EDEMSA bonds

7 July 2010

Andes Energia plc

("Andes" or the "Company")

Total Return Swap

Further to the announcement of 14 June 2010, the Board of Andes (AIM: AEN; BCBA: AEN), the Latin American energy group, is pleased to announce that EDEMSA has acquired the interest in the EDEMSA bonds ("Bonds") held under the Total Return Swap Agreement ("TRS") by Deutsche Bank AG ("Deutsche") and the TRS Participation Agreement ("TRSPA") by Magnus International S.A., a Chilean financial institution.

In accordance with the terms of this agreement, EDEMSA has acquired for a consideration of US$ 30.3 million, the interest in the Bonds held under the TRS and TRSPA with a face value of US$76.8 million. The TRS has a 3 year term and includes an early termination option provision beginning seven months after the effective date of the TRS.

Neil Bleasdale, Chairman of Andes and President of EDEMSA, commented, "The successful completion of this transaction will significantly reduce our future financial costs and our exposure to any devaluation of the AR$ against the US$. It is worth highlighting that we have managed to reduce EDEMSA's total net debt at the date of this transaction by more than 75%, from US$160 million in March 2007 to less than US$39 million. This, together with the early termination option, gives EDEMSA a high level of financial flexibility and the ability to plan investment for growth with a much reduced level of uncertainty over the effect of a weak AR$. "

For further information please contact:

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.