Quantcast
Last updated on April 18, 2014 at 1:21 EDT

Pacific Rubiales Reports Solid Financial Quarter and Resumption of Growth in the Company’s Major Oil Fields

November 8, 2012

TORONTO, Nov. 7, 2012 /PRNewswire/ – Pacific Rubiales Energy Corp. (TSX: PRE;
BVC: PREC; BOVESPA: PREB) announced today the release of its unaudited
consolidated financial results for the quarter ended September 30,
2012, together with its Management Discussion and Analysis (“MD&A”) for
the corresponding period. These documents will be available on the
Company’s website at www.pacificrubiales.com, on SEDAR at www.sedar.com, on the SIMEV website at www.superfinanciera.gov.co/web_valores/Simev, on the BOVESPA website at www.bmfbovespa.com.br/ and on the Company’s website at www.pacificrubiales.com. All values in this release are in US$ unless otherwise stated.

The Company has scheduled a teleconference call for investors and
analysts on Thursday November 8 2012 at 8:00 a.m. (Toronto and Bogotá
time) 11:00 a.m. (Rio de Janeiro time), to discuss the Company’s third
quarter results. Analysts and interested investors are invited to
participate using the dial-in instructions available at the end of this
news release.

Third Quarter 2012 Highlights

        --  Total production net of royalties of 97,142 boe/d including
            1,394 bbl/d* attributed to Block Z-1, offshore Peru. For
            further details with respect to how the Company's average daily
            production has been calculated, please see the section in this
            news release entitled "Production Summary".
        --  Net production in the third quarter increased 5% from the
            second quarter 2012 reflecting increases in production from the
            Company's major producing oil fields of Rubiales and Quifa
            (including the new commercial field development at Cajúa) and
            volumes associated with the PetroMagdalena acquisition
            completed in late July.
        --  The environmental license for 400 Mbbl/d of incremental water
            injection for the Rubiales oil field was received during the
            quarter in mid-August, which will allow oil production ramp-up
            to a targeted 2012 exit rate of 190 Mbbl/d total gross field
            production.
        --  On August 15, 2012 the Company received commerciality approval
            for a new field development in a portion of the Quifa North
            block to be called the Cajúa field.
        --  EBITDA increased 4% to $483 million ($1.59 billion for the
            first nine months, an increase of 14% compared to the same
            period in 2011), driven by production growth and higher
            netbacks.
        --  Net Earnings of $69 million ($552 million for the first nine
            months, an increase of 17% compared to the same period in
            2011).
        --  Adjusted Net Earnings from Operations of $131 million ($615
            million for the first nine months, an increase of 7% compared
            to the same period in 2011).
        --  Operating netbacks from oil and gas sales volumes of
            $61.42/boe, an increase of 14% over the third quarter 2011,
            driven by higher price realizations from both higher oil and
            natural gas benchmark prices, combined with marginally lower
            total costs.
        --  Total capital expenditures of $363 million (excluding
            acquisitions) compared to $277 million in the same period in
            2011.
        --  Exploration success of 88% from drilling a total of eight gross
            appraisal and stratigraphic wells of which seven were
            successful. In the first nine months of the year the Company
            has drilled a total of 49 gross exploration (including
            stratigraphic and appraisal) wells with a success rate of 84%.
        --  The Company entered into an agreement with Karoon Gas Australia
            Ltd. to acquire a 35% net working interest in four prospective
            exploration blocks (plus an option on an additional block) in
            the prospective Santos basin offshore Brazil. The first well
            will commence drilling by the end of 2012.
        --  The Company entered into an agreement to acquire a 40%
            participating interest in the Portofino block along the heavy
            oil resource trend, onshore Colombia.
        --  The Company completed the acquisition of PetroMagdalena Energy
            Corp. on July 27, 2012 for a cash consideration of
            approximately C$227 million.
        --  In the third quarter of 2012, the Company paid a cash dividend
            of $0.11 per share, to shareholders of record.

Ronald Pantin, Chief Executive Officer of the Company commented:

“The Company’s third quarter results were solid from both a financial
and operational viewpoint, contributing to strong gains year-to-date
that put us on track for a record year measured across all our
financial and operational metrics.

This was the quarter where production growth resumed in our two major
oil fields (Rubiales and Quifa fields) after production in the first
half was constrained by delays in the environmental permit approval
process for increased water injection. Growth in our average net
production in the fourth quarter is accelerating and is within striking
distance of our year-end exit targets.

Since receiving the environmental license approval, the Company has been
able to increase its total gross field production from approximately
243 Mboe/d to 270 Mboe/d (net after royalty 97 Mboe/d to 109 Mboe/d).
Current gross total field production is approximately 188 Mbbl/d at
Rubiales, 49 Mbbl/d at Quifa SW and 3 Mbbl/d at the new commercial
development in Quifa North (Cajúa field). These gains are driven by the
receipt of the environmental permit for an incremental 400 Mbbl/d water
injection at Rubiales and the commerciality approval for the Cajúa
field, received August 8 and 15, 2012 respectively.

Sales volumes in the third quarter were down from the record set in the
prior quarter, but up slightly from the first quarter 2012. Our sales
volumes fluctuate depending on volumes of diluent, oil for trading and
net inventory adjustments. In the third quarter compared to the
previous quarter, our diluent volumes remained flat due to more
purchases of natural gasoline rather than light oil product. We had no
oil for trading volumes in the quarter, and we had a net inventory
build rather than the large draw we saw in the prior quarter. These
swings are a natural characteristic of our business, but what is more
important was that our operating netbacks remained strong (with crude
oil netbacks close to $65/bbl and natural gas over $34/boe), and the
EBITDA ratio (EBITDA/Revenue) increased to 56% in the quarter from 54%
in the prior quarter despite a 2% drop in realized sales price. This
illustrates the strength of the business and its cash generating
capacity.

The Company has experienced delays related to the regulatory permitting
process affecting its Colombia operations, but we are actively working
with government agencies to expedite the process and have seen
improvements which are encouraging. In the case of Pacific Rubiales it
is important to recognize that this year’s delay in the licensing only
represents a delay in development, rather than a loss of production.

In addition, despite pipeline transportation disruptions affecting the
O&G Industry in Colombia, resulting in a drop in the country’s total
oil production during the third quarter, Pacific Rubiales was able to
both grow and deliver all of its oil production without any
disruptions. This illustrates the strategic importance and value of the
proactive investments the Company has made in midstream infrastructure.

Due to the permit delays, we now expect to be +/- at the bottom end of
the annual production guidance range that was reset at our second
quarter release to include production volumes coming from the
PetroMagdalena acquisition and from our 49% deemed participating share
attributed from block Z-1 in Peru.

I am pleased to announce that in the past week we have received the
environmental permit that will allow us to start exploration drilling
on the CPO-12 E&P block to the north and contiguous to the CPE-6 Hamaca
prospect. On the other hand we are still waiting on the blanket
environmental license for the CPE-6 E&P block which we require in order
to advance exploration drilling, extended well testing and field
development of the oil discoveries and prospects we have identified on
the block.

During the quarter, the Company completed its acquisition of
PetroMagdalena. The acquisition contributed approximately 3.2 Mboe/d of
net after royalty production in the third quarter, is already exceeding
our production expectations, and providing a reliable and growing
source of light oil diluent required for our rising heavy oil
production in Colombia. Since acquiring PetroMagdalena, the Company has
increased production from the assets by 40% to the current net 4.9
Mboe/d.

Also in Colombia during the third quarter, the Company acquired a 40%
participating interest in the Portofino exploration block. The block is
located within the heavy oil trend that hosts the giant producing
fields Rubiales/Quifa and Castilla/Chichemene, and on trend and
adjacent to the developing Capella heavy oil field. Pacific Rubiales is
already the largest operator and producer of heavy oil in Colombia and
has one of the largest net land positions along the heavy oil resource
trend. This acquisition adds to our existing portfolio, providing
future growth potential to the Company. Three exploration wells will be
drilled on the block targeting prospects defined on seismic.

Late in the third quarter, we entered into an agreement with Karoon to
acquire a 35% net working interest in four exploration blocks, plus an
option on a fifth block, located in the prospective Santos Basin
offshore Brazil. This is our first entry into Brazil, a country that
has an attractive balance of above and below ground risks for O&G
exploration and development. It is a good fit to our strategy of
selective expansion outside of Colombia and along with other
acquisitions we have undertaken this year, illustrates the Company’s
capacity and vision to look out beyond the short and medium term,
layering in opportunities to support, enhance and develop new growth
prospects into the future.

On October 31, 2012, Fitch Ratings raised its corporate credit rating on
the Company and its senior secured notes to BB+ from BB, also
indicating the Company’s outlook is stable; citing the Company’s
continued production and reserves diversification, proven track record
of increasing production, maintaining adequate reserve replacement
ratios, and the lower business risk as a result of the completion of
key infrastructure projects.

I am particularly pleased that in September Pacific Rubiales was added
to the Jantzi Social Index, which consists of 60 Canadian companies
that have met independently evaluated standards of environmental,
social and governance standards. The Company and its employees have
worked hard to meet these standards and introduce them to our
operations in Colombia and should be justifiably proud of this
achievement.

I would like to finish by saying that in this uncertain economic
environment for many, our Company’s Balance Sheet remains strong; and
our growth targets in the medium term remain intact underpinned by our
extensive low cost heavy oil exploration and development assets in
Colombia. We will continue our strategy of repeatable and profitable
growth by building for the long-term future, the leading E&P Company
focused in Latin America.”

Financial Summary

A summary of the financial results for the three months and nine month
ended September 30, 2012 and 2011 are as follows (a more detailed
discussion and analysis can be found in the MD&A):


                                Three Months Ended      Nine Months Ended

                                       September              September

    (in thousands of
    US$ except per
    share amounts or
    as noted)                    2012         2011        2012      2011

    Oil and gas sales                                          $         $
                              $ 870,369    $ 828,285   2,838,073 2,369,343

    EBITDA(1)                   483,108      463,700   1,589,354 1,392,421

    EBITDA Margin
    (EBITDA/Revenues)               56%          56%         56%       59%

    Per share - basic
    ($)(2)                         1.64         1.71        5.41      5.17

      - diluted ($)                1.60         1.55        5.25      4.68

    Net earnings  (3)            68,817      193,720     551,506   473,502

    Per share  - basic
    ($)  (2)                       0.23         0.71        1.88      1.76

      - diluted ($)                0.23         0.68        1.82      1.68

    Cash Flow from
    Operations                  417,792      305,451   1,125,797   741,527

    Per share  - basic
    ($)  (2)                       1.42         1.13        3.83      2.75

      - diluted ($)                1.38         1.02        3.72      2.49

    Adjusted Net
    earnings from
    operations                  130,707      163,180     614,688   575,197

    Per share  - basic
    ($)  (2)                       0.44         0.60        2.09      2.13

      - diluted ($)                0.43         0.55        2.03      1.93

    Non-operating
    items                        61,890     (30,540)      63,182   101,695

    Funds Flow from
    Operations (1)              348,325      349,930   1,156,012 1,016,839

    Per share - basic
    ($) (2)                        1.18         1.29        3.93      3.78

      - diluted ($)                1.15         1.17        3.82      3.42

 


    (1)     See "Additional Financial Measures" section 16 3Q2012 MD&A.

    (2)     The basic weighted average number of common shares outstanding
            for the third quarter ended September 30, 2012
            and 2011 was 295,022,739 (fully diluted - 302,872,969) and
            270,967,710 (fully diluted - 298,413,561), respectively.

    (3)     Net earnings for the third quarter of 2012 include a net loss
            of $38 million of the equity investments as required for
            the IFRS accounting rules.

Sales Volumes and Operating Crude Oil and Natural Gas Netbacks

The Company produces and sells crude oil and natural gas. It also
purchases crude oil from third parties as diluents and for trading
purposes, which are included in the reported “daily volume sold”. Both
revenues and costs are recognized on the respective volumes sold during
the period. The combined crude oil and natural gas operating production
and sales netback during the quarter ended September 30, 2012 was
$61.42/boe, 14% higher than the same period in 2011 driven by higher
price realizations resulting from higher oil and natural gas benchmark
prices.

The following is a reconciliation of volumes produced or purchased vs.
volumes sold during third quarter of 2012; including a breakdown of
crude oil production and diluent and crude oil trading purchases:


    Production and
    sales volumes
    (boe/day) (1)                         Three months ended September

                                                   2012               2011

                                 Oil         Gas      Combined     Combined

    Average total
    field
    production                 229,570     11,405      240,975      219,136

    Share before
    royalties and
    PAP                        105,592     10,693      116,285      102,957

    Average net
    production
    (after
    royalties and
    field
    consumption)                85,067     10,681       95,748       87,159

    Beginning
    inventory
    (ending
    inventory June
    30)                         15,541          -       15,541       20,866

    Average net
    production
    (after
    royalties and
    field
    consumption)                85,067     10,681       95,748       87,159

    Acquisition
    Petromagdalena
    (Beginning
    inventory July
    27, 2012)                      292          -          292            -

    Purchases of
    diluents and
    oil for trading
    (1)                         12,884          -       12,884       22,322

    Other inventory
    movements (1)              (1,320)         94      (1,226)           53

    Ending
    inventory
    September 30.             (23,419)          -     (23,419)     (28,847)

    Average daily
    volume sold
    (boe/day)                   89,045     10,775       99,820      101,553

The following table provides a breakdown of sales volumes by crude oil
produced, diluents and crude oil trading during the third quarter of
2012:


    Production and
    sales volumes
    (boe/day) (1)                      Three months ended September 2012

                                Oil Production     Diluent and       Total
                                                     Trading

    Beginning
    inventory (ending
    inventory June
    30)                                 11,956           3,585       15,541

    Average net
    production (after
    royalties and
    field
    consumption)                        85,067               -       85,067

    Acquisition
    Petromagdalena
    (Beginning
    inventory July
    27, 2012)                              292               -          292

    Purchases of
    diluents and oil
    for trading (1)                          -          12,884       12,884

    Other inventory
    movements (1)                        (430)           (890)      (1,320)

    Ending inventory
    September 30.                     (16,938)         (6,481)     (23,419)

    Average daily
    volume sold
    (boe/day)                           79,947           9,098       89,045

    (1)    See additional detail in "Inventory
           Movements" table 3Q2012 MD&A

Operating netbacks for the quarters ending September 30, 2012 and 2011
are as follows (a more detailed discussion and analysis along with
segmented first quarter netbacks can be found in the MD&A):


    Combined crude oil
    and gas (boe)                           Three months ended September

                                   2012         2012         2012       2011

                                                        Combined
                                    Oil          Gas          (7)   Combined

    Average daily
    volume sold
    (boe/day)(1)                 89,045       10,775       99,820    101,553

    Operating netback
    ($/boe)                                                                 

    Crude oil and
    natural gas sales
    price                        101.61        41.49        95.13      88.66

    Production cost of
    barrels sold (2)              13.89         3.97        12.82       5.29

    Transportation
    (trucking and
    pipeline) (3)                 14.56         0.03        13.00      11.08

    Diluent cost (4)               9.17            -         8.18      14.44

    Other costs (5)              (1.26)         2.85       (0.82)       2.23

    Overlift/Underlift
    (6)                            0.55         0.37         0.53       1.94

    Operating netback
    crude oil and gas
    ($/boe) (8)                   64.70        34.27        61.42      53.68

    (1)    Combined operating netback data
           based on weighted average daily
           volume sold which includes
           diluents
           necessary for the upgrading of the
           Rubiales blend.

    (2)    Cost of production mainly includes
           lifting costs and other production
           costs such as personnel, energy,
           fuel consumption, security,
           insurance and others. Higher oil
           operating cost driven by cost of
           disposing
           associated water production at
           Rubiales and Quifa fields, which
           increases energy and fuel
           consumption
           as compared to prior period of
           2011.

    (3)    Includes the transport costs of
           crude oil and gas through
           pipelines and tank trucks incurred
           by the
           Company to take the products to
           the delivery points to customers.

    (4)    Net blending cost of Rubiales
           crude was reduced 39%, from $4.22
           per bbl in the third quarter of
           2011
           to $2.56 per bbl in this period.
           This reduction is mainly due to
           the increase of usage of natural
           gasoline
           (92%) purchased at better prices
           than local crude oil used as
           diluents during 2011, blending
           rate
           improved to 14.6%, as indicated in
           the table below:

    Adjusted Net Cost of                       Three months ended September
    Diluent

                                                      2012          2011
                                                   (US$/bbl)     (US$/bbl)

    Average diluent                                   106.92         104.80
    purchase price

    Pipeline fees                                      12.29           7.76

    Average Rubiales                                (101.67)        (93.97)
    blend sales price

    Net diluent cost per                               17.54          18.59
    barrel

    Average blending                                   14.6%          22.7%
    ratio

    Net Blend cost per                                  2.56           4.22
    barrel

             For the purpose of securing diluents for blending Rubiales
             crude oil, the Company
             purchased 9,201 bbl/d during the third quarter of 2012 vs.
             10,687 bbl/d in the same
             period of 2011. The Company increased purchases of natural
             gasoline (82.1° API)
             to 8,587 bbl/d and continued local purchases (614 bbl/d) of
             light crude oils (40°
             API average). Blending cost was $2.56 per bbl of Rubiales
             crude (vs. $4.22/bbl in
             the same period of 2011).

    (5)      Other costs mainly correspond to royalties on gas production,
             external road
             maintenance at the Rubiales field, inventory fluctuation,
             storage cost and the net
             effect of the currency hedges of operating expenses incurred
             in Colombian pesos
             during the period.

    (6)      Corresponds to the net effect of the overlift position for the
             period amounting to
             $4.8 million, which generated a reduction in the combined
             costs of $0.53/boe as
             explained in "Discussion of 2012 Third Quarter Financial
             Results- Financial Position
             - Operating Costs" in 3Q MD&A.

    (7)      The Company's average daily volumes include PetroMagdalena's
             average daily
             volumes from July 27, 2012 to September 30, 2012 (a 65 day
             period) of 3,198 boe/d
             (total field production of 6,273 boe/d), which has been
             calculated by dividing
             PetroMagdalena's aggregate production of 207,870 boe (total
             field production of
             407,745 boe) over the 65 day period from acquisition.
             PetroMagdalena's average
             daily volume for the entire third quarter (calculated over 92
             days) was 2,259 boe/d
             (total field production of 4,432 boe/d).

    (8)      During the third quarter of 2012, the Company did not have
             crude oil for trading activity

Production Summary

The Company produces crude oil and natural gas from a number of
different fields, over 98% of which are located in Colombia. The
Company operates most of its production. The average net after royalty
production during the quarter ended September 30, 2012 was 97,142 boe/d
including 1,394 bbl/d* attributed to the recent acquisition in Peru,
12% higher than the same period in 2011.

Average production for the Company’s major producing fields for the
three months ended September 30, 2012 and 2011 are as follows (a more
detailed discussion and analysis can be found in the MD&A):


                                      Average Q3 Production (in boe/d)

                           Total field     Share before     Net share after
                           production      royalties and       royalties
                                              PAP(1)       

    Producing
    Fields -
    Colombia            Q3 2012 Q3 2011   Q3 2012 Q3 2011   Q3 2012 Q3 2011

    Rubiales /
    Piriri              171,871 167,343    71,876  68,958    57,501  55,166

    Quifa(2)             45,398  35,222    27,099  20,996    21,491  19,241

    La Creciente
    (3)                  10,498  11,053    10,318  10,860    10,316  10,857

    Cubiro                4,312       -     2,741       -     2,522       -

    Cajua                 2,621       -     1,572       -     1,478       -

    Abanico               1,525   2,082       430     656       412     633

    Rio Ceibas                -   1,692         -     457         -     366

    Sabanero (4)          1,500       -       736       -       692       -

    Dindal / Rio
    Seco                  1,083   1,279       653     740       535     620

    Arrendajo               800       -       444       -       408       -

    Other
    producing
    fields (5)            1,367     465       416     290       393     276

    Total
    Production -
    Colombia            240,975 219,136   116,285 102,957    95,748  87,159

    Producing
    Fields - Peru
    (See note
    below)                                                                 

    Block Z-1 (6)         2,845       -     1,394       -     1,394       -

    Total
    Production -
    Peru                  2,845       -     1,394       -     1,394       -

    Total
    Production
    Colombia and
    Peru                243,820 219,136   117,679 102,957    97,142  87,159

    (1)      Share before royalties is net of internal
             consumption at the field.

    (2)      Includes Quifa SW field and early
             production from Quifa North prospects. The
             Company's share before royalties in the
             Quifa SW
             field is 60% and decreases according to a
             high-prices clause that assigns additional
             production to Ecopetrol S.A.

    (3)      Royalties on the gas production from La
             Creciente field are payable in cash and
             accounted as part of the production cost.
             Royalties
             on the condensates are paid in kind,
             representing a small impact in the net
             share after royalties. The Company has an
             advance of
             70% in the project to increase the process
             capacity to 100 MMcf/d at La Creciente
             Station.

    (4)      The Company holds a 49.999% participation
             in Maurel et Prom Colombia B.V., which
             indirectly owns a 49.999% working interest
             in
             the Sabanero Block.

    (5)      Other producing fields corresponds to
             producing assets located in Cerrito,
             Moriche, Las Quinchas, Arrendajo, Guasimo
             and
             Buganviles blocks. Also includes the
             recently acquired blocks from
             PetroMagdalena such as Carbonera,
             Carbonera La Silla,
             La Punta and Yamu blocks (La Punta and
             Yamu are not operated blocks). Subject to
             Ecopetrol´s and ANH´s approval, the
             Company
             has divested its participation in the
             Moriche, Las Quinchas, Guasimo, and
             Chipalo blocks.

    (6)      Block Z-1 includes Corvina and Albacora
             fields which are operated by BPZ in which
             the Company acquired a 49% undivided
             participating interest on April 27, 2012
             subject to governmental approval. Once
             closing of the transaction occurs, the
             Company
             or any of its subsidiaries will be the
             technical operations manager under an
             Operating Services Agreement. The
             applicable royalties
             in Peru are paid in cash and are accounted
             as part of the production cost.

    (7)      The Company's average daily volumes
             include PetroMagdalena's average daily
             volumes from July 27, 2012 to September
             30, 2012 (a 65 day period) of 3,198 boe/d
             (total field production of 6,273 boe/d),
             which has been calculated by dividing
             PetroMagdalena's aggregate production of
             207,870 boe (total field production of
             407,745 boe) over the 65 day period from
             acquisition.  PetroMagdalena's average
             daily volume for the entire third quarter
             (calculated over 92 days) was 2,259 boe/d
             (total field production of 4,432 boe/d).

    (8)      The term ''boe'' is used in this MD&A. Boe
             may be misleading, particularly if used in
             isolation. A boe conversion ratio of cubic
             feet
             to barrels is based on an energy
             equivalency conversion method primarily
             applicable at the burner tip and does not
             represent a
             value equivalency at the wellhead. In this
             MD&A we have expressed boe using the
             Colombian conversion standard of 5.7 Mcf:
             1 bbl
             required by the Colombian Ministry of
             Mines and Energy.

Third Quarter Conference Call Details

The Company has scheduled a teleconference call for investors and
analysts on Thursday November 8, at 8:00 a.m. (Toronto and Bogotá time)
/ 11:00 a.m. (Rio de Janeiro time), to discuss the Company’s third
quarter results. Analysts and interested investors are invited to
participate using the dial-in numbers as follows (a presentation will
be posted on the Company’s website at: www.pacificrubiales.com prior to the call):


    Participant Number (International/Local):       (647) 427-7450
    Participant Number (Toll free Colombia):        01-800-518-0661
    Participant Number (Toll free North America):   (888) 231-8191
    Conference ID (English Participants):           36920400
    Conference ID (Spanish Participants):           36900534

The conference call will be webcast which can be accessed through the
following link: http://www.pacificrubiales.com.co/investor-relations/webcast.html.

A replay of the call will be available until 23:59 pm (Toronto time),
November 22, 2012, which can be accessed as follows:


    Encore Toll Free Dial-in Number:      1-855-859-2056
    Local Dial-in-Number:                 (416) 849-0833
    Encore ID (English Participants):     36920400
    Encore ID (Spanish Participants):     36900534

Pacific Rubiales, a Canadian-based company and producer of natural gas
and heavy crude oil, owns 100 percent of Meta Petroleum Corp., a
Colombian oil operator which operates the Rubiales, Piriri and Quifa
oil fields in the Llanos Basin in association with Ecopetrol, S.A., the
Colombian national oil company, and 100 percent of Pacific Stratus
Energy Corp. which operates the La Creciente natural gas field. The
Company is focused on identifying opportunities primarily within the
eastern Llanos Basin of Colombia as well as in other areas in Colombia
and northern Peru.

The Company’s common shares trade on the Toronto Stock Exchange and La
Bolsa de Valores de Colombia and as Brazilian Depositary Receipts on
Brazil’s Bolsa de Valores Mercadorias e Futuros
under the ticker symbols PRE, PREC, and PREB, respectively.

Advisories

Cautionary Note Concerning Forward-Looking Statements

This press release contains forward-looking statements. All statements,
other than statements of historical fact, that address activities,
events or developments that the Company believes, expects or
anticipates will or may occur in the future (including, without
limitation, statements regarding estimates and/or assumptions in
respect of production, revenue, cash flow and costs, reserve and
resource estimates, potential resources and reserves and the Company’s
exploration and development plans and objectives) are forward-looking
statements. These forward-looking statements reflect the current
expectations or beliefs of the Company based on information currently
available to the Company. Forward-looking statements are subject to a
number of risks and uncertainties that may cause the actual results of
the Company to differ materially from those discussed in the
forward-looking statements, and even if such actual results are
realized or substantially realized, there can be no assurance that they
will have the expected consequences to, or effects on, the Company.
Factors that could cause actual results or events to differ materially
from current expectations include, among other things: uncertainty of
estimates of capital and operating costs, production estimates and
estimated economic return; the possibility that actual circumstances
will differ from the estimates and assumptions; failure to establish
estimated resources or reserves; fluctuations in petroleum prices and
currency exchange rates; inflation; changes in equity markets;
political developments in Colombia, Guatemala or Peru; changes to
regulations affecting the Company’s activities; uncertainties relating
to the availability and costs of financing needed in the future; the
uncertainties involved in interpreting drilling results and other
geological data; and the other risks disclosed under the heading “Risk
Factors” and elsewhere in the Company’s annual information form dated
March 14, 2012 filed on SEDAR at
www.sedar.com. Any forward-looking statement speaks only as of the date on which it
is made and, except as may be required by applicable securities laws,
the company disclaims any intent or obligation to update any
forward-looking statement, whether as a result of new information,
future events or results or otherwise. Although the Company believes
that the assumptions inherent in the forward-looking statements are
reasonable, forward-looking statements are not guarantees of future
performance and accordingly undue reliance should not be put on such
statements due to the inherent uncertainty therein.

In addition, reported production levels may not be reflective of
sustainable production rates and future production rates may differ
materially from the production rates reflected in this press release
due to, among other factors, difficulties or interruptions encountered
during the production of hydrocarbons.

Average Daily Oil Production – Block Z-1 Peru

Peru production referenced in the news release corresponds to the 49%
deemed participating share of production attributable to the Company
from Block Z-1 for the period January 1 through June 30, 2012, pursuant
to a Stock Purchase Agreement (“SPA”) signed on April 27, 2012 between
the Company and BPZ Resources, Inc. (“BPZ”).  Under the SPA (i) at
closing operating revenues and expenses will then be allocated to each
partner’s respective participating interest and (ii) once approvals by
the relevant Peruvian authorities are granted, the Company shall
receive a 49% interest in the production of hydrocarbons from the Z-1
Block. No revenue and costs have been recognized yet in the Company´s
results with respect to the production from Block Z-1 as its full
entitlement is subject to approval of the applicable Peruvian
authorities.

Boe Conversion

Boe may be misleading, particularly if used in isolation. A boe
conversion ratio of 5.7 Mcf: 1 bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. The estimated values
disclosed in this news release do not represent fair market value. The
estimates of reserves and future net revenue for individual properties
may not reflect the same confidence level as estimates of reserves and
future net revenue for all properties, due to the effects of
aggregation.

Translation

This news release was prepared in the English language and susequently
translated into Spanish and Portuguese. In the case of any differences
between the English version and its translated counterparts, the
English document should be treated as the governing version.

Definitions 


    Bcf         Billion cubic feet.

    Bcfe        Billion cubic feet of natural gas equivalent.

    bbl         Barrel of oil.

    bbl/d       Barrel of oil per day.

    boe         Barrel of oil equivalent. Boe's may be misleading,
                particularly if used in isolation. The Colombian standard
                is a boe conversion ratio of 5.7 Mcf:1 bbl and is based on
                an energy equivalency conversion method primarily
                applicable at the burner tip and does not represent a value
                equivalency at the wellhead.

    boe/d       Barrel of oil equivalent per day.

    Mbbl        Thousand barrels.

    Mboe        Thousand barrels of oil equivalent.

    MMbbl       Million barrels.

    MMboe       Million barrels of oil equivalent.

    Mcf         Thousand cubic feet.

    WTI         West Texas Intermediate Crude Oil.

*See reference to “Average Daily Production – Block Z-1 Peru” in the
Advisories section of this news release.

 

 

 

 

 

SOURCE Pacific Rubiales Energy Corp.


Source: PR Newswire