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TORONTO, Dec. 5, 2011 /CNW/ - Pacific Rubiales Energy Corp. (TSX: PRE; BVC: PREC) announced today that it has commenced an offer to exchange any and all of its outstanding 8.750% senior notes due 2016 (CUSIP Nos. 69480U AB3 (Rule 144A) and C71058 AA6 (Reg. S) and ISIN Nos. US69480UAB35 (Rule 144A) and USC 71058AA68 (Reg. S)) (the "Existing Notes") held by Eligible Holders (as defined below) for newly issued U.S. dollar-denominated 7.25% Senior Notes (the "New Notes") due 2021 (the "Exchange Offer") and a solicitation of consents (the "Consents") to proposed amendments to the indenture governing the Existing Notes (the "Consent Solicitation", and together with the Exchange Offer, the "Exchange Offer and Consent Solicitation"). The purpose of the Exchange Offer is to diversify the maturity profile of the Company's existing debt by extending the maturity of a portion of its outstanding debt from 2016, the maturity of the Existing Notes, until 2021, the maturity of the New Notes.

Ronald Pantin, Chief Executive Officer of the Company, stated:  "With the recent success of the convertible debenture early conversion program and the commencement of the Exchange Offer, Pacific Rubiales looks to improve its financial position by securing more favourable credit terms and extending the term to maturity of its long term debt, which will benefit shareholders and indicates the increasing financial strength of the Company."

The purpose of the Consent Solicitation is to modify or eliminate certain provisions, including certain restrictive covenants, events of default and certain other provisions under the Existing Notes indenture. Adoption of the proposed amendments requires the consent of holders of Existing Notes representing at least a majority in aggregate principal amount of the outstanding Existing Notes, not including any Existing Notes which are owned by the Company or its subsidiaries. Each holder tendering Existing Notes that are not validly withdrawn will be deemed to have consented to the proposed amendments.

The Exchange Offer and Consent Solicitation will expire at 11:59 p.m. (Toronto time) on January 2, 2012, unless extended (such time and date, as the same may be extended, the "Expiration Date"). Eligible Holders who validly tender Existing Notes for exchange and grant their Consents by 5:00 p.m. (Toronto time) on December 16, 2011, unless extended (such time and date, as the same may be extended, the "Early Participation Date"), will receive the Total Exchange Price (as described below). Eligible Holders who validly tender Existing Notes for exchange after the Early Participation Date, but on or prior to the Expiration Date, will receive the Exchange Price (as described below). Existing Notes tendered in the Exchange Offer and Consent Solicitation and related Consents may be withdrawn at any time prior to 5:00 p.m. (Toronto time) on December 16, 2011, unless extended by the Company (such time and date, as the same may be extended, the "Withdrawal Deadline"). Eligible Holders may withdraw tendered Existing Notes and revoke their Consents at any time prior to the Withdrawal Deadline, but Eligible Holders may not withdraw their tendered Existing Notes or revoke their Consents on or after the Withdrawal Deadline except as required by applicable law.

Eligible Holders that tender their Existing Notes on or prior to the Early Participation Date will receive, in exchange for each US$1,000 of principal amount of Existing Notes being exchanged, an aggregate principal amount of New Notes equal to US$1,150, which includes an early participation payment of US$30 (the "Total Exchange Price"). Eligible Holders who validly tender their Existing Notes and grant their Consents after the Early Participation Date but prior to the Expiration Date will not be eligible to receive the early participation payment, but will be eligible to receive only the "Exchange Price" of US$1,120 in principal amount of New Notes for each US$1,000 in principal amount of Existing Notes validly tendered and accepted.  Cash in lieu of any fractional portion rounded down of a New Note will be paid on the applicable exchange date based on the Total Exchange Price or the Exchange Price, as the case may be.

All Eligible Holders whose Existing Notes are validly tendered and accepted for exchange will also receive a cash payment equal to the accrued and unpaid interest on their Existing Notes accepted for exchange from the last applicable interest payment date up to, but excluding, the applicable exchange date.

Notwithstanding any other provision of the Exchange Offer and Consent Solicitation, the Company's obligation to accept for exchange any Existing Notes validly tendered is subject to the satisfaction of certain general conditions described in the Exchange Offer and Consent Solicitation Statement, including that at least a majority in aggregate outstanding principal amount of the Existing Notes be tendered and not withdrawn on or prior to the Early Participation Date.

The New Notes will be direct, unsecured, subordinated obligations and will rank paripassu without preference among themselves. The New Notes will bear interest at an annual rate of 7.25% on the outstanding principal amount, payable semi-annually in arrears on each June 12 and December 12 of each year, commencing on June 12, 2012. The New Notes will mature on December 12, 2021. The terms and conditions of the Exchange Offer and Consent Solicitation are set forth in an Exchange Offer and Consent Solicitation Statement dated December 5, 2011 (the "Exchange Offer and Consent Solicitation Statement"). The Company may amend, extend or terminate the Exchange Offer and Consent Solicitation, subject to certain conditions described in the Exchange Offer and Consent Solicitation Statement.

The Exchange Offer and Consent Solicitation is being solicited only from holders of Existing Notes:  (a) who are "qualified institutional buyers," or "QIBs," as defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"); and (b) outside the United States to holders of Existing Notes who are persons other than "U.S. persons", as defined in Regulation S under the Securities Act, and who are eligible to participate in the Exchange Offer and Consent Solicitation pursuant to the securities laws of the jurisdiction in which they are located.  Holders of Existing Notes who: (i) are eligible to participate in the Exchange Offer and Consent Solicitation pursuant to at least one of the foregoing conditions; and (ii) held Existing Notes as of the Expiration Date are referred to herein as "Eligible Holders".

None of the Exchange Offer, the Consent Solicitation or the New Notes have been registered, and will not be registered, under the Securities Act, or under the securities laws of any other jurisdiction. The New Notes may not be offered within the United States or to, or for the account or benefit of, U.S. persons, except to Eligible Holders in compliance with section 4(2) or Regulation S under the Securities Act, as applicable. Only Eligible Holders are authorized to receive or review the Exchange Offer and Consent Solicitation Statement or to participate in the Exchange Offer and Consent Solicitation.  In Canada, only accredited investors (as defined under applicable securities laws) will be able to participate in the Exchange Offer and Consent Solicitation, or in the offering of the New Notes.  None of the Exchange Offer, the Consent Solicitation or the New Notes, will be offered to undetermined Colombian residents or to more than a 100 determined Colombian residents.

Global Bondholder Services Corporation has been appointed as the information and exchange agent for the Exchange Offer and Consent Solicitation. Holders may contact the information and exchange agent toll free at (866) 795-2200.

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 and Piriri 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 Shares trade on the Toronto Stock Exchange and La Bolsa de Valores de Colombia under the ticker symbols PRE and PREC, respectively.

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 10, 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.