Proposed Demerger and Management Appointment

28 February 2012

Andes Energia plc

("Andes" or "the Company")

Proposed Demerger and Management Appointment

The Board of Andes Energía PLC (AIM:AEN; BCBA:AEN), the Latin American energy group, is pleased to announce that it is proposing to demerge its E&P activities and electricity assets into separate quoted companies. It is also pleased to announce the appointment of a new member of management.

DEMERGER

In light of the increasing activities expected in both of the Company's business units (electricity and E&P) and in particular the progress made with its current drilling campaign, the Board of Andes believes that the demerger of the two business units will enhance shareholder value. The Board also believes that the separate entities will provide shareholders and the investment community with greater clarity resulting in improved access to the capital markets.

The Board will have a better understanding of timings after consulting with our legal, tax and regulatory advisors regarding regulatory requirements and the most appropriate and tax efficient structure.

As the plans for the proposed demerger progress, it is the Company´s intention to strengthen the board and management team with a strong representation of specialists in their respective industries.

MANAGEMENT APPOINTMENT

Mr Alan Stark has been appointed Vice President of Geoscience for Andes. Mr Stark is a geophysicist with 35 years E&P experience, having worked for the past 30 years in Argentina. He holds a BSc in Physical Geology from the University of Exeter and an MBA from the University of Durham. He was Head of Geophysics at Argentine oil company Cadipsa from 1991 to 1994, then Vice President Exploration at Vintage Oil Argentina from 1995 to 2005. Following that he worked as a Geoscience Advisor for Occidental Petroleum Argentina.

Neil Bleasdale, Chairman of Andes, commented: "We believe that given the drilling programme currently underway and the continuing potential to grow in both of our existing businesses, the division of the two units into separate quoted companies will permit both activities to express their value more accurately through their respective share prices and allow the investment community to understand and value the Company's businesses more readily. It is our intention to build strong industry specialist boards and management teams for each business unit. In that regard we are very pleased that Alan has joined us, as he will bring significant relevant expertise.".

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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.