Pacific Rubiales announces financial results for the year ended December 31,
2009

TORONTO, March 15 /CNW/ - Pacific Rubiales Energy Corp. (TSX: PRE; BVC: PREC) announced today the release of its audited consolidated financial results for the year ended December 31, 2009, together with its Management's Discussion and Analysis, Annual Information Form and its 2009 Statement of Reserves, Form 51-101F1. These documents are available on the company's website, and at www.SEDAR.com.

The company has announced an increase in revenues of over $60 million to $639.2 million compared to the prior year figure, and also an increase in EBITDA to $275.5 million. These increases occurred despite the sharp decline in international oil prices (WTI decreased by 38%), and are driven by the significant increase in net production sold of 56% and an important reduction in costs per barrel of 26%.

During the year, the company also increased its 2P reserves (net after royalties) to 280.6 million barrels of oil equivalent (boe), an increase of 34%, representing 1.3 barrels of reserves per outstanding share by the end of the year. This is primarily a result of an intensive exploration campaign with a success rate of 86%, with 19 successful wells drilled out of 22.

Ronald Pantin, Chief Executive Officer, commented: "The outstanding financial results achieved in 2009 demonstrate our position as the premier independent E&P company in Latin America and the second-largest crude oil producer in Colombia. I am particularly pleased with these results as they were achieved in a difficult environment for the oil and gas industry, which was adversely impacted by the downturn in global economic activity and resulted in a significant decline in crude oil prices. I have nothing but the highest praise to offer to all our employees for making this year a successful one under such challenging conditions. Given the success of our operating and exploration activities during the first quarter of this year, as well as our ambitious capital expenditure program for 2010, we look forward to achieving similarly outstanding results in this fiscal year."

Management will hold a live conference call in both English and Spanish on Tuesday, March 16 to discuss the company's financial results.

The conference call will be held in English beginning at 9:00 am Bogota time (10 am EDT). Analysts and interested investors are invited to participate as follows:

    
    Participant Number (Canada/International): 1 (647) 427 7450

    Participant Number (Toll Free US/Canada): 1 (888) 231 8191

    Conference ID: 62721926
    

The conference call will be held in Spanish beginning at 10:30 am Bogota time (11:30 am EDT). Analysts and interested investors are invited to participate as follows:

    
    Participant Number (Toll Free Canada and USA): 1 (877) 407 5372

    Participant Number (International): 1 (702) 894 2278

    Participant Number (Toll Free Colombia): 01800 710 1835

    Conference ID: 63125014
    

A detailed summary of results for the year ended December 31, 2009 follows:

2009 Results Summary (figures in US$ unless otherwise stated)

Summary of Financial Results:

    
                                                      Year ended December 31,
    (in thousands of US$ except per share amounts
     or as noted)                                             2009      2008
    -------------------------------------------------------------------------

    Average net production sold after royalties (boe/day)   35,374    22,670
    Average combined crude oil and natural gas sales
     price ($/boe)                                           49.51     69.98
    Net sales                                              639,201   579,064
    Income from Operations(1)                               77,240   175,666
    Funds Flow from Operations(2)                          198,105   257,982
    Per share(3) - basic ($)                                  0.93      1.29
                 - diluted ($)                                0.93      1.22
    EBITDA                                                 275,527   268,065
    Per share - basic ($)                                     1.29      1.34
              - diluted ($)                                   1.29      1.27


    Operating netback combined oil & gas($/boe)(4)            2009      2008
    -------------------------------------------------------------------------
    Crude oil and natural gas sales price                    49.51     69.98
    Lifting costs                                             2.35      4.36
    Transportation and other costs                            9.82      9.45
    Upgrading cost (diluent including transportation)         7.07     11.66
    Other production costs(5)                                 3.53      5.14
    Overlift/Underlift(6)                                    (0.17)     1.48
    -------------------------------------------------------------------------
    Operating netback                                        26.91     37.89
    -------------------------------------------------------------------------
    (1) Income from operations includes all direct costs, Depletion,
        Depreciation & Amortization and G&A expenses, excluding the
        unrealized non-cash effect of the overlift and stock-based
        compensation.
    (2) Calculated based on cash flow from operations before changes in non-
        cash operating working capital.
    (3) The weighted average number of common shares outstanding for the year
        ended December 31, 2009 and 2008 was 213,294,237 and 200,574,170,
        respectively.
    (4) Combined operating netback data based on weighted average daily
        production sold which includes diluents necessary for the upgrading
        of the Rubiales crude.
    (5) Other production costs mainly correspond to transport of personnel to
        and from the field, technical assistance, catering, royalties on gas
        production, and security.
    (6) Corresponds to the net effect of the overlift position for the year
        amounting to $2.1 million which generated a reduction in the combined
        production costs of $0.17 per boe.
    

Results Analysis and Highlights:

The results for the year ended December 31, 2009 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 exploration and production ("E&P") investment program. This was achieved despite the fact that the oil and gas industry was adversely impacted in 2009 by the downturn in the global economy which had resulted in a significant decline in crude oil prices, with signs of recovery appearing only towards the end of the year. The average WTI NYMEX price for the year was $62.09 per barrel (bbl) in comparison with $99.92/bbl in 2008, which represents a reduction of 38%. As a result, the average combined realized oil and gas sales price for the company for the year ended December 31, 2009 decreased to $49.51 per boe from $69.98 per boe in 2008, representing a reduction of 29%. This last figure demonstrates how the company was able to execute, through its trading and commercial initiatives, better than most.

The increase in gross operated production of the company during the year was a significant achievement, averaging 82,887 boe per day (boe/d), which is 36,123 boe/d (77%) greater than operated production for 2008. This growth in operated production came mainly through the increase in production at the Rubiales heavy oil field. As of March 15, 2010, the company's total operated production has exceeded 135,000 boe/d for all its fields, which makes the company the fastest growing oil and gas company in Colombia. As a consequence of this, and of management's commitment to control costs while increasing production, production costs per barrel have continued to decrease, showing a 26% reduction over the same period last year.

In the execution of its commercial strategy, the company continued exporting its oil production to its most attractive international markets (USA, Canada, Caribbean), while maintaining a presence in the local market with direct sales to the bunker and industrial sectors. During 2009, the company exported 8,625,955 barrels of crude oil, mostly to refineries in the US, and sold 1,603,363 barrels to the Colombian domestic market.

The company increased revenues by 10% to $639.2 million as compared to $579.1 million in 2008 despite lower prices for oil and gas during 2009. This was the consequence of the significant increase in production and the optimization of marketing mentioned above. Although this operational success enabled the company to increase revenues, net income was impacted by a number of non-cash charges, resulting in a net loss for the year of $154 million. These non-cash financial charges are: foreign exchange loss associated with future income tax liabilities; unrealized loss related to the fair value of the risk management contracts outstanding as of the end of 2009; and interest accruals related to the financing facilities used for the development of the oil infrastructure to increase the production capacity in the Rubiales field.

The company continues to move forward on its established investment plan, including the accelerated execution of the development plans for Rubiales and other fields. The official inauguration of the Oleoducto de los Llanos Orientales ("ODL") pipeline by the President of Colombia, Mr. Alvaro Uribe, on September 14, 2009, marked the beginning of operations of the most significant oil infrastructure project built in Colombia in a decade. It will allow for the development of the Rubiales field to its full potential, the leveraging of Quifa and the company's surrounding exploration blocks, as well as allowing for the transportation of crude oil from other producing fields in the Llanos basin to local and international markets.

In 2009, the company focused its exploration and appraisal campaign on the Quifa and Rubiales blocks, drilling a total of 19 wells at those locations (5 exploratory and 14 appraisal wells). Of the 19 wells, 16 were successful and incorporated a total of 154.8 million bbl of combined proved plus probable (2P) gross reserves or 78.0 million bbl net reserves before royalties. The total net reserves after royalties reached 69.0 million bbl. At the Quifa block the discoveries were made on Prospects "D", "E", "H" and "I", as a result of 3 exploratory and 5 appraisals wells. At the Rubiales field the 8 successful appraisal wells extended the field to the west (Rub-147 on Prospect "D") and southwest (area of Rub-52). Only three dry-hole wells resulted from this exploration campaign: Quifa-15 and Rub-310 on Prospect "B" and Quifa-16 on Prospect "C".

    
    Milestones
    ----------

    -   On February 24, 2010, the company announced an update to the
        independently certified Statement of Reserves Data and Other Oil and
        Gas Information for all of the company's assets, estimating total 2P
        reserves at 280.6 million boe (MMboe), net after royalties, having a
        total net present value (NPV) (10% discount, before tax) of $8.32
        billion. Despite a total net production of 12.4 MMboe in 2009, the
        company's net proven plus probable reserves increased by 34.3%, from
        209 MMboe as of December 31, 2008. These reserves represent 1.3
        barrel of net 2P reserves per outstanding share as of December 31,
        2009.

    -   In 2009, the company exported a total of 8.6 million bbl of oil
        mainly to US refineries, including 15 Vasconia crude oil cargoes for
        7.3 million bbl at a price approximately $4.60/bbl less than WTI, a
        significant commercial accomplishment. The company also demonstrated
        a flexible commercial strategy by selling 1.6 million bbl of Rubiales
        production in the Colombian domestic market, at an average price of
        $53.90/bbl.

    -   During 2009, the exploration activity concentrated on drilling
        campaigns, seismic work and data acquisition using leading-edge
        technology to reduce the uncertainty of exploration risk. As a result
        of this activity, a total of 22 exploratory and appraisal wells were
        drilled, and the company acquired 386 km(2) of 3D seismic;
        2,200 km(2) of hyperspectral images; 4,369 km and 3,189 km of
        airborne magnetic and gravimetric data respectively; and 1771 km of
        stress field detector (SFD). The total gross exploration expenditure
        was $64.7 million: $36.1 million in drilling and $28.6 million in
        data acquisition. As a result of the drilling campaign, the company
        incorporated a total of 155 million bbl gross of oil reserves, for a
        total success ratio of 86%, and gross discovery costs of
        approximately $0.42/boe. The total net exploration expenditure of
        $48.3 million was comprised of $25.3 million in drilling and $23
        million in data acquisition. Accordingly, the company
        incorporated a total of 69 million bbl oil net reserves after
        royalties, at a net discovery cost of approximately $0.7/boe.

    -   The construction of the ODL pipeline, with a length of 235 km, a
        diameter of 24 inches, and a design capacity of 160,000 bbl/d was
        concluded in early September. Construction was completed within 21
        months. The line fill started on September 10, 2009, four days before
        its inauguration by Colombian President Alvaro Uribe. The completion
        of this first phase of the project allowed the transportation of
        68,000 bbl/d of diluted crude (18 degrees API) from the Rubiales
        field to the OCENSA pipeline system through the Monterrey pumping
        station, as soon as the line fill was completed.

    -   During 2009 the company transported 29,467 bbl/d through the
        different trucking and pipeline systems, 23,944 bbl/d of Rubiales
        crude (12.5 degrees API), and 5,523 bbl/d of diluents. The ODL
        pipeline system began operations on October 1, 2009 and transported a
        combined volume of 6.3 million bbl for Ecopetrol and the company
        during the year, generating savings in transportation costs for the
        company of $16 million. The Guaduas system, through its PF-2
        facility, also generated income of $3.7 million for the fourth
        quarter, for a total of $19.7 million for the year 2009.

    -   Despite lower realized crude oil prices throughout 2009, as compared
        with 2008, the company was able to increase revenues in 2009 ($639.2
        million in 2009 versus $579 million in 2008), mainly due to a
        substantial increase in production volume and trading optimisation.

    -   As of February 15, 2010, the company had reached the historical
        milestone of exceeding 132,000 boe/d of gross operated production,
        equivalent to 53,419 boe/d net after royalties. The 132,000 boe/d
        milestone resulted from the continuous growth in production of heavy
        oil in the Rubiales/Piriri 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 La Creciente block and other
        smaller fields.

    -   EBITDA during 2009 totalled $275.5 million, despite being affected by
        significantly lower oil prices; this represents an increase of 3%
        compared to 2008 EBITDA of $268.1 million. EBITDA from international
        sales represented 72% of this amount, while EBITDA from gas and
        domestic sales contributed 15% and 13%, respectively.

    -   Total capital expenditures during the year totalled $403.7 million
        ($345.2 million net of the 40% tax benefit effect in Colombia), of
        which $48.3 million went into exploration activities including
        seismic, aerogravimetry, aeromagnetometry and drilling ($23 million
        to geophysics and $25.3 million to drilling of wells). Also, $234.7
        million were invested in the expansion and construction of production
        infrastructure and $120.7 million in production drilling activities.

    -   The company announced on November 4, 2009 an expanded and fully
        funded capital plan of $853 million for 2010. With this investment
        program the company expects to double its net production before
        royalties, reaching 92,000 boe/d at the end of 2010 versus the 2009
        year end figure of 40,579 boe/d. The $853 million capital program for
        2010 includes $165.5 million for development drilling, $190.8 million
        for exploration, $471.8 million for production facilities and
        $25 million to advance the STAR pilot project. This is an increase of
        $471 million over 2009 capital expenditures and $394 million over the
        previously projected 2010 budget.

    -   As part of the STAR project, the company successfully completed two
        In-situ Combustion Tests (ICT) in the lab testing phase (Phase I).
        These tests have been carried out using high temperature, high
        pressure combustion reactors in the University of Calgary's labs, and
        cores and fluids produced from wells in the Rubiales field. The
        results obtained clearly indicated the enhanced performance that the
        Rubiales field could achieve using this enhanced recovery technique.

    -   On November 10, 2009, the company closed a senior notes offering with
        an aggregate principal amount of $450 million and maturity dates of
        November 10, 2014 (33.3%), November 10, 2015 (33.3%), and November
        10, 2016 (33.4%). The company used the proceeds from the issuance of
        the senior notes 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 170,000 gross bbl/d by the end of 2010, as well as for general
        working capital purposes and the repayment of short and long-term
        debt.

    -   On December 18, 2009, the company received approval from the
        Superintendencia Financiera de Colombia ("Superfinanciera"), the
        Colombian regulatory entity in charge of supervising public issuers,
        for the listing of its shares on La Bolsa de Valores de Colombia (the
        "BVC", or the "Colombian Stock Exchange"). The company is the first
        international company to have its shares listed on the BVC. Trading
        of the shares started during the week of December 21, 2009 under the
        symbol PREC, and will enable the company to access capital in the
        region if needed. The listing does not involve the issuance of new
        common shares of the company or any other securities or derivatives,
        such as ADRs, as it was structured solely to allow the common shares
        of the company that are currently outstanding and trading on the
        Toronto Stock Exchange, to be tradeable by investors on the BVC.
        Other than enabling investors to buy and sell shares in Colombian
        Pesos, the listing will not result in any changes to the rights and
        entitlements of holders of the company's shares, irrespective of
        whether they purchase their shares through the TSX or the BVC. The
        volume of trading in the company's common shares on the BVC has
        increased steadily since they commenced trading. On March 4, 2010,
        the company's shares were for the first time the most actively traded
        equity securities on the BVC.
    

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/Piriri and Quifa Block in the Llanos Basin in association with Ecopetrol S.A., the Colombian national oil company. Also, through its affiliate Pacific Stratus, 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 over 55,000 barrels of oil equivalent per day (after royalties), with working interests in 32 blocks in Colombia and Peru.

Information in this press release expressed in barrels of oil equivalent (boes) is derived by converting natural gas to oil in the ratio of six thousand cubic feet (mcf) of natural gas to one barrel (bbl) of oil. 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.

SOURCE Pacific Rubiales Energy Corp.

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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