At least 17 soldiers loyal to President Abd-Rabbu Mansour Hadi were killed by suspected Al Qaeda militants, local officials said on Saturday.
The militants took them to a remote location and killed them by shooting, the officials and residents said. They said 17 other hostage soldiers were injured during the tragedy and some managed to escape and seek help from local leaders.
Ansar al Sharia, an al Qaeda affiliate in Yemen, later issued a statement denying responsibility for the attack and blamed a local armed fighter named Ali Aqeel.
"We entered Ahwar around two months ago to chase this corrupt individual and his gang," the statement said.
The soldiers were on a family visit in Aden and returning back to their military base in al-Mahra to take their salaries, security sources said. There wore civilian clothes and were not riding in military vehicles.
There have already been several failed attempts to defuse the conflict in Yemen, which has drawn in regional foes Saudi Arabia and Iran, and triggered a humanitarian crisis in the Arab world's poorest country.
The Saudi Arabia-led military coalition formally began its intervention in Yemen on March 25, 2015 after the Houthi rebels advanced on the southern city of Aden, forcing Yemeni President Hadi to flee the city.
According to Yemen's Ministry of Public Health, at least 7,000 people, including 1600 children, have been killed in the ongoing civil war in Yemen, nearly half of them civilians. More than 16,500 people have been injured since March 2015.
Twenty million people in the country are in need of aid, 13 million are facing food shortages and 9.4 million are having difficulties accessing drinking water.