New Exploration License in Chubut

10 June 2011

Andes Energia plc

("Andes" or the "Company")

New Exploration License in Chubut

Andes, the oil and gas, electricity distribution and hydro-electric power company in Argentina, is pleased to announce that Petrominera Chubut S.E. (Chubut Government Oil & Gas Company) has awarded the block CÑ-01 "Ñirihuau Sur" to a joint venture formed between Andes Energia Argentina S.A. ("Andes SA") and Kilwer S.A.("Kilwer").

Under the joint venture agreement, Andes SA holds a 60% economic interest, Kilwer holds a 20% economic interest and Petrominera Chubut S.E. holds a 20% carried interest.

The block covers an area of 4,538 km2 and is located in the North Western part of the Chubut Province lying in the homonymous basin.

Oil springs are well known in the Ñirihuau basin. A shallow well located 31 km West of the block, currently supplies gas to a small village. A neighbouring block was awarded to YPF/Pluspetrol. The exploratory interest arises from a model supported by geochemical studies, surface data and chronological data that indicates the presence of a petroleum system (El Foyel Group), which would explain the origin of the oil springs

The exploration license has been granted for six years. During the first three years the work programme will include the collection of 3,000 geochemical samples and the acquisition of 50 km of 2D seismic and the reprocessing of a further 150 km of 2D.

Andes now has an interest in 11 licenses in Argentina covering more than 30,000 km2 and has entered into farm in agreements for 8 of these licences with YPF, the largest oil and gas development company in the country.

Juan Carlos Esteban, CEO of Andes's oil and gas operations commented:

"This is the first time that Andes Energia has participated and been successfully awarded, a licence in an open round bid. Other participants in the same round were YPF, Panamerican Energy (CNOOC) and Pluspetrol. This is an important step to expand our portfolio of licenses, broadening our potential upside in new basins."

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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.