NEWSROOM

    TORONTO, July 8 /CNW/ - Pacific Rubiales Energy Corp. (TSX: PEG)
announced today that it has executed an agreement to acquire 100% of Kappa
Energy Holdings Ltd. for a cash payment of approximately US$168 million,
subject to minor post-closing adjustments.
    Kappa is a Colombian oil and gas exploration and production company which
holds exploration and production licenses in Colombia, where it has been
operating since 1997. Kappa has a commanding land position, operating nine
blocks with a 10 year track record.
    Kappa has gross acreage of 747,000. This acreage consists of nine leased
blocks in the Catatumbo, Lower, Middle and Upper Magdalena, and Llanos basins
of Colombia, with the following net working interests: Abanico (22.5% in the
production area and in the Santana and Casablanca exploration areas, with
23.8% and 14.8% working interests, respectively, and 30.5% working interests
in the remaining exploration areas), Alhucema (50%), Arrendajo (32.5%),
Cerrito (average 75%), Chipalo (50%), Cicuco (100% for gas and oil), Guasimo
(100%), Buganviles (49%) and Las Quinchas (50%).
    The Abanico contract area includes the main oil producing field, Abanico
(4,100 gross barrels per day) and gas producing field, Ventilador (4.3 gross
million cubic feet per day). Three of the exploration contracts, with the ANH
(Guasimo, Alhucema and Arrendajo), are in the drilling phase and the other
two, with Ecopetrol (Chipalo and Buganviles), are in the exploration phase.
Acacia Este (part of the Las Quinchas block) offers the largest exploration
potential.
    Kappa has a strong existing reserve base with, as of May 31, 2008,
approximately 9.3 million barrels equivalent (MMboe) of proven and probable
reserves and 24.0 MMboe of proven, probable and possible reserves. In
addition, 116 MMboe of prospective resources have been identified in the best
estimate case. There is no certainty that any portion of the resources will be
discovered. If discovered, there is no certainty that it will be commercially
viable to produce any portion of the resources. All the reserve numbers quoted
above are net before royalties.
    Pacific Rubiales believes that this acquisition not only expands the
resource base of the company, but also enhances the future exploration
potential by adding new blocks that the company believes are highly promising.
Pacific Rubiales is confident that the application of state of the art
technology plus the proven track record of its management will add value to
the newly acquired assets.
    Ronald Pantin, the company's Chief Executive Officer, stated "the
execution of this agreement confirms our commitment to continue searching for
the best available exploration and production assets in the region and
underlines our drive to make Pacific Rubiales the largest independent oil and
natural gas company in the region."
    GMP Securities L.P. has been retained as the exclusive financial advisor
in connection with this transaction. As part of the scope of its retainer, GMP
will examine various financing options and report such options to the Board of
Directors of Pacific Rubiales. Closing of the acquisition is expected to be
completed in early September 2008. Completion of the acquisition is subject to
customary conditions of closing and the receipt of certain regulatory
approvals.
    The reserve and resource estimates set forth herein have been prepared by
Petrotech Engineering Ltd., of Burnaby, Canada effective as of May 31, 2008 in
accordance with the Canadian Oil and Gas Evaluation (COGE) Handbook, and will
be set forth in an independent reserve and resource evaluation report being
prepared by Petrotech. The report is expected to be completed by mid-July,
2008 and will be filed on SEDAR when completed. The Petrotech report will
confirm the reserves and resources reported above and will be prepared in
accordance with the requirements of the Canadian National Instrument 51-101
standards of disclosure for oil and gas activities. Petrotech is acting
independently in the preparation of its report. Petrotech and its employees
have no direct or indirect ownership in the properties appraised or the areas
of study described in the report.
    Possible reserves are those additional reserves that are less certain to
be recovered than probable reserves. There is a 10% probability that the
quantities actually recovered will equal or exceed the sum of proved plus
probable plus possible reserves. A boe is derived by converting gas to oil in
the ratio of six thousand cubic feet of gas to one barrel of oil. Boes 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.

    Pacific Rubiales, a Canadian-based company and producer of natural gas
and heavy crude oil, owns 100 percent of Meta Petroleum Limited, 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
21,000 barrels of oil equivalent per day, with working interests in the
Rubiales, Piriri and Quifa concessions and the Caguan, Dindal, Rio Seco, Puli
B, La Creciente, Moriche, Guama, Arauca, Tacacho and Jagueyes blocks in
Colombia and blocks 135, 137 and 138 in Peru.

    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 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
28, 2008 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.

    %SEDAR: 00007953E