NEWSROOM

TORONTO, June 5, 2012 /CNW/ - Pacific Rubiales Energy Corp. (TSX: PRE; BVC: PREC; BOVESPA: PREB) today announced that it has entered into a definitive agreement (the "Arrangement Agreement") with PetroMagdalena Energy Corp. (TSX-V: PMD) pursuant to which the Company has agreed to acquire all of the issued and outstanding common shares in the capital of PetroMagdalena by way of a Plan of Arrangement under the British Columbia Business Corporations Act (the "Arrangement").

PetroMagdalena, which is listed on the TSX Venture Exchange with a market capitalization of approximately CDN$187 million, is a Canadian-based oil and gas exploration and production company with working interests in 19 properties in five basins in Colombia.

Under the Arrangement, shareholders of PetroMagdalena will, following closing of the transaction, receive CDN$1.60 in cash for each common share of PetroMagdalena held.  In addition, holders of PetroMagdalena's share purchase warrants (TSX-V: PMD.WT) will, following closing, receive CDN$0.25 in cash for each unexercised warrant held.  The Company intends to finance the acquisition cost (approximately CDN$253 million) using existing cash on hand.

Ronald Pantin, Chief Executive Officer of Pacific Rubiales, said, "We are very pleased to strike this deal with PetroMagdalena, which is already a key provider of light oil as diluent for our crude.  We believe this acquisition is both very complementary and accretive to our existing business."

Each company's board of directors unanimously approved the terms of the proposed transaction.  Both Miguel de la Campa and Serafino Iacono, directors of the Company who are also directors of PetroMagdalena, did not participate in any discussions or negotiations regarding the approval of the proposed acquisition and abstained from the boards' deliberations.

Arrangement Agreement

The Arrangement will be subject to, among other things, the approval of at least 66 2/3% of the votes cast at a special meeting (the "Meeting") of PetroMagdalena shareholders and warrantholders (voting together) to be called to consider the Arrangement. In addition, the Arrangement will be subject to certain conditions, including court approval, relevant regulatory approvals and the absence of any material adverse change with respect to PetroMagdalena.  The transaction is expected to close during the third quarter of 2012.

The Arrangement Agreement contains customary non-solicitation provisions, subject to PetroMagdalena's right to consider and accept superior proposals. Pacific Rubiales has been granted the right to match competing proposals. The Arrangement Agreement contains, among other things, a termination fee of CDN$10 million payable by either party in certain specified circumstances.

Further information regarding the transaction will be contained in an information circular that PetroMagdalena will prepare and mail to its securityholders in connection with the Meeting.  PetroMagdalena securityholders are urged to read the information circular once it becomes available, as it will contain important information concerning the proposed transaction.

Advisor and Counsel

The Company's financial advisor is RBC Capital Markets and the Company is being advised on legal matters by Norton Rose Canada LLP.

About Pacific Rubiales Energy Corp.:

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. Pacific Rubiales has working interests in 43 blocks in Colombia, Peru and Guatemala.

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.

Cautionary Statement on Forward-looking Information

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: the closing of the proposed transaction or the possibility that such transaction may not close, delays in completing the proposed transaction, 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.