TIDMAEN

RNS Number : 2369R

Andes Energia PLC

25 June 2015

25(th) June 2015

Andes Energia plc

("Andes" or "the Company")

AGM Statement

At the Company's Annual General Meeting to be held at 2pm today at the offices of Nabarro, 125 London Wall, London EC2Y 5AL, the Chairman of Andes, Nicolas Mallo Huergo, will make the following comments:

"Trading in the year to date has been in line with management expectations with Group daily production increasing to 1,950 bpd in Argentina and 1,400 bpd in Colombia taking total current production levels to 3,350 bpd. Oil prices in Argentina remain at US$75 per barrel, with Andes receiving a small discount to this, and in Colombia prices are directly linked to Brent.

Good progress is being made at the Chachahuen development (Andes 20%, YPF 70%) with 29 wells drilled year to date, which has contributed a further 1,080,000 boe to 1P reserves, taking Group 1P reserves to 12,300,000 barrels*. With our partner YPF, we plan to drill a further 60 wells over the next two years. Each well is expected to contribute approximately 20 bpd of production net to Andes.

Earlier this year, we were very encouraged by the results of the Las Varillas x-1 well, which represents our fourth discovery and test in Vaca Muerta and is our second well currently producing from Vaca Muerta. The Las Varillas x-1 well continues to produce at 13 bpd.

The integration of Interoil is progressing to plan.

Finally, the Board was encouraged to note that on 24(th) June 2015 it was announced that 13 candidates have been selected for the General Election in Argentina with the frontrunners perceived as being pro-business."

*Unaudited

Ends

For further information please contact:

 
 Andes Energia          Nicolas Mallo Huergo,   T: +54 11 
  plc                    Chairman                4110 5150 
                         Alejandro Jotayan, 
                         CEO                     T: +44 20 
                         Billy Clegg, Head       3757 4983 
                         of Communications 
 Macquarie Capital      Jon Fitzpatrick         T: +44 20 
  (Europe) Ltd           Fergus Marcroft         3037 2000 
                         Nick Stamp 
 Westhouse Securities   Antonio Bossi           T: +44 20 
                         David Coaten            7601 6100 
 GMP Europe LLP         Rob Collins             T: +44 20 
                         Emily Morris            7647 2800 
 Camarco                Georgia Mann            T: +44 20 
                                                 3757 4986

Qualified Person Review

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).

Note to Editors:

Andes Energia is an oil and gas company focussed on onshore South America with a market capitalisation of circa GBP174m. The Company has its main operations in Argentina and Colombia.

The Company has 26MMbbls of conventional 2P reserves, and it also has certified prospective resources of 659MMboe, primarily in the Vaca Muerta unconventional formation in Argentina and 7.5 million acres across South America.

The Company has approximately 2 million net acres in unconventional plays including 250,000 net acres in the Vaca Muerta formation, which is the second largest shale oil deposit in the world and the only producing shale oil deposit outside of the USA. Over 300 wells have already been drilled and fracked in the Vaca Muerta formation.

Andes is the only AIM quoted company on the London Stock Exchange with exposure to the Vaca Muerta formation.

The Company currently produces 3,300 bbls per day in Argentina and Colombia from 6 conventional fields in Argentina and 2 in Colombia, with positive cash flows generated. Andes Energia, with its partner YPF, has 30 wells planned over the next 12 months..

Considerations on Argentinean oil domestic market and regulation

Domestic oil prices in the country are not directly linked with international price movements, and have not been affected by recent drops in WTI and Brent prices. In December 2014, National and Provincial States, together with oil producers, refiners and retail vendors formally agreed to set a price of US$75 per barrel for crude oil. Argentina used to be a net oil exporter until 2008 with extensive infrastructure available to transport oil from inland fields to the Atlantic Ocean coast. In 2014 the country imported minimal quantities of crude oil for the first time in 20 years, but in 2015 the supply/demand situation is expected to be balanced. All big refiners, except one, are also crude producers, and all of them sell the refined products domestically. Part of the refining capacity is located inland near oil fields, at more than 1,000 km from the Atlantic coastline, which implies a substantial transport cost to process imported crude oil. Additionally, the country is running with a shortage of foreign currency in the Central Bank reserves, and companies who want to import must ask for authorisation from the Central Bank to receive foreign currency to pay for imports. There is, therefore, an incentive for the State to promote the consumption of local crude oil instead of authorising oil imports, even at a higher price than import parity, to avoid a loss of foreign currency reserves and to incentivise domestic production, investments, jobs and other activities.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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