PGR.L Regulatory News (PGR)

17 November 2011

Andes Energia plc

("Andes" or "the Company")

Mata Mora

Drilling Update

Mata Mora well YPF.NQ.MMO.x-1 - Oil and gas presence - High pressure detected

The Board of Andes (AIM: AEN; BCBA: AEN), the Latin American energy group, is pleased to announcethat the exploratory well MMox1 on the Mata Mora concession in the Neuquén province, has been successfully drilled, cased and cemented to a total depth of 3,151 metres. The well confirmed a pay thickness of 136 metres in the Vaca Muerta formation and the presence of oil and gas.

HIGHLIGHTS

·; Oil and gas shows

·; High pressure detected

·; Pay thickness of 136 metres in the Vaca Muerta formation

Mata Mora well YPF-NQ.MMo.x-1

During drilling of exploratory well MMox1, on the Mata Mora block in the Neuquen province, the Vaca Muerta shale formation was found at a depth of 2,990 metres and numerous oil and gas shows were recorded, with the strongest gas show starting at a depth of 3,055 metres below ground level (mbgl), ranging from 440,000 parts per million to a peak of 660,000 parts per million at 3,080 mbgl. Oil shows were also detected in the mud pits.

The well also detected unusually high pressure in the Vaca Muerta formation. As a result it was decided to isolate the open hole section with a temporary cement plug before we continued drilling, reaching a final depth of 3,151 mbgl.

During this second drilling stage flow gas was flared several times with flames reaching 3 to 4 metres in height and producing a black smoke. The chromatography confirmed presence of the entire hydrocarbons chain (C1, C2, C3, C4 and C5). At the same time, a comprehensive suite of open hole logs were run by Schlumberger and Baker, including the recovery of 37 sidewall cores. The analysis of these core samples will provide, along with other data, information on porosity, permeability, total organic carbon, thermal maturity and gas composition, which will be used for completion and stimulation design.

The Vaca Muerta shale interval in the MMOx1 well is approximately 136 metres thick.

The joint venture expects the completion works, full testing and fracturing of MMOx1 to commence within the next 30 days.

Drilling operations were conducted by YPF S.A. ("YPF"), AEN's partner and operator in the Mata Mora block. YPF holds a 63% interest in the Mata Mora block, Ketsal and Kilwer hold a 13.5% interest, AEN a 13.5% interest and the government entity, Gas y Petróleo del Neuquén, a 10% interest.

Juan Carlos Esteban, Chief Executive Officer of Andes's oil and gas operations commented, "We are pleased and very encouraged with these preliminary results. In the next few months we will determine the size and commercial viability of the resources we have confirmed with this well. The presence of the Vaca Muerta formation in many of the other areas our licences cover, gives us confidence that Andes will become an important participant in conventional and unconventional oil and gas plays in Argentina.".

In accordance with the 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).

Enquiries:

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.

YPF is Argentina's largest oil company and is controlled by Repsol YPF, S.A. ("Repsol"), Spain's largest oil and gas company. Repsol has operations in Europe, Latin America, North America, the Middle East, Asia and North Africa and explores for and produces oil and natural gas, refines petroleum and transports petroleum products and liquefied petroleum gas. At the end of 2009 it had certified reserves of 1,013 million barrels of oil equivalent according to its filings with the NYSE.