PGR.L Regulatory News (PGR)

2 November 2010

Andes Energia plc

("Andes" or the "Company")

Arbitration Price Adjustment

Further to the announcements of 29 September 2010, 27 May 2010, 29 September 2009 and 21 February 2008, the Board of Andes (AIM: AEN; BCBA: AEN), the Latin American energy group, announces that an earn out payment has now been defined in relation to the Company's acquisition of the final 50% interest in Sodem S.A., the controlling holding company of EDEMSA (the "Acquisition").

The terms of the Acquisition included the possibility of an earn-out payment. However, under the stock purchase agreement certain elements of the earn-out were open to interpretation and as the parties failed to reach agreement an arbitrator was appointed. Andes submitted a paper to support their belief that no earn-out was payable.

The arbitration process has now been concluded. In accordance with the adjustment price determination resolution established by the arbitrator Dr. Nicolás Eduardo Becerra, Andes Electricidad S.A., a wholly owned subsidiary of Andes, is required to pay a cash payment of US$180,000 per month for 60 months, in full and final settlement of the vendor's claims in relation to the Acquisition.

Neil Bleasdale, Chairman of Andes and President of EDEMSA, commented, "We are satisfied to have reached a final solution to the price adjustment issue, which brings an end to the uncertainty. At a current discount rate applicable to Argentine assets, the net present value of this obligation amounts to approximately US$8 million and given EDEMSA`s much improved operating performance and reduced net indebtedness, we believe this represents fair value for the asset."

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Note to Editors:

Andes is a Latin American energy group, with electricity distribution, hydro-electric power and oil and gas interests in Argentina. The Company's focus is on the Argentinean energy sector, which it believes offers premium assets at undervalued prices. Andes has a 51% interest in EDEMSA.