Quetzal Announces Proposed Spinout of Guatemalan Assets

Mon May 16, 2011 7:59pm EDT

* Reuters is not responsible for the content in this press release.

Quetzal Energy Ltd. (TSX VENTURE: QEI) ("Quetzal" or the "Company") is
pleased to announce that its Board of Directors has approved a plan,
subject to shareholder and other approvals, whereby the Company intends
to distribute its Guatemalan oil and gas interests, held through a
wholly-owned subsidiary, to its shareholders. The plan is intended to
maximize the value of its businesses to Quetzal shareholders by creating
two distinct and independent companies. The plan will result in the
creation of a new, publicly traded company, RealPetrol Ltd.
("RealPetrol"), which will indirectly hold the Guatemalan assets.
Quetzal's other assets, comprised primarily of oil and gas assets in
Colombia, will become the focus of its management and strategic direction.

    "The decision to distribute the Guatemalan assets to RealPetrol
recognizes that we have two distinct businesses that can be significantly
enhanced by giving them the opportunity to independently evaluate growth
opportunities and organize their capital resources. We believe that
separating the two businesses at this time will be financially beneficial
to both and moreover, will unlock value for shareholders," said Robert
Szczuczko, Quetzal Chief Executive Officer.

    Under the plan, Quetzal shareholders will retain their current interest
in Quetzal and will receive one common share in RealPetrol for every
fifteen Quetzal common shares held. RealPetrol will have separate
management and Board of Directors, and will be publicly traded. Current
optionholders and warrantholders will participate in the arrangement and
the details of such participation will be set out in the proxy circular
referenced below. The proposed distribution will be effected by way of a
Plan of Arrangement that will be subject to, among other things, TSX
Venture Exchange, court, shareholder and other regulatory approvals. It
is expected that for most securityholders, the distribution will be
completed on a tax-deferred basis. A proxy circular outlining details of
the proposed transaction will be mailed to Quetzal shareholders and
warrantholders shortly, with a special meeting of shareholders to take
place on June 20, 2011. The plan is expected to take effect July 1, 2011.

    The securities offered have not been, and will not be, registered under
the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act")
or any U.S. state securities laws, and may not be offered or sold in the
United States or to, or for the account or benefit of, United States
persons absent registration or any applicable exemption from the
registration requirements of the U.S. Securities Act and applicable U.S.
state securities laws. This press release shall not constitute an offer
to sell or the solicitation of an offer to buy securities in the United
States, nor shall there be any sale of these securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful.

    Ascendant Securities Inc. provided services to Quetzal with respect to
the proposed transaction.

    About Quetzal

    Quetzal is a development stage independent oil and gas company engaged in
exploration, development, and production activities in Colombia and
Guatemala. Quetzal is actively involved in identifying and developing
commercial opportunities for the monetization of hydrocarbon resources in
both countries.

    Cautionary Statements

    This news release contains forward-looking information and
forward-looking statements within the meaning of applicable securities
laws (together, "forward-looking information"). The use of any of the
words "expect", "anticipate", "continue", "estimate", "believe", "plans",
"intends", "confident", "may", "objective", "ongoing", "will", "should",
"project", "should" and similar expressions are intended to identify
forward-looking information. In particular, but without limiting the
foregoing, this news release contains forward-looking information
concerning the use of proceeds of the recently completed offering of
units of the Corporation.

    The forward-looking information is based on certain key expectations and
assumptions made by Quetzal, including expectations and assumptions
concerning the operational results in Colombia and Guatemala. Although
Quetzal believes that the expectations and assumptions on which the
forward-looking information are based are reasonable, undue reliance
should not be placed on the forward-looking information because Quetzal
can give no assurance that they will prove to be correct.

    Since forward-looking information addresses future events and conditions,
by its very nature it involves 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
inherent risks involved in the exploration and development of oil and gas
properties, the uncertainties involved in interpreting drilling results
and other geological data, uncertainties relating to fluctuating oil and
gas prices, the possibility of cost overruns or unanticipated costs and
expenses and other factors including unforeseen delays. Anticipated
exploration and development plans relating to Quetzal's properties are
subject to change. 

    The foregoing list of assumptions, risks and uncertainties is not
exhaustive. The forward-looking information contained in this press
release is made as of the date hereof and Quetzal 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.


Quetzal Energy Ltd.
Robert Szczuczko
Chief Executive Officer
(403) 606-1317

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