Quetzal Energy Ltd. Announces Third Quarter 2010 Results

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Quetzal Energy Ltd. (TSX VENTURE:QEI) announces its unaudited results for the three months ended September 30, 2010.

HIGHLIGHTS of the quarter                                                   

--  To follow up on the Canaguay-1 oil discovery made in the third quarter,
    the Canaguay-1 well commenced testing multiple zones on October 6, 2010.
    The Canaguay-1 testing program included six drill stem tests of which
    five were completed as of the date of this MD&A. Included in the tests
    completed was a test in the lower Mirador that initially tested 2,225
    barrels per day of 20.7 API crude oil. (See Press Release dated November
    22, 2010). Quetzal Energy Ltd is the acting operator and is earning a
    25% working interest in the Canaguaro block. 
    
--  The Company completed the interpretation of the Llanos 27 block seismic
    and has identified several prospects including drillable locations. The
    drilling program is expected to commence in early 2011. 
    
--  The Company closed a $C9.6 million equity financing on September 9, 2010
    raising net proceeds of $C8.7 million that will be used to finance the
    company's exploration and development program and general corporate
    expenses. 
    

Subsequent to the quarter end, the Company was successful in achieving credit approval from the Economic Development Corporation and the Royal Bank of Canada to back the Agencia Nacional de Hidrocarburos ("ANH") guarantees which removed the restriction on cash deposits of USD $4.9 million.

Financial highlights                      September 30, 2010  June 30, 2010 
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Cash and cash equivalents                 $        2,512,046  $   1,111,190 
Petroleum and natural gas properties              35,768,446     32,836,833 
Total assets                                      48,379,543     41,286,221 
Total liabilities                                  9,345,249     10,538,258 
Share capital, warrants and contributed                                     
 surplus                                          48,915,651     39,378,708 
Deficit                                          (12,653,101)   (10,698,237)
Working capital (deficit)                           (359,822)    (3,701,739)
Net loss for the period (three months)             1,954,864        950,430 
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Forward Looking Statements - Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of Quetzal, including, but not limited to the impact of general economic conditions, industry conditions, volatility of commodity prices, risks associated with oil and gas activities, currency fluctuations, dependence upon regulatory approvals, the availability of future financing and exploration risk. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. www.quetzalenergy.com