PGR.L Regulatory News (PGR)

28 February 2012

Andes Energia plc

("Andes" or "the Company")

Drilling Update - Mata Mora

The Board of Andes (AIM: AEN; BCBA: AEN), the Latin American energy group, is pleased to announce an update on testing and fracturing activities on the Mata Mora concession:

HIGHLIGHTS

·; The well YPF.NQ.MMO.x-1 discovered oil and gas in the Vaca Muerta formation

·; The well found a Vaca Muerta thickness of 136 metres (446 feet)

·; During the initial 48 hour period, the well flowed at an average rate of 97 bpd of 31° API light crude oil

·; The well produced on average 10.3 m³/d of oil and 1,434 m³/d of gas during the production testing period from 31 January to 16 February 2012

·; Ryder Scott has attributed prospective resource of 140.8 mmb of oil and 39 bcf of gas to the block which represents an equity net participation of 19.9 mmboe to Andes

Mata Mora block

The Mata Mora block covers 56,339 acres (228 km²) and is located in the eastern region of Argentina's Neuquén basin.

The well was drilled, cased and cemented to a total depth of 3,151 metres and found the target Vaca Muerta shale formation as announced by Andes on 17 November 2011.

The top of the Vaca Muerta formation was reached at a depth of 2,990 metres with a total of 136 metres penetrated.

A hydraulic fracture stimulation of the Vaca Muerta was performed targeting the following zones 3,054.3 - 3,055.0 mbgl, 3,065.3 - 3,066.0 mbgl, 3,075.3 - 3,076.0 mbgl, 3,085.0 - 3,085.7 mbgl and 3,100.3 - 3,101.0 mbgl.

The well produced on average 10.3 m³/d of oil and 1,434 m³/d of gas during the production testing period through a 4 mm choke (10/64 inch) at flow pressures of 13.8 kg/cm² and above.

Drilling operations were conducted by YPF S.A. ("YPF"), Andes's partner and operator in the Mata Mora block. YPF is Argentina's largest oil and gas development company.

YPF holds a 63% interest in the Mata Mora block; Kilwer S.A. and Ketsal S.A. a 13.5% interest; Andes a 13.5% interest; and the government entity, Gas y Petróleo del Neuquén, a 10% interest.

The Vaca Muerta formation is one of two principal source rocks in the Neuquén basin in Argentina. The formation is late Jurassic, early Cretaceous in age, covers an area of approximately 7.41 million acres (30,000 km²), varies in depth between 5,500 to 14,000 feet and in places is up to 1,400 feet thick. In published reports, the U.S. Energy Information Administration has estimated a risked, recoverable resource of 240 trillion cubic feet ("TCF") of shale gas from the Vaca Muerta formation in the Neuquén basin.

A Ryder Scott Report ("Report"), commissioned by Repsol, reveals 77% of the area, held by Repsol and its associates, to be oil and the balance a mixture of dry and wet gas. The report covered 8,071 km² (1,994,378 acres) and attributed 21,167 mmboe of prospective resources, 1,525 mmboe of contingent resources and 116 mmboe of 3P reserves. YPF has advised Andes that the Ryder Scott Report has attributed P90 prospective resource of 84.9 mmboe, P10 prospective resource of 221.3 mmboe and a mean of 147.7 mmboe prospective resources for 100% of the block which represents an equity net participation of 19.9 mmboe to Andes.

Juan Carlos Esteban, CEO of Andes´s oil and gas operations commented, "We are very pleased with the Mata Mora well. This discovery is ahead of schedule and represents an important milestone in Andes´s short history. We are very pleased with the advancement of our exploration programme for our E&P portfolio and this discovery encourages us to accelerate it"

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).

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.