Petro Rubiales and Pacific Stratus Agree to Merger to Create Pacific Rubiales Energy Corp.
Nov 12, 2007

    VANCOUVER and TORONTO, Nov. 12 /CNW/ - Petro Rubiales Energy Corp. (TSXV:
PEG) and Pacific Stratus Energy Ltd. (TSX: PSE) are pleased to announce that
they have entered into an agreement by which Petro Rubiales will combine on a
market to market basis with Pacific Stratus through a court approved plan of
arrangement. Pursuant to the combination, Pacific Stratus will become a
wholly-owned subsidiary of Petro Rubiales and the combined entity will be
renamed "Pacific Rubiales Energy Corp."
    The combined entity is expected to have a fully diluted market
capitalization of approximately Cdn$2.5 billion and will result in the
formation of a world class diversified oil and gas producer, with an inventory
of exploration upside opportunities. Shareholders in Pacific Rubiales will own
a unique company with:-   Significant oil and gas production (2008 estimated combined
        production in excess of 30,000 barrels of oil equivalent per day
    -   Continued significant natural gas exploration upside from Pacific
        Stratus's 100%-owned Colombian blocks (the La Creciente block has
        7 prospects, with the initial prospect "A", containing proved plus
        probable reserves of 0.6 trillion cubic feet (tcf) of gas)
    -   Oil exploration opportunities on the Arauca, Quifa and new Peruvian
    -   Complementary management skill sets with an enhanced technical
        expertise in both production and exploration, in both oil and gas
    -   The largest independent oil and gas exploration and production base
        in Colombia
    -   Positioning amongst the largest international oil and gas exploration
        companies on the TSX
    -   Significant upside given the below market metrics as compared to the
        company's TSX peer group
    -   A balanced and diversified asset base
    -   A strengthened cash position of Cdn$220 million and balance sheet to
        support future acquisitions in South America, positioning it as a
        significant and opportunistic oil and gas consolidatorPacific Stratus shareholders will receive 8.85 common shares of Petro
Rubiales for each share in Pacific Stratus. The holders of common share
purchase warrants and options of Pacific Stratus will receive common share
purchase warrants and options of Petro Rubiales, in amounts and at exercise
prices to be based on the common share exchange ratio. The exchange ratio
represents a market to market transaction based on the agreed 10, 15 and 20
day volume weighted average price of the two companies.
    The transaction will require approval by 66 2/3% of Pacific Stratus
shareholders voting and present at a special meeting of Pacific Stratus
shareholders to be held in Toronto in early 2008 (exact date to be announced
at a later date). Petro Rubiales' shares shall remain the same and no action
is required by its shareholders. Completion of the transaction is subject to
the satisfaction of certain conditions by both parties, including the
completion of due diligence investigations. It is also subject to the
execution of a definitive agreement and the approval of both the Toronto Stock
Exchange and TSX Venture Exchange. It is anticipated that the transaction will
be concluded in the first quarter of 2008. The agreement may be terminated if
certain conditions are not met, but if a party terminates the agreement or
fails to consummate the transaction or enters into an agreement with a third
party, such party shall pay to the other a termination fee.
    Upon completion of the transaction, the board of directors of the
combined entity is expected to be Serafino Iacono (Co-Chairman), Miguel de la
Campa (Co-Chairman), Ronald Pantin, Jose Francisco Arata, German Efromovich
and Gordon Keep. In addition, a four person advisory board consisting of
Augusto Lopez, Miguel Rodriguez, Jose Efromovich and John Zaozirny will also
be appointed, with the expectation that the board of directors of Pacific
Rubiales will be increased to ten at its next annual meeting, at which time
these four individuals will be added to the board of directors.
    The boards of directors of both Petro Rubiales and Pacific Stratus have
unanimously approved the transaction. The recommendation of Petro Rubiales'
board of directors is supported by a fairness opinion from its financial
advisor, Endeavour Financial International Corporation, and that of Pacific
Stratus's board of directors is supported by a fairness opinion from its
financial advisor, GMP Securities L.P. As well, Orion Securities Inc. provided
an additional fairness opinion to the board of Pacific Stratus.
    Ronald Pantin, President and Chief Executive Officer of Petro Rubiales
said, "This transaction is a merger of complementary companies that helps
create one of the largest oil and gas production and development companies in
Colombia. It provides an immediate increase in production to our shareholders
and creates a diversified company with an exciting exploration portfolio."
    Jose Francisco Arata, Chief Executive Officer of Pacific Stratus stated,
"This transaction is very compelling in that it combines Pacific Stratus's
very strong exploration team with an extremely competent production team from
Petro Rubiales. Both companies hold a significant oil and gas exploration
portfolio and the merger will allow them to leverage their strong operational
and exploration expertise at their respective properties. The combined entity
is well placed to become a significant factor in the Colombian and South
American energy market."
    Petro Rubiales and Pacific Stratus have an existing letter agreement
whereby Pacific Stratus has the right to earn 50% of Petro Rubiales' interest
in the Quifa Association Contract, while Petro Rubiales has the right to earn
a 50% interest in Pacific Stratus' interest in the Arauca Technical Evaluation
Agreement, both in Colombia.
    Endeavour Financial International Corporation acted as exclusive
financial advisor to Petro Rubiales and GMP Securities L.P. is acting as
exclusive financial advisor to Pacific Stratus.
    Petro Rubiales and Pacific Stratus will host a special joint web cast and
teleconference call on Tuesday, November 13, 2007 at 8:30 a.m. (EST) to
discuss the transaction.

    The web cast can be accessed through:

    Call-in details are as follows:

    Toronto & International: (416) 644 3433
    North America: (800) 732 0232

    Petro Rubiales, a Canadian-based company and producer of heavy crude oil,
is owner of 100 percent of Meta Petroleum Limited, a Colombian oil and gas
operator which operates the Rubiales and Piriri oil fields in the Llanos Basin
in association with Ecopetrol S.A. the Colombian, state-owned oil company. The
Company is focused on identifying opportunities primarily within the eastern
Llanos Basin of Colombia.

    Pacific Stratus Energy is a Canadian-based oil and gas company that
initiated operations in 2004. The company is focused on identifying attractive
opportunities primarily within the upstream Sub Andean basins. Pacific Stratus
has a current net production of 1,900 barrels of oil per day, with working
interests in the Caguan, Dindal, Rio Seco, Puli B, La Creciente, Moriche,
Guama and Arauca blocks in Colombia and blocks 135, 137 and 138 in Peru. The
company has offices in Toronto, Caracas and Bogota. Further information is
available on our website at

    The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this news release.

    This press release contains forward-looking statements based on
assumptions, uncertainties and management's best estimates of future events.
Actual results may differ materially from those currently anticipated.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties. Important factors that could cause actual results to differ
materially from those expressed or implied by such forward looking statements
are detailed from time to time in the respective company's periodic reports
filed with the British Columbia Securities Commission and other regulatory
authorities. Neither company has the intention or obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.

For further information:
For further information: Petro Rubiales Energy Corp.: Mr. Ronald Pantin,
Chief Executive Officer and Director, (604) 688-9180 or Dr. Sally L. Eyre,
Senior Vice President, Corporate Development, (604) 688-9180; Pacific Stratus
Energy Ltd.: Jose Francisco Arata, Chief Executive Officer, (416) 362-7735, or Peter Volk, General Counsel & Secretary, (416)