Azabache Energy Inc. announced the completion of the production testing operation performed on the Cvo.x-2 exploration well on the Covunco Norte Sur Block, Neuquén Province (the Block). The company is pleased to provide the following up date: 1. Upon the Cvo.x-2 well being completed and the hydraulic fracture stimulation at the planned depths (1st stage: perforated at 1,991.5 to 1,974.0 m below ground level; 2nd stage: perforated at 1,946.0 to 1,914.5 m below ground level; and 3rd stage: perforated at 1,672.7 to 1,642.0 m below ground level) a bridge plug was placed in order to isolate the 1st stage from the others as it was not successfully completed with Proppant. The reason why the first stage did not penetrate the Vaca Muerta Formation as expected is being currently analyzed; 2. Between 01/16/2014 up to 03/14/2014 the well was extracted from the 2nd and 3rd stages by means of a well testing circuit (Wellhead Chicksan Connections, Manifold, Triphasic Separator, Flowback and Storage Tanks and Burned lines), with a maximum flow back net of oil (37 API) of 24 Bbls/d and a maximum gas flow of 56,000 Scf/d, with a gross flow back of 75% water (frac water).

During this period, the wellhead pressure went from 1850 to 220 Psi, flowing through a 3 mm Choke. 67% of the total volume of water injected was recovered in the 2nd and 3rd stages; 3. The results obtained from the Production Logging Tool suggest that the fracture was effective at the 2nd stage level, especially in the upper section, where 1,259 m3 of water and 182.6 metric tons of Proppant were placed. This section has an average TOC content of 2.29% and it has limestone interbedded with shale.

The role of these limestones and potential natural fractures is not known yet and is a matter for study. The results of these studies will be considered as a basis for future interventions; 4. After the Production Logging Tool was removed, the well was shut-in due to the low pressure to wait for its recovery and then re-entry within approximately 3 months when the pressure in wellhead recovers. The pressure will be monitored periodically; 5. The company now is now submitting the required technical information and applications to the Neuquén Province to obtain an extended evaluation period for this Block and expects to obtain the necessary approvals in the next few weeks.