Quetzal Energy Ltd. Updates Drilling of Atzam #3 and Announces Intention to Drill Atzam #3A

CALGARY, ALBERTA--(Marketwire - Aug. 17, 2009) -

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Quetzal Energy Ltd. (TSX VENTURE:QEI) ("Quetzal") announces today that it has discontinued efforts to continue drilling on the Atzam #3 location at a total depth of 705' and will move the rig a short distance from this location to spud the Atzam #3A. The hydrocarbon reserve target and potential remains the same.

Quetzal reached a total depth of 705' in the Atzam #3 but lost complete circulation to the shale shaker resulting in surface washouts around the rig footings. Consequently, to ensure operational efficiency going forward, management has decided to mitigate the problem and reposition the rig away from the washout area to spud a new well to be named the Atzam #3A.

As was stated in the July 23, 2009 press release by Quetzal, "It should be noted that In 1987, Basic Resources (Bahamas Ltd) was forced to abandon the Atzam #1 well (approximately 500 meters north east of the Quetzal Energy Ltd. Atzam #3) due to similar drilling issues, causing Basic to skid their rig and drill the Atzam #1A well (currently utilized as a water disposal well for Quetzal Energy Ltd's operations.)"

A change will be made in drilling and casing procedure for the top hole section of the Atzam #3A that will include driving surface conductor pipe to the top of the limestone beds at approximately 70'. This is expected to protect the unconsolidated formations above the limestone from mud or water invasion. For further details on the Atzam #3 well and current drilling campaign, please refer to the press releases of Quetzal dated June 25, July 23 and August 12, 2009, each available on SEDAR at www.sedar.com.

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 drilling activities, currency fluctuations, dependence upon regulatory approvals, the availability of 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.