NEWSROOM

TORONTO, Jan. 10 /CNW/ - Pacific Rubiales Energy Corp. (TSX: PRE; BVC: PREC) announced today an operational update on its production activities, and guidance on its capital spending plan for 2011. As of December 31, 2010, the Company's gross production capacity stood at 220,000 barrels of oil equivalent per day ("boepd"), with a net production of 84,000 boepd, a 75% increase in relation to the net exit production of 2009 of 48,000 boepd. Exit production is approximately 8% below Company projections and is a result of transportation issues downstream of the field that are currently being resolved.

The Company´s exploration portfolio currently covers 6,725,673 hectares or 16,619,501 acres, and it remains the largest independent oil and gas producer and explorer in Colombia, second only to the state-owned Ecopetrol. The Company further expanded its portfolio in 2010 by adding two blocks in the Republic of Guatemala and six in the Llanos-Putumayo basins in Colombia.

The Company´s fully funded capital budget for 2011 is estimated to be US$1.12 billion with an estimated gross exit production of 265,000 boepd or 112,000 boepd net. The Company will continue pursuing its strategy of production growth from its producing assets, but also accelerating the addition of new reserves from its exploration assets which will be released this quarter in an updated independent reserves report.  

Mr. Ronald Pantin, Chief Executive Officer, commented: "The Company ends 2010 on the same high note in which it started. We are very pleased with the performance of our producing assets, as they continue to perform as planned. Also, the exploration efforts continue to be in high gear, with over 28 exploratory and appraisal wells drilled and a success rate of over 80% during the year. The primary focus for the Company continues to be the ramping up of production capacity. We are presently securing access to transportation capacity with the expansion of the ODL pipeline, and our participation in the Oleoducto Bicentenario de Colombia ("OBC") project, the company that will build, own and operate a new oil pipeline in Colombia (see press release dated November 15, 2010). I feel confident that we will continue meeting our targets."

During 2010, the Company drilled 42 producing wells and 17 exploration/appraisal wells at the Quifa field. This, together with the completion of the Central Processing Facility ("CPF") at Quifa, allowed for the field's production to reach its target of 30,000 bopd by the end of 2010. In addition, the completion of CPF2 at the Rubiales field raised production capacity to 170,000 bopd, which will be fully realized as the expansion of OCENSA pipeline is completed in the next few weeks.

This marks another record year for Pacific Rubiales, a result of a concerted and sustained effort to build on the Company's production potential in tandem with its exploration portfolio, while ensuring it has the capacity and commercialization strategy in place to move the production at the well head to the end customer. 

Capital Expenditure Plan 

The Company's capital expenditure strategy entails two main long-term initiatives: (i) growth based upon discovering, developing and producing new and existing reserves; and (ii) securing market access by participating in key oil and gas transportation and port infrastructure projects. For 2011, the Company has budgeted $340 million for exploration activities as it enters into a more intensive phase of effort in more than 26 of its blocks in Colombia, and begins operations in Peru and Guatemala. The Company plans to invest $438 million in production facilities, mainly at Quifa and Rubiales, as it ramps up production in the Quifa field and continues to expand the fluid handling capacities in the Rubiales field. The expansion of production capacity in all of the fields calls for an investment of $139 million in development drilling. Finally, the Company has earmarked $204 million for projects such as STAR, IT investment and its investment in the transport and port projects. In total, the investment budget for 2011 amounts to $1.12 billion.   

A detailed update on the Company's exploration activity will be released shortly as our partners in all the blocks finalize their internal approval process. An updated and revised version of the investor presentation (in particular, corrections in the investment plan) will be posted on the Company´s website at www.pacificrubiales.com.

Annual Meeting of Shareholders

In 2011, the Company will be holding its annual meeting of shareholders on May 31, 2011, in Bogotá, Colombia in both English and Spanish.

Debenture Adjustment

In 2010, the Company began paying a dividend to its shareholders by paying a cash dividend in the aggregate amount of $25,000,000 (or $0.094 per common share) for the quarter.  Under the indenture dated August 28, 2008 that governs the 8% Convertible, Unsecured, Subordinated Debentures of the Company ("Debentures"), the dividend payment on December 16, 2010 triggered an adjustment to the conversion rate applicable to the Debentures.  However, in accordance with the provisions of the indenture, since the adjustment to the conversion rate resulting from the dividend payment was less than 1%, the adjustment was not to be made at the time, but instead will be carried over to the time of any subsequent adjustment. 

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. 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 a current net production of approximately at 84,000 barrels of oil equivalent per day, after royalties, with working interests in 40 blocks in Colombia, Peru and Guatemala.  

The Company's common shares trade on the Toronto Stock Exchange and La Bolsa de Valores de Colombia under the ticker symbols PRE and PREC, respectively. 

Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 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.