15% of the Option Well Drilling Costs and retain a 45% interest in the Option Well after payout (15% before payout plus a 5% to 15% convertible gross overriding royalty) and a 45% working interest in the balance of the Option Lands. Tuscany already holds a 20% interest in the Option Lands and will pay the remaining 20% of the Option Well Drilling Costs in connection therewith. In the event that the parties determine to drill the option well, Tuscany will also pay Diaz a fee of $174,000 for geological, land acquisition and carrying costs.

Diaz and Tuscany have several common directors and officers, including Mr. Robert W. Lamond, who is the Chairman, President and Chief Executive Officer of each of Diaz and Tuscany. Mr. Lamond is also the Chairman, President and Chief Executive Officer of Humboldt Capital Corporation, which together with Mr. Lamond owns, or exercises control or direction over, directly or indirectly, 33.6% of the outstanding common shares of Diaz and 34.9% of the outstanding common shares of Tuscany. Accordingly, the Farmout Agreement is a related party transaction under the rules of the TSX Venture Exchange and remains subject to its review and acceptance.

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

ADVISORY: Certain information in this news release, including drilling plans and projected drilling, completion and equipping costs, may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, environmental risks, competition from other producers, inability to retain drilling rigs and other services, capital expenditure costs, including drilling, completion and facilities costs, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive.

The forward looking statements contained in this press release are made as of the date hereof and Diaz undertakes no obligations to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

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