NEWSROOM

TORONTO, Nov. 9 /CNW/ - Pacific Rubiales Energy Corp. (TSX: PRE; BVC: PREC) announced today the release of its unaudited consolidated financial results for the three and nine month periods ended September 30, 2010, together with its Management's Discussion and Analysis ("MD&A") for the corresponding periods. These documents are posted on the Company's website and SEDAR at www.sedar.com.

Ronald Pantin, Chief Executive Officer, commented: "With $405.4 million in revenue this quarter, more than double the revenue achieved in the same quarter last year, we have demonstrated our leadership in aggressive and sustained production growth. This track record of execution is the foundation of our new strategic initiatives announced earlier this week. The Company is committed to becoming the leading E&P oil and gas company in the region."

The accumulated revenues for the first nine months of 2010 totalled $1.15 billion, higher by 168% in comparison to the same period of 2009. This was the result of the considerable increase in production and the optimization of marketing activities, coupled with higher combined crude oil and gas prices in 2010. This operational success not only resulted in increased revenues but also in an increase in net income for the first nine month period to $112.9 million, compared to a $129.01 million loss for the same period of 2009.

The Company also announced on Monday, November 8, 2010, the launch of its comprehensive growth strategy, reinforcing its emphasis on growth in the E&P sector. The strategy has three major components: (i) growth based upon discovering, developing and producing new and existing reserves; (ii) securing market access by participating in key oil and gas transportation and port infrastructure projects; and (iii) integrating downstream assets in the value chain while strengthening the links with stakeholders in the host countries.

Management will hold a live conference call in both English and Spanish on Wednesday, November 10, 2010 to discuss the Company's financial results beginning at 9:00 am (EST). Analysts and interested investors are invited to participate as follows:

Participant Number (International/Local): (647) 427-7450

Participant Number (Toll free Colombia): 01-800-518-0661

Participant Number (Toll free North America): 1-888-231-8191

Conference ID: 24198476

A replay of the English call will be available until 23:59 pm (ET) on November 24, 2010, which can be accessed as follows:

A detailed summary of results for the quarter ended September 30, 2010 follows:

Summary of Quarterly Financial Results:

Netbacks:

Results, Analysis and Highlights:

The results for the third quarter of 2010 underline the strength of the Company's operational activity, its capacity to increase production and commitment from management to deliver robust financials.

Management is focused on realizing challenging operational objectives while continuing the Company's ambitious E&P investment program under the umbrella of its paramount strategic focus: growth.

The average WTI NYMEX price for the third quarter of 2010 was $76.26/bbl in comparison with $67.88/bbl for the same period of 2009, which represents an increase of 12%. The combined realized oil and gas sales price for the third quarter of 2010 was $60.91/bbl vs. $55.31/bbl for the third quarter of 2009, representing an increase of 10%.

The increase in gross operated production of the Company during the third quarter of 2010 was a significant achievement, averaging 144,115 boe/d (56,404 boe/d net after royalties), which is 64,703 boe/d (23,762 boe/d net after royalties), greater than operated production for the same period of 2009. The 81% growth in operated production is mostly as a result of the increase in production at the Rubiales and Quifa heavy oil fields and the construction of new facilities at both fields to process crude oil. 

Production continues to grow and as of today, the Company has reached the historical milestone of exceeding 163,877 boe/d of gross operated production, equivalent to 68,704 boe/d, net after royalties, which, as in previous quarters, continues to make the Company the fastest growing oil and gas company in Colombia, as well as the country's second largest operator. 

In the execution of its commercial strategy, the Company continued exporting its oil production to international markets, namely, USA and Europe, while maintaining a presence in the local market with direct sales to the bunker and industrial sectors. During the third quarter of 2010, the Company exported 5.4 million bbl of crude oil, and sold 0.4 million bbl of oil to the Colombian domestic market. In addition, gas sales to the domestic market averaged 58 mmscf/d of natural gas produced at the La Creciente field.

During the third quarter of 2010, the Company continued its exploration campaign in the Quifa and CPE-6 blocks, and started drilling activity in the Guama and Topoyaco blocks, for a total of 5 exploratory wells drilled during the period. In Quifa, the Jaspe-1 ST2 appraisal well was drilled on prospect "A" in the northern part of Quifa, while in the CPE-6 block the Guairuro-2 stratigraphic well was drilled in the northern part of the block. Both wells confirmed the presence of hydrocarbon columns on the basal sandstones at the C-7 interval of the Carbonera Formation.  In the Guama and Topoyaco blocks, we started drilling three exploratory wells during the third quarter of 2010 and final depth is expected to be reached during the fourth quarter.

The exploration program during the third quarter of 2010 resulted in two new exploratory successes: 1) The Guairuro-2 well, located in the CPE-6 block, which showed presence of hydrocarbons and  31.5 feet of net pay, and 2) the Jaspe-1 ST2 well, located in the Quifa Block, which is in the process of being completed.

Total net exploration expenditure for the third quarter of 2010 was $23.8 million.

Milestones

• Due to a substantial increase in production volume during the first nine months of 2010, the Company was able to reach revenues of over $1.1 billion ($1,146 million), higher by 168% in comparison to the same period of last year.
• EBITDA during the nine months of 2010 totaled $651.9 million which represents a significant increase of 261% compared to EBITDA of $180.8 million in the same period of 2009. For the third quarter of 2010, EBITDA amounted to $219.6 million, mainly generated from international sales (88%), while gas and domestic sales contributed 6.5% and 5.5%, respectively.
• As of today, the actual production of the Company had reached over 163,877 boe/d of gross operated production, equivalent to approximately 68,704 boe/d, net after royalties. This milestone resulted from the continuous growth in production of heavy oil in the Rubiales/Piriri and Quifa blocks, further supported by the coming into operation of the ODL pipeline. This volume also incorporates the development of the Company's light and medium oil blocks, as well as the natural gas volume produced (at a conversion rate of 6,000 standard cubic feet per barrel) from the La Creciente block and other smaller fields.
• The Company exported 8 cargoes (7 Castilla and 1 Vasconia) representing a total volume of 5.4 million bbl of oil, 7 cargoes to USA and one to Europe, compared to 1.62 million bbl (Vasconia) exported during the same period of 2009. The total volume exported during the third quarter of 2010 represents more than a two-fold increase when compared with the same period of 2009.
• During the third quarter of 2010, the sales of gas increased to an average of 58 mmscf/d of natural gas from 40 mmscf/d in the same period of 2009 (45% increase), sold mainly from the La Creciente field at an average price of $4.82/mmbtu (equivalent to $4.80/mmscf), representing a premium of 22% over the weighted domestic regulated price of $3.96/mmbtu and 13% over the Henry Hub natural gas prices in the United States.
• During the third quarter of 2010, the Company transported 72,022 bbl/d through the different trucking and pipeline systems, including 10,761 bbl/d of diluents; 80% of this volume was transported via pipeline, generating savings of $15.99/bbl in transportation costs for the Company.
• During the third quarter of 2010, a total of 5 exploratory wells drilled, of which four wells were successful and one is still under evaluation.
• During the third quarter of 2010, the Company successfully completed nine combustion, oxidation and acceleration rate tests (ICT/RTO/ARC), which confirmed the potential benefits to the Rubiales field under the STAR process. These tests confirmed the feasibility and potential of the technology and cleared the way for the next stages of the project. 
• As of the end of September 2010, 45% completion of the planned Oleoducto de Los Llanos ("ODL") Pipeline 340,000 bbl/d expansion project was reported.  This project includes construction of two booster stations, increasing storage capacity at the Rubiales Pumping Station and construction of a pipeline branch to Cusiana Station. The expected completion date is March 2011.
• During the third quarter of 2010, the following new facilities were constructed, mainly at the Rubiales field: i) 6.5 km of new roads, ii) 37.4 km of flow lines between 10" and 30", iii) 5 new power sub-stations, iv) new skim tank at CPF-1 in order to handle an incremental volume of 325,000 bbl/d of fluid, v) new water treatment facilities at CPF-1 in order to handle an incremental volume of 100,000 bbl/d of water and vi) 80,000 bbl/d additional water disposal capacity in the existing injection pads.
• Also during the third quarter, construction of CPF-2 has reported significant progress. CPF-2 will add 70,000 bbl/d oil production capacity to the Rubiales field. CPF-2 is planned to be operational in the fourth quarter of 2010. 
• Start-up of the Quifa Central Processing Facility is planned to take place in early November 2010. The new facilities at Quifa will gather production from the western block of Quifa. Dehydrated heavy crude will be pumped directly to the ODL pumping station. The anticipated capacity of these new facilities is 30,000 bbl/d of crude from the Quifa field.
• Capital expenditures during the third quarter of 2010 totaled $200 million, of which $131.8 million was invested in the expansion and construction of production infrastructure; $23.8 million went into exploration activities including seismic, aerogravimetry, aeromagnetometry and drilling; $43.5 million was invested in production drilling activities and $1 million was invested in other projects.
• Oil and gas operating costs for the third quarter of 2010 were $128.6 million (September 30, 2009 - $75.4 million). The increase over the previous period is primarily due to the 84% increase in net oil production at the Rubiales field.  However, production costs per boe were reduced to $21.03, or 21% lower than the same period of 2009 mainly explained by the higher volume of production and a $10.5 million positive effect recognized during the third quarter of 2010 resulting from foreign currency risk management contracts recorded against operative expenses. The $21.03 per boe consists of cost of production of $4.10, transportation cost of $6.13, dilution cost of $11.72 and other recovery cost of $0.93. 
• The Company has consolidated its position in the Colombian Stock Exchange and currently is ranked second in the three main indexes (COLCAP, COL20 and IGBC).

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 69,000 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.

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 12, 2010 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.