PGR.L Regulatory News (PGR)

7 June 2012

Andes Energia plc

("Andes" or the "Company")

Acquisition of AHI S.A.

Option to acquire Santa Rosa block

The Board of Andes (AIM: AEN; BCBA: AEN), the Latin American energy group, is pleased to announce the acquisition through the execution of a share swap of 100% of the share capital of A.H.I. S.A. ("AHI").

After the share swap Andes will own a:

·; 100% conventional and unconventional interest in the Repatriación block in the Chaco-Parana basin in Paraguay:

·; 100% conventional and unconventional interest in the Los Buitres, Mina Baku and La Brea blocks in the Neuquen basin located in the Province of Mendoza, Argentina; and

·; 100% interest in the Agrio formation and a 40% carried interest in the other formations in a 296 km2 area of the El Manzano block in the Neuquen basin located in the Province of Mendoza, Argentina.

The total consolidated acreage of the AHI assets is 600,683 acres with 2P reserves of 5.9 MMboe and risked conventional and unconventional prospective resources of 191 MMboe and unrisked unconventional prospective resources of 8.1 Tcf of gas.

Andes has also signed an option to acquire the Santa Rosa block, 1,901,228 acres, in the Cuyana Basin in Mendoza, Argentina.

Acquisition/ Share Swap

The interests in the above licences have been acquired through the acquisition of 100% of the issued share capital of AHI from International Capital Markets Group Chile S.A., Mezzo Trading International, Inc., Albor Group, Ltd and Sommers International Holdings, Inc.. For the year ended 31 December 2010, AHI had net assets of US$ 1.8 million, net current assets of US$ 1.5 million and no liabilities.

Consideration for the acquisition of AHI will be satisfied through the issue of 117,062,222 ordinary shares of AEN of 10 pence each ("Ordinary Shares") and 7,000,000 warrants (the "Warrants").

The Warrants, which have a five year term, have different exercise prices as follows:

Option to Acquire Santa Rosa Block CC y B9

Andes has entered into an option agreement (the "Option") to acquire a 100% of Cynthia Holdings, which owns 100% of Exploraciones Oromin, which has the exclusive right to a 100% interest in the Santa Rosa CC y B9 block, in the province of Mendoza, Argentina. The Option is exercisable for a total consideration of US$992,124 for a period of 60 days.

Nicolas Mallo Huergo, Director of Andes, commented: "We are delighted at being able to complete this acquisition. These assets represent an enormous potential in conventional and unconventional resources. This consolidates Andes as a producer and operator and as a leader in properties in the Vaca Muerta formation in the Neuquen basin and as a pioneer in Paraguay to explore the Chaco-Parana Basin for both, unconventional and conventional resources. This move represents a diversification of our asset portfolio and provides Andes with solid platform from which to grow the E&P business.".

A presentation with details of these assets will be made available on the Company's website at www.andesenergiaplc.com.ar next week.

In accordance with AIM guidance for mining, oil and gas companies, Mr. Juan Carlos Esteban has reviewed the information contained in this announcement. Mr. Juan Carlos Esteban, an Officer of the Group, is a petroleum engineer with over 20 years of experience and is a member of the SPE (Society of Petroleum Engineers).

Application for Admission, Completion of the Acquisition and Total Voting Rights

Application will be made for 117,062,222 new Ordinary Shares to be admitted to AIM, which is expected to become effective on 13 June 2012.

Following admission of the 117,062,222 ordinary shares, the total number of issued Ordinary Shares will be 292,752,402 Ordinary Shares. The Company does not hold any Ordinary Shares in treasury. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Financial Service Authority's Disclosure and Transparency Rules.

For further information please contact:

Note to Editors:

Andes is a Latin American energy group, with oil and gas, electricity distribution and hydro-electric power interests in Argentina. The Company's focus is on the Argentinean energy sector, which it believes offers premium assets at undervalued prices.