Quetzal Energy Ltd. has completed the previously announced sale to SGS Acquisition Company Ltd. of its wholly-owned subsidiary, Quetzal Energy Inc., which held Quetzal's Guatemalan operations.

Pursuant to a definitive agreement dated January 25, 2012, SGS:

■ agreed to pay Quetzal US $1.5 million (plus certain adjustments), of which US $500,000 (plus approximately US $13,000 in adjustments) was paid at closing with the balance of US $1 million (plus approximately US $120,000 in adjustments) to be paid upon the occurrence of certain performance milestones and in any event no later than 365 days after closing; ■ will grant Quetzal a 10 per cent carried interest in the first two wells drilled by SGS on QEG's properties (the "Properties"); and ■ granted Quetzal an option to participate on a 10 per cent pro rata basis in all other wells drilled by SGS on the Properties.

With recent drilling success in Colombia, Quetzal has decided to focus its management time and financial resources on its four private participating interests in Colombia. Quetzal estimates that QEG has outstanding unfunded capital obligations to the Guatemala government of approximately US $25 million for drilling exploration and development wells, conducting well work-overs, and shooting 2D seismic. Although Quetzal believes the Properties represent potential exploration upside, it was determined that QEG is non-core to Quetzal given the expected cost obligations and Quetzal's focused strategy on Colombia.

Tags: Quetzal Energy