Azabache Energy Inc.

Azabache Energy Inc.

September 23, 2010 11:32 ET

Azabache Announces Operational Update and Appointment of Chief Financial Officer

CALGARY, ALBERTA--(Marketwire - Sept. 23, 2010) -


Azabache Energy Inc. ("Azabache") or the ("Company") (TSX VENTURE:AZA) is pleased to provide an update on its exploration activities and to announce the appointment of a new Chief Financial Officer of the Company.

Azabache has been busy on several fronts over the past few months moving ahead with the development projects (referred to herein as "OAX1 well" and "OAX2 well"), advancing exploration plays and examining the acquisition of producing properties.

Development Projects

The OAX2 well, located in Argentina and which was reperforated in January 2010, has been under long term testing to verify stabilized production from sufficient reserves to justify a 15 km tie-in with the regional gas pipeline. Preliminary results indicate that the production has stabilized after 28 days (680 hours) with an average production of 862 Mscf/d (24629 m3/d) and 8 bbl/d (1.3 m3/d) of condensate (56 APIº) at a well head pressure of 270 psi (1862 kPa) through a 25/64 inch (10 mm) choke. The Tordillo Formation was perforated over the interval from 6220 - 6406 feet (1896 - 1952.5 m) below ground level. The test is anticipated to finish by the second week of October 2010. Results of the test to date are as expected by management of the Company.

The OAX1 well, located approximately 8 km northwest of the OAX2 well, was assigned 30 bcf (850 million m3) possible reserves in the Company's 2009 National Instrument 51-101 reserves evaluation. The well was drilled by YPF (the former Argentine State-owned Company) in 1969 and tested 2.36 MMscf/d (66828 m3/d) from the Lajas Formation over an 11 hour test. Azabache is planning to workover this well, starting the first week of October 2010. The job is expected to be completed in 15 days, including drilling plugs and reperforating the Lajas sands between 7907 – 8284 ft (2410 - 2525 m) below ground level, a net increased perforation interval of 249 ft (76 m).

Claudio Larotonda, CEO and President of Azabache, stated: ")ur intentions are to prove up commercial production in the OAX1 well and OAX2 well prospects, and if successful, declare commerciality and convert this portion of Covunco Block into a 25 year production contract. If both wells produce as expected under long term tests, management anticipates that there should be enough production to justify building a pipeline with a capacity of 8 MMscf/d." The Company has begun discussions with pipeline companies who are interested in constructing and financing these facilities, assuming the tests have a satisfactory outcome.

Exploration Projects


The Company received the approval of La Mona Exploration and Production contract. The block, a former Technical Evaluation Agreement (TEA), is located in Lower Magdalena Basin, Colombia. Azabache had completed seismic work on the block and identified several prospects. The Company is excited about the La Mona prospect, which is the most "drill ready" of Azabache's properties and has had preliminary discussions with parties who have indicated an interest in farming in and drilling an exploration well. The Company is working to have this prospect drilled in early 2011.


The Company has had preliminary discussions with other companies with the objective of farming out the various ready to drill prospects in the Covunco and El Corte blocks in Argentina. The Company expects that farm-ins will be concluded which will result in at least one exploration well in late 2010 or early 2011.

Appointment of Chief Financial Officer

Effective September 1, 2010, Mr. Mark Hopkins has been appointed the Chief Financial Officer of the Company, replacing Mr. Andres Tinajero who had resigned. Mr. Hopkins has been with EcoMax Energy Services Ltd. ("EcoMax") for the past 6 years in senior executive and financial management roles, most recently as EcoMax's Chief Executive Officer. Mr. Hopkins graduated from the University of Saskatchewan with a Commerce degree, holds a Chartered Accountant designation and has 20 years experience in the oil and gas and oilfield supply and service industry in senior financial and operations roles. The Board of Directors of Azabache wishes to express its gratitude to Mr. Tinajero for his time of service.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful. The securities have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

This press release contains forward-looking statements. More particularly, this press release contains statements concerning the Company's expected exploration and development results, its future operations and the completion of its drilling programs. The forward-looking statements contained in this document are based on certain key expectations and assumptions made by Azabache, including with respect to the anticipated timing for completion of drilling, the participation of other parties in its planned operations and the results of its exploration and development activities. Although Azabache believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Azabache can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the failure to obtain necessary regulatory approvals, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations. he forward-looking statements contained in this document are made as of the date hereof and Azabache undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

The term "BOE" may be misleading, particularly if used in isolation. In accordance with National Instrument 51-101, a BOE conversation ratio for natural gas of 6 mscf: 1 bbl has been used which is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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