Azabache Energy Inc. has entered into agreements with various arms length and non-arm's length parties to complete a senior unsecured interest-bearing debt financing in the principal amount of up to an aggregate of $2.31 million. The loan will be issued to the lenders at a discount of 6.98%, resulting in net proceeds to the company of $2,150,000. The loan will bear interest at a rate of 4% per annum, calculated and payable together with the principal of the loan upon the maturity date.

The term of the loan will be 18 months from the effective date of the loan, with the company having a right to prepayment at any time. At maturity, the loan together with all accrued interest will become due and payable by the company. In consideration for the lenders advancing the loan, Azabache will pay to the lenders up to an aggregate of 9.25 million common shares in the capital of the company.

Such bonus shares to be issued to the lenders on a pro rata basis, at a rate of four common shares with a deemed value of five cents per common share for each dollar of the loan.