TORONTO, Jan. 7 /CNW/ - Pacific Rubiales Energy Corp (TSX: PRE; BVC: PREC) announced today that it has entered into an agreement with Oleoducto Central S.A. ("OCENSA") to acquire preferential rights to the use of available capacity on the OCENSA pipeline system for up to 160 million barrels of its oil for a 10 year period beginning February 1, 2010, in consideration for a one-time payment of US$190 million.
Under the terms of the agreement, the transport capacity of the contract is specified as follows:
1. 50 thousand barrels of oil per day ("kbopd") from the first business
day of February 2010, until December 31, 2010;
2. 60 kbopd commencing January 1, 2011, for seven years counted from the
first business day of February 2010;
3. 20 kobpd commencing on the day after the seven year period noted
above has elapsed for a period of up to three additional years, or
until the total volume of capacity pursuant to the agreement has
reached 160 million barrels.
In parallel to this agreement, the two companies have executed a related transportation contract to regulate the operating aspects of transporting oil through the OCENSA system. These volumes will be delivered by the company to OCENSA at either the Cusiana station or the El Porvenir station and will be pumped through to the Covenas terminal for which the company will pay the transportation tariff as set by the Ministry of Mines and Energy of Colombia for each segment of the OCENSA pipeline.
In addition to this agreement, Pacific Rubiales has also purchased 10 kbopd capacity in the OCENSA system to be accessed through the new truck unloading facility, currently under construction in the Cusiana station. All together, the company has secured a capacity of 60 kbopd in the OCENSA system for most of 2010 and 70 kbopd starting in January 2011.
Mr. Ronald Pantin, Chief Executive Officer, commented: "Given the anticipated growth of production from the entire Llanos basin and other basins in Colombia, and the limitations on existing transportation infrastructure, this agreement is a key initiative for us to secure the continuous flow of oil production from the Rubiales and Quifa blocks at a low and competitive transportation cost. In addition to this strategic advantage for us and for our customers, access to this infrastructure may also gives us the flexibility to buy diluents in Cusiana, providing substantial transportation cost leverage."
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 Quifa Block 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 49,500 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 (boe) 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