Zargon Oil & Gas Ltd. Announces $33.9 Million Bought Deal Financing

CALGARY, ALBERTA --(Marketwire - March 17, 2011) -

NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES

Zargon Oil & Gas Ltd. ("Zargon") (TSX:ZAR) today announced that it has entered into a financing agreement, on a bought deal basis, with a syndicate of underwriters, co-led by Scotia Capital Inc., CIBC, Peters & Co. Ltd., and including TD Securities Inc. and FirstEnergy Capital Corp. (collectively, the "Underwriters"), for an offering of 1,500,000 common shares of Zargon (the "Common Shares") at $22.60 per Common Share for gross proceeds of $33,900,000 (the "Offering"). Zargon has also granted the Underwriters an over-allotment option to purchase up to an additional 225,000 Common Shares, at the same price, exercisable in whole or part at closing or until 30 days following closing of the Offering.

The net proceeds of the Offering will be used by Zargon to reduce outstanding borrowings under its existing credit facilities, to accelerate its capital expenditure program and for general corporate purposes.

The Common Shares to be issued under the Offering will be offered by way of a short form prospectus to be filed in all provinces of Canada, with the exception of Quebec.

Closing of the Offering, which is subject to customary conditions and regulatory approvals, including approval of the Toronto Stock Exchange, is expected to occur on or about April 7, 2011.

The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

ADVISORY: This press release contains forward-looking statements. More particularly, this press release contains statements concerning the anticipated closing date of the Offering, the over-allotment option and the anticipated use of the net proceeds of the Offering. Although Zargon believes that the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them because Zargon can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. The closing of the Offering could be delayed if Zargon is not able to obtain the necessary regulatory and stock exchange approvals on the timelines it has planned. The Offering will not be completed at all if these approvals are not obtained or some other condition to the closing is not satisfied. Accordingly, there is a risk that the Offering will not be completed within the anticipated time or at all. The intended use of the net proceeds of the Offering by Zargon might change if the board of directors of Zargon determines that it would be in the best interests of Zargon to deploy the proceeds for some other purpose, such as an acquisition.

The forward-looking statements contained in this press release are made as of the date hereof and Zargon 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.

Zargon Oil & Gas Ltd. is a Calgary based oil and natural gas company working in the Western Canadian and Williston sedimentary basins with a long history of earnings and distributions/dividends. Zargon's smaller size and technical focus provides a unique opportunity to deliver profitable oil exploitation results from smaller oil projects that may be overlooked by larger competitors.

In order to learn more about Zargon, we encourage you to visit Zargon's website at www.zargon.ca where you will find a current shareholder presentation, financial reports and historical news releases.