Azabache Announces Commercialization of Covunco Block, Argentina

January 27, 2010

Toronto, Ontario, Canada – Azabache Energy Inc. ("Azabache") (TSX VENTURE:AZA) announces that it has entered into an arrangement with Gas Meridional to purchase up to 1.8 MMcf of gas per day at $2.80 per MMBTU, pending finalization of a definitive agreement.

The Company will initially supply the gas from recently re-perforated intervals in the Tordillo Formation (1905-1930 and 1940-1952.5 m) of the OAx-2 well in the Covunco Block of the Neuquen Basin. Gas flowed at a stabilized rate of 883 Mcf and 5 bbls of condensate per day through a 5/16" choke at a wellhead pressure of 300 psi.

In addition, the Company has signed a letter of intent for a strategic alliance with GNC Galileo S.A. and Galileo Rental S.A. to install facilities for compressed natural gas transportation. GNC Galileo S.A. will provide and maintain the operation of the facilities for the transportation.

FOR FURTHER INFORMATION PLEASE CONTACT:

Azabache Energy Inc.
Claudio Larotonda
President & CEO
+54.11.4893.4004
clarotonda@azaenergy.com
www.azaenergy.com

Azabache Energy Inc.
Glenn Van Doorne
Chairman
+403.966.8739
gvandoorne@azaenergy.com
www.azaenergy.com

Not for distribution to United States newswire services or for dissemination in the United States.

This press release was prepared by Azabache Energy Inc. which accepts the responsibility as to its accuracy. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.