Pacific Rubiales Announces Financial Results for the Quarter Ended June 30, 2009



    TORONTO, Aug. 13 /CNW/ - Pacific Rubiales Energy Corp. (TSX: PRE),
announced today the release of its unaudited consolidated financial results
for the three month period ended June 30, 2009, together with its Management's
Discussion and Analysis. These documents are posted on the company's website
and SEDAR: www.sedar.com.
    Ronald Pantin, Chief Executive Officer, commented: "We are very pleased
with our second quarter results which continue to show strong production
growth, more than compensating for the significant weakness in the current oil
price when compared with the same period last year. This is largely due to our
almost 68% increase in production from the same period last year. This is an
achievement that demonstrates our leadership and growth potential among the
Colombian E&Ps. We remain focused on executing on our internal growth strategy
as the ODL pipeline construction is completed, on time and on budget, which
will allow us to take the Rubiales field to its full potential."
    Management will hold a live conference call to discuss the company's
financial results on Friday, August 14 beginning at 9:00 am Bogota time or
10:00 am EDT. Analysts and interested investors are invited to participate as
follows:

    
    Conference call:

    Participant Number (Toronto): 416-915-5761
    Participant Number (toll free): 800-814-4860


    Operating Summary
                                           Three months ended June 30
                                      2009       2009      2009       2008
                                       Oil        Gas    Combined   Combined
                                    -----------------------------------------

    Average daily production sold
     (boe/day)(1)                    34,428      5,283     39,711     20,504
    -------------------------------------------------------------------------

    Operating netback ($/boe)(2)
      Crude oil and natural gas
       sales price                    48.05      25.44      45.05      85.93
      Lifting costs                    2.84       1.79       2.70       4.09
      Transportation and other
       costs                          10.77       3.66       9.83       8.93
      Upgrading cost (diluent
       including transportation)       6.42          -       5.57      15.47
      Other production costs           3.94       4.97       4.08       4.64
      Overlift/Underlift(3)            6.19       0.49       5.44      (0.44)
    -------------------------------------------------------------------------
      Operating netback               17.89      14.53      17.43      53.24
    -------------------------------------------------------------------------
    (1) Natural gas conversion rate used was 6 mcf equals 1 barrel of oil
        equivalent ("boe"). 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.
    (2) Combined operating netback data based on weighted average daily
        production sold which include diluents necessary for the upgrading of
        the Rubiales blend.
    (3) Corresponds to the effect of overlift position of 455,000 boe as of
        June 30, 2009 amounting to $19.4 million, or a net combined effect of
        $5.44 per boe in production costs.


    Financial Summary

                                                         Three months ended
    (in thousands of US$ except per share                      June 30,
     amounts or as noted)                                  2009       2008
    -------------------------------------------------------------------------

    Net sales                                             160,994    158,567
      Operating costs                                     (79,238)   (60,902)
      Depletion, depreciation and amort.                  (43,231)   (22,902)
                                                      -----------------------
    Net Operating Income from Operations                   38,525     74,763
      General & administrative expenses                   (14,021)   (11,049)
      Other non-cash(1) items and taxes                  (143,044)   (21,586)
                                                      -----------------------
    Net lncome (Loss) for the period                     (118,540)    42,128
                                                      -----------------------
                                                      -----------------------

      Interest expense and others                           8,355        168
      Income tax expense                                    1,802     32,535
      Depletion, depreciation and amort.                   43,231     22,902
      Non cash unrealized loss on risk
       management contract                                 28,227          -
      Foreign exchange (gain) loss                         85,235    (10,532)
                                                      -----------------------
    EBITDA                                                 48,310     87,201
                                                      -----------------------
    Net Income per share - basic and diluted(2)
      - basic                                               (0.56)      0.21
      - diluted                                             (0.56)      0.19
    Capital expenditures (include $12.2 million
     of advances paid to suppliers)                       (83,640)   (64,877)

    Total assets                                        2,448,927  1,882,494
    Fund flow from operations(3)                           38,934     62,145

    (1) Other non-cash items include:
        a)  The provision for an unrealized foreign exchange conversion loss
            of $85.2 million due to the revaluation of the Colombian peso and
            the Canadian dollar against the US$ during the period;
        b)  A provision to account for the overlift of 455,000 barrels of oil
            and gas of $19.4 million which will be settled when the volumes
            are balanced by an appropriate underlift;
        c)  A non-cash unrealized loss originated from the fair value
            calculation of the risk management contracts of $28.2 million at
            June 30, 2009; and
        d)  Others: interest expense/income of $8.4 million, income tax of
            $1.8 million

    (2) The weighted average number of common shares outstanding for the
        three months and six months ended June 30, 2009 was 211,964,610 and
        211,286,198, respectively, to calculate basic loss per share
        (203,536,198 and 190,672,316 for the same respective periods in
        2008). Diluted shares totaled 233,325,757.

    (3) Calculated based on cash flow from operations before changes in
        non-operating working capital.
    


    Second Quarter 2009 Results Summary

    The results of the second quarter of 2009, and by implication those of
the first six months of 2009, reflect the continuous strength of the company's
operations.
    During the second quarter, operated production of the company reached an
average of 71,533 boe/d, which is an increase of 28,829 boe/d over the same
period last year. This growth in operated production came mainly through the
increase in production at the Rubiales heavy crude oil field. By August 2,
2009, the production at Rubiales reached 65,000 bbl/d, making this the fastest
growing and also the highest producing field in Colombia. Production costs per
barrel continue to decrease, showing a 48% reduction over the same period last
year. This is evidence of management's commitment to cost control while
increasing production.
    During the quarter, the marketing strategy of the company continued to
create value in spite of the lower oil prices as compared with the same period
last year. The company continued balancing volumes for export with volumes for
the internal market, thereby maximizing the revenue stream from an active
marketing and commercial strategy. During the second quarter of 2009, the
domestic market amounted to an average volume of 5,302 bbl/d.
    As a result of the significant increase in production, and even with the
relatively lower prices for oil and gas during the second quarter of 2009
compared with the same period last year (WTI $60.32/bbl versus $133.88/bbl),
the company was able to generate the same level of revenues for the period
($160.9 million in 2009, $158.6 million in 2008). These revenues and the
operational successes that allowed the company to achieve these revenues were
also impacted by a number of financial charges arising from financial and
non-cash items which will level off during the course of the year. These
non-cash financial charges reflect mainly foreign exchange risks associated
with future income taxes liabilities, which may or may not materialize, and
the effect of overlift volumes that are a reflection of the company having
marketed, for operational reasons, greater volumes than its equity
participation in production. This overlift is anticipated to be cancelled out
over the short term.
    The company continues to move forward with its comprehensive investment
and exploration plans, focused on the development of the Rubiales Master Plan.
As of August 2, 2009, the ODL pipeline was mechanically completed and in the
final stages of hydrostatic testing. The 'Early Pumping' phase is anticipated
to begin by the end of August 2009. The production and processing capacity at
the Rubiales field is on track to fulfil the production goal of 100,000 bbl/d
by the end of the year, as previously stated.

    
    Year to date highlights

    -   On March 3 2009, the company announced the independently certified
        Statement of Reserves Data and Other Oil and Gas Information for all
        of the company's assets, which estimated gross working interest
        proved plus probable (2P) reserves to be 247 mmboe. Proven reserves
        increased 50%, from 136 mmboe at the end of 2007, to 204 mmboe at the
        end of 2008. These reserves represent almost one barrel of net proven
        reserves (P1) per outstanding share.

    -   During the second quarter of 2009, the company continued to show it
        is the most dynamic E&P company operating in Colombia, with an
        average production of 71,533 boe/d, an increase of 28,829 boe/d
        (9,474 boe/d net) over the same period of 2008. This growth in
        operated production came through increases in the Rubiales field
        production and development of other assets.

    -   During the second quarter of 2009 the company drilled the Abanico 20,
        RUB-150, RUB-220 RUB-221, RUB-222 and RUB-224 appraisal wells, and
        the Mirla Negra 1 exploratory well, all with positive production
        results.

    -   The company concluded negotiations with Ecopetrol which resulted in
        the signature of a binding Memorandum of Understanding ("MOU") on
        April 7, 2009, to pursue the evaluation of Synchronized Thermal
        Additional Recovery "STAR" technology at the Rubiales field. The
        MOU not only outlines the mechanism by which both companies will
        ascertain the success of the tests and pilot project, but also
        establishes a path forward to the structuring of an eventual contract
        between the two parties for the commercial application of the
        technology, for duration of the economic life of the Rubiales field.

    -   During the second quarter 2009 the company handled an average of
        28,795 bbl/d (a 244% increase from the average for the second quarter
        of 2008) through the new facility in Guaduas (PF2), generating
        revenues of $4.5 million.

    -   The construction of the Rubiales Pipeline "Oleoducto de los Llanos
        Orientales" ("ODL") has shown significant progress during the second
        quarter of 2009. The ODL project's progress reached 82% and a
        strategy has been developed for the Early Pumping of the pipeline
        which will generate additional cash flow for the company while
        allowing ODL to complete the project one month ahead of schedule.

    -   In the second quarter of 2009, revenues increased to $160.9 million
        from $158.6 million in the second quarter of 2008, primarily due to a
        substantial increase in production, despite the lower realized crude
        oil prices in the second quarter of 2009 when compared with the same
        period 2008.

    -   EBITDA during the six months of 2009 totalled $98.1 million while for
        the second quarter of 2009 EBITDA amounted to $48.3 million. EBITDA
        from international sales represented 71% of this amount, while EBITDA
        from gas and domestic sales contributed 19% and 10%, respectively.

    -   On May 5, 2009 the company closed on initial commitments totalling
        $180 million under a previously announced senior secured revolving
        credit facility of up to $250 million. The facility consists of
        $50 million commitments from each of BNP Paribas, Calyon and Banco
        Davivienda S.A. and $30 million from West LB A.G., each a lead
        arranger for the facility. The company expects to use the proceeds
        from the facility for the development of its oil infrastructure
        (including costs of drilling, oil dehydration and water treatment) to
        increase the production capacity of the Rubiales and Piriri fields up
        to 100,000 gross bbl/d by the end of 2009, as well as for general
        working capital purposes and the repayment of short-term debt. The
        company has received the entire $180 million from this loan during
        the second quarter of 2009.

    -   Total cash capital expenditures during the first six months of 2009
        totalled $149.0 million ($184.5 million in the cash flow which
        excludes the 40% taxable benefit in Colombia). The actual cash
        capital expenditures of the period were $71.4 million (net of the 40%
        taxable benefit in Colombia) of which $14.9 million went into
        exploration activities including seismic, aerogravimetry,
        aeromagnetometry and drilling ($8.4 million to geophysics and
        $6.5 million to drilling of wells); $31.6 million were invested in
        the expansion and construction of production infrastructure and
        $24.9 million in production drilling activities.
    

    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 34,000
barrels of oil equivalent per day, with working interests in 32 blocks in
Colombia and Peru.

    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 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 April 1,
2009 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




For further information:

For further information: Mr. Ronald Pantin, Chief Executive Officer and
Director, Mr. Jose Francisco Arata, President and Director, (416) 362-7735;
Ms. Belinda Labatte, (647) 428-7035

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Pacific Rubiales Energy Corp.

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