Azabache Energy Inc.: Company Update

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


Azabache Energy Inc. ("Azabache" or the "Company") (TSX VENTURE:AZA) announces
that the Operator of the Antares Block (in which the Company has a 50% working
interest) is completing the civil construction at the drilling location for the
Lemaya well on the Antares Block, Colombia. This well will be drilled pursuant
to the amended Farm out Agreement dated May 23, 2012 previously announced in a
press release dated May 24, 2012. The well will reach a total depth of 3,100 ft
and is targeting light oil from the Caballos Formation. The drilling rig is
expected to move onto the drilling location in the next few days with an
anticipated spud date by August 14th, 2012. 


Azabache continues to study cores of the recently drilled exploration well
(CVOx-2) on the Covunco Norte Sur Block in Argentina. The company expects to
perform a stimulation job on this well before the end of the year.


On July 25th, 2012, the Argentinean Executive Power issued Decree# 1277/2012 the
terms of which appear to directly affect both the upstream and downstream oil
and gas industry in Argentina including as follows:




--  Amendment to certain of the laws concerning the free marketing of
    hydrocarbons established by previous governments in 1989. 
--  Creation of a new commission under the Ministry of Economy with a
    mandate of: 
    a.  Establishing and consolidating of a national investment plan for the
        oil and gas industry. An example of the new provisions is that
        operators of hydrocarbon blocks in the country will be required to
        submit an annual work plan that will be evaluated by this commission
        to determine whether such plan fits within the national plan. 
    b.  Assuring reasonable prices for products in the industry. 
    c.  Publishing reference prices for hydrocarbons and fuels products



The effects of this Decree on the Company's properties remain unclear, though as
a result of the Decree discussions and negotiations with a potential joint
venture partner in respect of its shale oil play in Argentina have been put on
hold, pending greater clarity of the potential impact of this Decree. In the
meantime the Company will continue to pursue other suitable farm out /joint
venture opportunities for its shale oil properties with regional and
international industry E&P companies.


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 operational
activities as well as the potential effects of foreign government's actions on
future exploration and developments plans of the Company. The forward-looking
statements contained in this document are based on certain key expectations and
assumptions made by Azabache. 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
conclude arrangements with joint venture partners to assess the viability of the
Company's shale oil and gas assets, the failure to obtain other regulatory and
governmental 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. The 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.
Azabache Energy Inc. (TSXV:AZA)
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