NEWSROOM

TORONTO, Feb. 23, 2012 /CNW/ - Pacific Rubiales Energy Corp. (TSX: PRE; BVC: PREC; BOVESPA: PREB) announced today the results of an independent evaluation of the Company's reserves in reports dated February 23, 2012 and effective December 31, 2011, which show that the Company's net 2P reserves grew by approximately 52% when compared to December 31, 2010.

José Francisco Arata, President of the Company commented: "We look at these reserves reports for 2011 as a clear demonstration of the robustness of our exploration and development portfolio, and the Company's business strategy. The 52% reserve growth is very strong, driven by the 83% exploration success rate. The Company continues to grow its reserves along with production, and the addition of reserves in new areas clearly shows that the Company is diversifying its reserve base beyond the Rubiales field."

Highlights on net after royalty ("net") reserves from the independent reserve evaluation reports include:

• Total net Proved plus Probable ("2P") reserves grew by 52% to 407 MMboe. Approximately 78% of 2P reserves are Proved reserves ("1P").
• 547% Reserve Replacement with net 2P reserves additions of 5.5 boe per boe produced.
• Total net 1P reserves grew by 34% to 318 MMboe. Approximately 80% of proved reserves are liquids with the majority of these being heavy oil.
• Successful diversification of reserves base with Rubiales field representing 29% of total net 2P reserves (down from 51% a year ago), and Quifa at 36% of total net 2P reserves (up from 17% a year ago).
• Reserve Life Index ("RLI") increased to 13.0 from a 2010 year-end RLI of 11.5.
• First 2P (Probable) net reserve bookings of 44 MMboe on the CPE-6 E&P block.

2011 2P Reserves Summary
	Oil Equivalent Net 2P Reserves (MMboe)2
December 31, 20101	268.8
Net Additions	169.5
Production3	(31.0)
December 31, 2011	407.3

Notes:
¹ Statement of Reserves Data and Other Oil and Gas Information as of December 31, 2010, filed on SEDAR in Form 51-101 F1, on March 10, 2011.
²The term ''boe'' is used in this news release. 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 news release we have expressed boe using the Colombian conversion standard of 5.7 Mcf: 1 bbl required by the Colombian Ministry of Mines and Energy. We have provided a reconciliation to the NI 51-101 conversion standard of 6 Mcf: 1 bbl in the "Advisories" section of this news release.
³ Production represents the twelve month period ended December 31, 2011.

2011 Year-end Reserves

The following tables summarize information contained in the independent reserves reports prepared by RPS Energy Canada Ltd. ("RPS") and Petrotech Engineering Ltd. ("Petrotech") dated February 23, 2012 with an effective date of December 31, 2011. RPS evaluated the reserves of the Company in the developed Rubiales and Quifa SW fields, while Petrotech evaluated the reserves in the remaining fields and areas that have active ongoing exploration programs. These reports were prepared in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and the National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Additional reserve information as required under NI 51-101 will be included in the Company's Annual Information Form which will be filed on SEDAR by March 14, 2012.

The Company's net reserves after royalties incorporate all applicable royalties under Colombian fiscal legislation based on forecast pricing and production rates, including any additional participation interest ("PAP") related to the price of oil applicable to certain blocks.  For further information concerning the PAP interest, please see the Company's Management Discussion and Analysis dated November 8, 2011.

The recovery and reserve estimates of crude oil and natural gas reserves provided in these reports are estimates only, and there is no guarantee that the estimated reserves will be recovered. Actual crude oil and natural gas reserves may eventually be greater than or less than the estimates provided. All reserves presented are based on RPS and Petrotech forecast pricing and costs effective December 31, 2011. All of the Company's reserves are in Colombia.

 

Reserves at December 31, 2011 (MMboe1)
Field	P1			P2			2P			Hydrocarbon Type
	100%	Gross	Net	100%	Gross	Net	100%	Gross	Net
Rubiales	344.2	146.9	117.6	1.3	0.6	0.5	345.5	147.5	118.0	Heavy Oil
Quifa SW	120.1	72.1	56.2	18.5	11.1	8.7	138.6	83.2	64.9	Heavy Oil
Quifa Norte	119.6	71.8	58.5	45.4	27.3	22.7	165.0	99.0	81.3	Heavy Oil
CPE-6	-	-	-	115.3	57.7	44.3	115.3	57.7	44.3	Heavy Oil
Sabanero2	10.3	5.1	4.8	21.2	10.6	10.0	31.5	15.7	14.8	Heavy Oil
La Creciente	83.1	83.1	77.3	-	-	-	83.1	83.1	77.3	Gas & Condensate
Other Blocks	9.4	4.9	4.3	4.7	2.9	2.5	14.1	7.8	6.8	L&M Oil & Associated Gas
Total at Dec. 31, 2011	686.6	383.8	318.7	206.5	110.0	88.6	893.1	493.8	407.3
Total at Dec. 31, 2010	539.9	285.5	238.4	70.8	39.8	30.4	610.7	326.3	268.8
Difference	146.7	97.3	80.4	135.7	70.3	58.1	282.4	167.6	138.5
2011 Production	79.5	37.9	31.0	Total Reserves Incorporated			361.9	205.5	169.5
Note:	1The term ''boe'' is used in this news release. 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 news release we have expressed boe using the Colombian conversion standard of 5.7 Mcf: 1 bbl required by the Colombian Ministry of Mines and Energy.  We have provided a reconciliation to the NI 51-101 conversion standard of 6 Mcf: 1 bbl in the "Advisories" section fo the news release.
	2Pre-Psie Cooperatief U.A. holds a 49.999% participation in Maurel & Prom Colombia B.V., which indirectly owns a 49.999% working interest in the Sabanero block. Pre-Psie Cooperatief U.A. is a wholly owned subsidiary of the Company.
	In the table above, 100% refers to total 100% field interest; Gross refers to WI before royalties; Net refers to WI after royalties
	Numbers in table may not add due to rounding

 

 

2011 Year-end Net Proved and Probable Reserves
	Condensate, Light & Medium Oil (MMbbl)		Heavy Oil (MMbbl)		Associated and Non- Associated Natural Gas (Bcf)		Total Oil Equivalent (MMboe)1
	Gross	Net	Gross	Net	Gross	Net	Gross	Net
Proved Producing	1.7	1.6	66.1	52.6	478.1	444.5	151.7	132.2
Proved Non-Producing	0.2	0.2	15.6	12.5	3.1	3.0	16.4	13.2
Proved Undeveloped	0.3	0.3	215.4	173.0	0.2	0.2	215.7	173.4
Total Proved	2.2	2.1	297.1	238.1	481.4	447.7	383.8	318.8
Total Probable	0.6	0.6	109.0	87.6	2.3	2.2	110.1	88.6
Proved + Probable (2P)	2.8	2.7	406.1	325.7	483.7	449.9	493.9	407.3

 

Notes:

1The term ''boe'' is used in this news release. 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 news release we have expressed boe using the Colombian conversion standard of 5.7 Mcf: 1 bbl required by the Colombian Ministry of Mines and Energy.  We have provided a reconciliation to the NI 51-101 conversion standard of 6 Mcf: 1 bbl in the "Advisories" section of the news release.

Discussion of Reserves

The Company's exploration capital expenditure in 2011 was approximately US$266 million, adding 169.5 MMboe of net 2P reserves through the drill bit, for a finding cost of US$1.57/boe. A drilling program of 69 gross (38.7 net) exploration wells (including appraisal and stratigraphic wells) resulted in 57 discoveries for an 83% success rate and was instrumental in increasing the Company's reserves in 2011. The Company operates approximately 99% of its production and on a gross 100% basis was responsible for adding an estimated 360 MMboe of 2P reserves to Colombia's total reserve base, and an estimated 40% of Colombia's production growth during the year.

In the Company's Rubiales field, net 2P reserves declined to 118 MMboe from 137 MMboe a year ago on production of approximately 20 MMboe. The Rubiales field is a mature oil field that will see plateau production in the next several years before natural declines start in 2015. The Rubiales field, which in 2008 accounted for 60% of the Company's 2P reserve base, now accounts for less than 30% of a larger base.

In the Quifa SW field, net 2P reserves grew to 65 MMbbl from 25 MMbbl a year ago, but more significantly total Proved reserves grew from 20 MMbbl to 56 MMbbl. Net production during 2011 was 6.5 MMbbl.

In the area known as Quifa Norte, the exploration activity continued and allowed the net 2P reserves to grow from 20 MMboe a year ago to 81 MMboe, an increase of over 300%. Early production at Quifa Norte started in late December 2011 under the exploration license and all year-end 2P reserves were classified as undeveloped. Full development will commence on obtaining development permits expected in early 2012. Both exploration and commerciality declaration, along with development activity, will continue in Quifa Norte during 2012.

On the Sabanero block, where the Company has a 49.999% interest, net 2P reserves grew to 15 MMbbl from zero a year ago. Similar to Quifa Norte, the operator Maurel et Prom Colombia B.V. started production on the Sabanero block in late December 2011 under both exploration and development permits and the production is expected to grow during 2012.

On the CPE-6 E&P block some 70 km southwest of Rubiales/Quifa, net 2P reserves of 44 MMbbl were booked for the first time on this important exploration block. The Company has a working interest of 50% and is operator of the block. These reserves resulted from the evaluation of all the wells drilled in the northern portion of the block. As soon as the environmental permit for the block is awarded, the Company will start an exploration and appraisal drilling campaign to confirm reservoir potential and declare commerciality for the northern portion of the block. After commerciality approval by the ANH, the Company intends to advance the block to an appraisal-development phase through a drilling campaign planned in the second half of 2012. In the La Creciente natural gas producing block, net 2P reserves declined to 441 Bcfe from 452 Bcfe a year ago due to net 2011 production of 23 Bcf partly offset by technical revisions.

On other exploration and minor non-core producing blocks, net 2P reserves declined to 6.8 MMboe from 7.4 MMboe, a result of production of approximately 1 MMboe partly offset by small technical revisions.

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 46 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.

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 11, 2011 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.

Reserves Replacement

Production replacement is calculated by dividing reserves additions by production in the same period. Reserves additions over a given period, in this case 2011, are calculated by summing one or more of revisions and improved recovery, extensions and discoveries, acquisitions and divestitures. Reserve replacement cost is calculated by dividing total capital invested in finding, development and acquisitions net of divestitures by reserve additions in the same period.

Finding Costs

The aggregate of the finding costs incurred in the most recent financial year and the change during that year in estimated future finding costs generally will not reflect total finding costs related to reserves additions for that year.

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.

Paragraph Reference	Using Colombian Standard 5.7 Mcf:1 bbl	Using Canadian Standard 6 Mcf: 1 bbl
3	407 Mboe	386.7 Mboe
3	5.5 boe	5.2 boe
3	318MMboe	302.1 MMboe
3	44MMboe	41.8 MMboe
3	268.8 MMboe	255.4 MMboe
3	169.5 MMboe	161.0 MMboe
3	(31.0)	(29.4) MMboe
3	407.3 MMboe	386.9 MMboe
7	169.5MMboe	161.0 MMboe
7	$US 1.57/boe	$US 1.49/boe
7	360MMboe	342 MMboe
8	118 MMboe	112.1 MMboe
8	138 MMboe	131.1 MMboe
8	20 MMboe	19 MMboe
10	20 MMboe	19 MMboe
10	81 MMboe	77 MMboe
13	6.8 MMboe	6.5 MMboe
13	7.4 MMboe	7.0 MMboe
13	1 MMboe	0.95 MMboe

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.