PGR.L Regulatory News (PGR)

11 March 2013

Andes Energia plc

("Andes" or "the Company" or "the Group")

Acquisition of producing and exploration assets in Argentina

The Board of Andes (AIM: AEN; BCBA: AEN) is pleased to announce the successful completion of the acquisition of 100% of the issued share capital of Kilwer S.A. ("Kilwer"), a private oil and gas company with producing and exploration assets in Argentina, from local, South American investors.

KILWER PORTFOLIO HIGHLIGHTS

·; 1.2 million of net 2P reserves, 39 million bbl of net contingent resources, 60 million bbl of net recoverable shale oil resources, and 1.9 million of net acreage.

·; 6.75% working interest in 2 development blocks Neuquen

·; 10% carried interest in 3 exploration blocks and a 5% carried interest in 4 exploration blocks in Mendoza

·; 40% working interest in 1 exploration block and a 15% working interest in 2 exploration blocks in Salta

·; 2% carried interest in 6 exploration blocks and a 20% working interest in 1 exploration block in Chubut

·; 2% working interest in 1 exploration block in Rio Negro

This transaction is a significant step in Andes's path to become a large operating company in terms of reserves and production and consolidates Andes as the fourth largest holder of E&P acreage in Argentina (4,590,565 acres, equivalent in size to 90% of Wales), with interests in blocks in prolific hydrocarbon basins, including; Neuquen; Golfo San Jorge; Northwest; and Nirihuau.

The combination of Kilwer's and Andes's assets is strategically very valuable; providing a participation in ten new licences; increasing the Group's participation interest in ten licences; giving Andes operator status in others; and bringing additional production, via the Kilwer's interest in Chachahuen, an asset in its early development stage, which also has unconventional potential in the Vaca Muerta formation. This development field increases Andes's annual production by 30%. Andes attributes a premium value to this asset due to the technical and operational advantages that exist and the fact that under a JV agreement with YPF S.A, Andes is carried through the exploration and early development phase, making it a net cash generating business unit. Following the acquisition, Andes is now the operator on 13 licences.

Acquisition Terms

The interests in the above licences have been acquired through the acquisition of 100% of the issued share capital of Kilwer. The consideration for the acquisition has been satisfied in part by (i) the issue of 60,676,666 ordinary shares of 10 pence per share in Andes, to the vendors of Kilwer (the "New Ordinary Shares"); (ii) the issue of a US$10,000,000 convertible bond with a term of 5 years and an interest rate of 11% per annum; and (iii) the issue of a US$25,000,000 bond with a term of 10 years and an interest rate of 11% per annum.

Independent Report

G&G Energy Consultants was engaged by Andes to carry out a technical and economic evaluation of Kilwer's assets. The report assigned the following range of values to Kilwer's net interests:

G&G Energy Consultants is one of the leading energy consulting firm for M&A transactions in the Republic of Argentina.

Nicolás Mallo Huergo, Chairman of the Company commented, "The acquisition of Kilwer consolidates Andes as an operating company, adds new producing fields and brings valuable assets with conventional and unconventional potential that would have a significant positive impact on Andes in the short term."

An updated Company presentation providing a technical overview of these assets will be made available on the Company's website at www.andesenergiaplc.com.ar

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 and Total Voting Rights

Application has been made for the 60,676,666 New Ordinary Shares to be admitted to AIM, which is expected to become effective on 14 March 2013.

Following admission of the 60,676,66 New Ordinary Shares, the total number of issued ordinary Shares will be 259,815,286 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 oil and gas group, with interests in Argentina, Paraguay and Colombia. The Company's focus is on the oil and gas sector in South America, which offers premium assets at undervalued prices.