NEWSROOM

TORONTO, Oct. 28, 2014 /CNW/ - Pacific Rubiales Energy Corp. (TSX: PRE) (BVC: PREC) (BOVESPA: PREB) today provided an operational update for its third quarter 2014 operating results, which includes estimates of production and sales volumes, price realizations, and operating netbacks, summarized as follows:

Note: All values in this release are in U.S.$ unless otherwise stated.

Third Quarter 2014 Results

Total net production for the quarter is expected to be in the range of 142 to 146 Mboe/d, an increase of approximately 13% from the same period a year ago. This is 3% lower than the previous quarter, impacted by lower than expected production from the Rubiales Field primarily due to restricted water disposal capacity, partly offset by higher than expected light oil production.

The Company released a detailed exploration update news release yesterday, highlighting a more than doubling of its light oil production over the past 12 months and the success in adding new light oil production through the exploration drill bit. Approximately 10,000 bbl/d of new oil production is coming from 39 exploration wells drilled in 2014 to date, a 72% success rate.

Development of the new heavy oil field in the CPE-6 block continues. The phase one central processing facility construction is in progress, with completion expected within the next 30 to 45 days. The Company continues drilling on the block with two wells recently drilled and successfully testing oil, and an additional well currently drilling. A more detailed update on the progress of the CPE-6 development will be provided on the third quarter conference call next week (Thursday November 6, 2014).

The Company reports its sales volumes comprised of produced volumes available for sale, plus purchased diluent volumes (mixed with heavy oil production to form a sales blend), plus oil for trading ("OFT") volumes, plus/minus sales inventory adjustments. Sales volumes can vary significantly from quarter-to-quarter as a consequence of fluctuating diluent and OFT volumes, which can include significant swings in oil inventories which are related to the timing of export cargo liftings.

Sales volumes in the third quarter are expected to be in the range of 162 to 164 Mboe/d, an increase of 32% and 5% from the same period a year ago and the prior quarter, respectively. The OFT volumes are expected to be in the range of 13 to 15 Mbbl/d (compared to 8.6 Mbbl/d in the second quarter 2014). Diluent volumes are expected to be similar to the prior quarter (2.2 Mbbl/d in the second quarter 2014).

The Company expects oil price realization in the third quarter to be in the range of $91 to $93/bbl, which is lower as compared to the same quarter a year ago and the second quarter 2014, but in-line with the decline in benchmark oil prices. Most of the Company's oil production in Colombia and Peru is exported at prices linked to international oil prices. Both WTI and Brent benchmark oil prices declined approximately $6/bbl (5% - 6%) during the quarter. Combined realized prices (including natural gas production) are expected to be in the range of $87 to $89/boe.

The Company calculates its operating netback for both revenues and costs based on total sales volumes, rather than produced volumes. Total operating costs are reported as a combination of: production, transportation, and diluent costs, plus other costs and overlift/underlift costs. The latter two (other costs and overlift/underlift) largely relate to movements in storage and cargo lifting inventory and can consequently significantly impact total costs either positively or negatively, in any given quarter.

The Company maintained its underlying operating costs in-line with the prior quarter, but lower than the same period a year ago. Operating netbacks for the quarter are expected to be lower compared with the prior quarter, impacted by the drop in benchmark oil prices, however cash operating margins are expected to remain at or above 60%.

Pacific Rubiales, a Canadian company and producer of natural gas and crude oil, owns 100% of Meta Petroleum Corp., which operates the Rubiales, Piriri and Quifa heavy oil fields in the Llanos Basin, and 100% of Pacific Stratus Energy Colombia Corp., which operates the La Creciente natural gas field in the northwestern area of Colombia.  Pacific Rubiales has also previously acquired 100% of Petrominerales Ltd, which owns light and heavy oil assets in Colombia and oil and gas assets in Peru, 100% of PetroMagdalena Energy Corp., which owns light oil assets in Colombia, and 100% of C&C Energia Ltd., which owns light oil assets in the Llanos Basin.  In addition, the Company has a diversified portfolio of assets beyond Colombia, which includes producing and exploration assets in Peru, Guatemala, Brazil, Guyana and Papua New Guinea.

The Company's common shares trade on the Toronto Stock Exchange and La Bolsa de Valores de Colombia and as Brazilian Depositary Receipts on Brazil's Bolsa de Valores Mercadorias e Futuros under the ticker symbols PRE, PREC, and PREB, respectively.

Advisories

Cautionary Note Concerning Forward-Looking Statements

This news 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, Peru, Brazil, Papua New Guinea and Guyana; 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 13, 2014 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.

Boe Conversion

Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 5.7 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. The estimated values disclosed in this news release do not represent fair market value. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation.

Definitions                                                                                   

Translation

This news release was prepared in the English language and subsequently translated into Spanish and Portuguese. In the case of any differences between the English version and its translated counterparts, the English document should be treated as the governing version.

SOURCE Pacific Rubiales Energy Corp.

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