TORONTO, June 23 /CNW/ - Pacific Rubiales Energy Corp. (TSX: PRE; BVC: PREC) announced today that it has been awarded six new blocks in the Ronda 2010 bidding process organized by the Agencia Nacional de Hidrocarburos of Colombia (ANH). The company won sole rights to three blocks and was awarded three other blocks through a joint venture with Talisman (Colombia) Oil & Gas, a wholly owned subsidiary of Talisman Energy Inc. In all six blocks the company will be the operator.
The blocks awarded to the company are located in the Putumayo, Llanos, and Cordillera Basins.
With the three blocks described below the company acquires the largest exploration acreage in this basin, where the company visualizes the continuation of the heavy oil belt to the southeast of the Rubiales and Quifa oil fields. The blocks that were awarded to Pacific Rubiales in the Putumayo are:
CAG 5 Block: This block was awarded to a joint venture formed by the company's subsidiary, Meta Petroleum Corp. (50%) and Talisman (50%). The block is a Type 3 Special Technical Evaluation Agreement (TEA) block with an area of 372,036 hectares located towards the central part of the Caguan Basin. During the 36 months of the first exploration phase, the joint venture will invest US$82.2 million in the acquisition of 1,846 km of multi-spectral analysis, 1,152 km of 2D seismic, and the drilling of five stratigraphic wells. The winning bid carries an additional royalty of 2%. The block is located just to the north of the company's Tacacho and Terecay Contracts. The company believes that this block has a very high potential for hydrocarbon accumulation and should maintain the continuity of the Tacacho and Terecay structures towards the north.
CAG 6 Block: This block was awarded to a joint venture formed by Meta (60%) and Talisman (40%). The block is a Type 1 E&P block with an area of 48,177 hectares located just to the west by north-west of the CAG 5 Block and to the south of the Topoyaco Block, where the company has a 50% working interest. During the 36 months of the first exploration phase, the joint venture will invest US$21.1 million in the acquisition of 335 km of 2D seismic and the drilling of one exploratory well. The company believes that it will find the continuity of the Caballos formation subthrust play found in the Topoyaco Block. The block carries an additional royalty of 2%.
PUT 9 Block: This block was awarded to a joint venture formed by Meta (60%) and Talisman (40%). This block is a Type 1 E&P block with an area of 49,150 hectares. It is located to the west of the CAG 5 Block and the company's Terecay E&P Blocks and 60 km to the south of the Topoyaco Block. During the 36 months of the first exploration phase, the joint venture will invest US$15.1 million in the acquisition of 200 km of 2D seismic and 1 exploratory well. The block carries an additional royalty of 18%. The company expects to find new production opportunities similar to those identified in the surrounding blocks in the area, bearing in mind that there are several oil producing wells in this block in a previously identified structure.
This basin is located in the thrust sheet east of the Cuisiana-Cupiagua giant fields in Colombia. In this basin there are abundant oil seeps and the few wells drilled in the basin show a very thick heavy oil saturated pay zone, where the expertise of the company in the Llanos Basin can be applied.
COR 24 Block: 100% of the COR 24 Block was awarded to the company as part of the Type 3 (TEA) blocks located in the Eastern Cordillera. This block has an area of 250,831 hectares and is located in the central part of the Eastern Cordillera. During the 36 months of the first exploration phase the company will invest US$9.6 million in the acquisition of 1,290 km of multispectral analysis, 230 km of 2D seismic, and 1,000 km of seismic reprocessing. The block carries an additional royalty of 2%. The company believes that this block is highly prospective, being located approximately 40 km north of the Bolivar Field, which produces oil with an API of 18 degrees. This block has an anticlinal structure in a north-south trend as associated with several oil seeps in the area and has the additional benefit of shallow wells, with an approximate total depth of 4,000 feet.
The Llanos Basin is a very well known and prolific basin in the foreland of the Colombia Andes, where the Rubiales and Quifa Oil Fields are located. It is also close to the giant Cano Limon Oil Field. The blocks in this basin that were awarded to the company are:
LLA 7 Block: This block was awarded to the company (100%) as a Type 1 E&P block. The block has an area of 61,785 hectares and is located 40 km southwest of the Arauca Block, which is also operated by the company. The 36 month-long first exploration phase includes the drilling of one exploratory well and the acquisition of 404 km of 2D seismic for a total investment of US$13.1 million. The company expects to find a prospective area similar to the recently identified structures in the Arauca and CPE 1 Blocks. The block carries an additional royalty of 2%.
LLA 55 Block: This block was awarded to the company (100%) as a Type 1 E&P block. It has an area of 41,602 hectares and is located just to the southwest of the Arauca Block operated by the company. The 36 month-long first exploration phase includes the drilling of one exploratory well and the acquisition of 404 km of 2D seismic for a total investment of US$13.1 million. The company expects to find a prospective area similar to the recently identified structures in the Arauca and CPE 1 Blocks. The block carries an additional royalty of 2%.
With the completion of this ANH 2010 Bidding Process, Pacific Rubiales has, once again, demonstrated its position as one of the most significant independent oil & gas companies in Colombia. The net total investment for the company will be US$98.62 million for the first 36 month exploration phases in all contracts; with a total area awarded of 823,581 hectares. This additional exploration spending will be funded with operating cash flow starting in 2011 and is subject to ANH exploration regulations that specify funding by type of block.
Commenting on the outcome of the bidding process, Ronald Pantin, Chief Executive Officer of the company, stated "We are very pleased with the results of the Bidding Round because it validates our strategy and consolidates our position in the Llanos and Putumayo Basins, the two basins in which the company has recently focused its exploration efforts."
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 57,000 barrels of oil equivalent per day, with working interests in 35 blocks in Colombia and 3 blocks (135, 137 and 138) in 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 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.
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) 436-2152