CALGARY, ALBERTA--(Marketwire - Oct. 28, 2011) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Azabache Energy Inc. (TSX VENTURE:AZA) ("Azabache" or the "Company") announces that it has filed its annual audited financial statements, management's discussion and analysis and certifications of annual filings for the year ended June 30, 2011. In addition, Azabache has filed its reserves data and other oil and gas information required by National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities. Copies of the foregoing documents are available on SEDAR at [ www.sedar.com ].

Highlights of the 2011 fiscal year included:

Operating results

Net loss for the year ended June 30, 2011 was $3,925,000 ($0.06 per share) compared to a net loss of $6,258,000 ($0.18 per share) for prior year. The reduced loss was due primarily to an impairment provision $3,520,000 taken in the 2010 fiscal year related to its properties in Argentina and to reduced geological and geophysical consulting fees ($205,000). These decreases were offset by increased foreign exchange losses ($383,000) due to the stronger Canadian dollar, increased salary expense ($229,000) due to salary increases needed to remain competitive in Argentina, stock-based compensation costs ($230,000) related to options issues in 2011 and write-offs ($254,000) of tax balances in Argentina that may not be recoverable.

Financings

During the fiscal year ended June 30, 2011, the Company raised net proceeds of $24,458,000 through the issue of 60,675,271 common shares in three private placements and through the exercise of outstanding warrants.

El Corte & Covunco Norte-Sur negotiation

In April, 2010 and 2011 the Company filed a petition to obtain the relinquishment of 234.48 km² of the exploration permit in the Covunco Norte-Sur and requested the initiation of the third period of the exploration permit.

With respect to the El Corte area, in April 2011 the Company and its partner (the provincially owned oil and gas company) submitted a proposal to provincial authorities to relinquish 143.85 km² in exchange for an extension of the exploratory periods plus the incorporation in the El Corte block of an additional exploration surface of 188 km² as compensation for an area in Covunco Norte-Sur which had hydrocarbon potential but was subject to environmental and other restrictions that prevented exploration or development.

These blocks are now targets for shale oil/gas opportunities. The Company has engaged consulting firms in Canada and Argentina to further explore the potential value of the blocks for unconventional plays.

Antares Farm-in

On May 10, 2011 Azabache and Petroleos del Mar ("Petromar"), executed a Farmout agreement related to the Antares Block. Under the agreement, Azabache will acquire a 30% interest in the Antares area (operated by Petromar under an exploration and production contract signed between Petromar and the ANH). Under the agreements, the Company will fund the drilling of two exploratory wells in the Antares Block to a maximum of US$5.0 million, pay Petromar cash of US$1.0 million, issue US$1.1 million in common shares of Azabache and issue additional shares if the drilling results in a commercial discovery.

La Mona Exploration and Production Contract

On June 29th, 2010, the Company signed an Exploration and Production Contract ("E&P Contract") with the Colombian National Hydrocarbons Agency ("ANH") to explore for, develop and produce hydrocarbons in the La Mona Block.

In Phases 1 and 2 of the 24 month Exploration Period of the E&P Contract, Azabache had committed to acquire and process 85 line-km of 2-D seismic data and drill one exploration well. In April 2011 the Company requested that the ANH swap the Phase 1 and Phase 2 commitments to allow it to drill the Patacones prospect and acquire additional seismic once the results of the exploration well are known. That request was approved with the result that the Company has until 30 days before February 29, 2012 to start work on that well.

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.

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