Estrella International Energy Services Ltd.: December 2012 Operational Update

NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRES

Estrella International Energy Services Ltd. ("Estrella" or the "Company") (TSX
VENTURE:EEN), announces its operational update for December 2012. Warren Levy,
Chief Executive Officer of Estrella commented: "The Company has made extensive
advances in the planned repositioning of our rig fleet onto long term stable
operations. We are also pleased to announce that our directional drilling
business has completed successful rollout in Argentina and Chile, and we expect
to be operational in both Peru and Colombia early in the new year. We believe
that these moves will unlock substantial improvements in financial performance
and have substantially better positioned the Company for the future." 


Rig 1201 

Along with rig 551, rig 1201 is the premier rig in Estrella's rig fleet as an AC
power, fully automated drilling rig. In November 2012, Estrella signed a 3+2
year contract with YPF to commence drilling operations for it in the Neuquen
basin in Argentina. The rig is expected to operate drilling deep high pressure
gas wells. The rig is currently being prepped to mobilize into the field. 


The contract required Estrella to transport rig 1201 from Chile to Argentina,
which in turn required the consent of Estrella's primary lender, Credit Suisse,
in connection with the amended and restated credit agreement made between
Estrella and Credit Suisse (the "CS Credit Facility"). On December 14, 2012,
Estrella obtained the consent of Credit Suisse, and as a condition of granting
of the consent, Estrella was required to repay US$1.5M of principal on the CS
Credit Facility and to maintain a ratio of 2.5 to 1 of pledged assets (valued at
fair market) to principal. 


Rig 551 

Rig 551 recently completed two successful drilling campaigns for Canadian junior
operators in Argentina. The rig is in the final stages of negotiations for a
multi-year contract with an operator in the Neuquen basin of Argentina. The rig
is completing its periodic API inspection and if awarded, is expected to
initiate operations on the new contract before year end. 


Rigs 101 and 102 

Rigs 101 and 102 have been offered contract extensions for 3 additional years
with the same operator in southern Argentina. This contract extension would see
the rig operating seven consecutive years in the same fields. 


Peru Operations 

Rig 204 has been successfully relocated from Colombia, and along with Rig 201 is
working on contract in Peru. 


Colombia Operations 

Rig 1002, has been awarded a contract to drill for an operator in central
Colombia and is in the first wellsite being prepared to drill. Rigs 205 and 552
continue to operate on their contracts and rig 556 has been awarded a short test
contract ahead of a key long term tender in the field next year. Rigs 202 and
206 have been offered long term contracts in Argentina, and the company is
currently evaluating the feasibility of relocating the rigs to that country. 


The remainder of the fleet in Colombia continues to be marketed and the Company
believes there is a strong potential to place additional rigs onto long term
contracts in the country. 




Rig Fleet Status                                                            
                                                                            
  7 Rigs on long term contracts                          37%                
                                                                            
  2 Rigs completing long term contracts in early 2013    10.5%              
                                                                            
  2 Rigs offered multi-year contracts                    10.5%              
                                                                            
  3 Rigs working on short term contracts                 16%                
                                                                            
  5 Rigs being marketed                                  26%                



Directional Drilling and General 

Estrella has now successfully deployed gyro services in Argentina, Peru and
Colombia. Directional services with Scientific Drilling supplied tools have been
run with 100% operational success in Argentina and Chile, with deployment and
operational start expected in Colombia and Peru early in 2013. The fourth
quarter has seen staff being trained at Scientific Drilling International in the
US. 


Loan from Ringo Holdings L.P. 

Ringo Holdings L.P., the controlling shareholder of Estrella, has pursuant to a
subordinated loan agreement and promissory note dated as of December 17, 2012,
agreed to loan US$10 million to the Company, which loan can be increased to up
to US$20 million (the "Loan"). The Loan bears interest at the rate of 12% per
annum for the period from December 17, 2012 to September 17, 2013, and 14% per
annum at all times thereafter. On December 17, 2012, Ringo Holdings L.P.
disbursed US$10 million on the Loan. 


The Loan is subordinate to the CS Credit Facility, and subject to certain
exceptions, the Company is not authorized to make any payments of principal or
interest on the Loan until such time as the CS Credit Facility has been
terminated.  


The directors of the Company have determined that the Loan is on commercially
reasonable terms that are no less advantageous to the Company that what it could
have received on the open market.  


The proceeds from the Loan will be used to repay a portion of the CS Credit
Facility, refinance certain short term debt obligations, finance some working
capital obligations associated with new rig contracts and for general corporate
purposes. 


A copy of the subordinated loan agreement and the promissory note can be found
on SEDAR at www.sedar.com.  


Update on Acquisitions 

Estrella is also pleased to report on the final status of contingencies
associated with its previously announced acquisitions of STS and Zigma.  


For the acquisition of STS, on closing 4,750,000 Class A Preferred Shares were
issued to the vendors on closing and subject to escrow conditions in connection
with contingencies. 164,374 of the Class A Preferred Shares will be released to
the Company and cancelled against contingencies, and the remaining 4,584,626
Class A Preferred Shares will be released from escrow to the vendors.  


For the acquisition of Zigma, on closing the Company reserved the issuance of
Class B Special Shares to the vendors, pending resolution of contingencies.
After resolving contingencies with the vendors, no Class B Preferred Shares will
be issued. 


Appointment of New Chairman 

At its recent strategy sessions in Buenos Aires the board of directors, in an
attempt to further comply with the objectives of National Policy 58-201 and best
practices in corporate governance, decided to separate the roles of CEO and
Chairman. To this end the Company is pleased to announce that Horacio Reyser has
been appointed Chairman of Estrella. Warren Levy, the former Chairman and CEO
will continue in the role of CEO.  


Mr. Reyser is a partner of the Southern Cross Group has been with the firm since
its inception in 1998 and is based in Buenos Aires, Argentina. He has been a
director of Estrella since July 2012. Mr. Reyser has 18 years of operating,
consulting and private equity experience in Latin America. Prior to joining
Southern Cross, Mr. Reyser worked for INFUPA - a regional M&A advisory firm,
where he focused on infrastructure, services and industrial company related
mergers and acquisitions. Mr. Reyser began his career in financial and strategic
planning at SIDERCA, the Argentine steel tube manufacturer which is part of the
Techint Group - one of the largest industrial conglomerates in Latin America. He
later worked in SIDERAR, the flat-steel products divisions of the Techint Group
focused on a wide variety of operational projects and strategic acquisitions
executed by subsidiaries of the Techint Group. Mr. Reyser holds a degree in
Industrial Engineering from Instituto Tecnologico de Buenos Aires (ITBA) and
completed an Advanced Management Program at Harvard Business School. Mr. Reyser
is a member of the Board of Directors of CGC, an Argentine exploration and
production company controlled by Southern Cross. He is also the Director of the
Business Council of CADAL (Center for Latin American Opening and Development). 


Statements in this press release may contain forward-looking information. Any
statements in this press release that are not statements of historical fact may
be deemed to be forward-looking statements. Forward-looking statements are often
identified by terms such as "may", "should", "anticipate", "expects" and similar
expressions. Forward-looking statements in this press release include, but are
not limited to, statements with respect to the future business plans and
services. 


The reader is cautioned that assumptions used in the preparation of any
forward-looking information may prove to be incorrect. Events or circumstances,
such as future availability of capital on favourable terms, may cause actual
results to differ materially from those predicted, as a result of numerous known
and unknown risks, uncertainties, and other factors, many of which are beyond
the control of Estrella. The reader is cautioned not to place undue reliance on
any forward-looking information. Such information, although considered
reasonable by management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated. Forward-looking
statements contained in this press release are expressly qualified by this
cautionary statement. The forward-looking statements contained in this press
release are made as of the date of this press release, and Estrella does not
undertake any obligation to update publicly or to revise any of the included
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by securities law. 


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THEREFROM. 


FOR FURTHER INFORMATION PLEASE CONTACT: 
Estrella International Energy Services Ltd.
Warren Levy
Chief Executive Officer
[phone]
[phone] (FAX)
[e-mail]