TORONTO, May 13 /CNW/ - Pacific Rubiales Energy Corp. (TSX: PRE), announced today the release of its unaudited consolidated financial results for the three month period ended March 31, 2010, 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 first quarter results which continue to show strong production growth, with an increase of 81% in average realized oil and gas sales price reflected in a 246% increase in revenues from the same quarter last year. The company also almost doubled average production of oil and gas sold, going from 34,283 boed to 65,702. Gross operated production increased by 88% from the same period last year, demonstrating the rapid ramp-up in production at Rubiales from the capacity investment we have made in our principal field."
Management will hold a live conference call in both English and Spanish on Friday, May 14 to discuss the company's financial results.
The conference call will be held in English beginning at 9:00 am Bogota time or 10 am EST. Analysts and interested investors are invited to participate as follows:
Participant Number (Local/International): 1 (647) 427-7450
Participant Number (Toll Free US/Canada): 1 (888) 231-8191
Conference ID: 75244675
The conference call will be held in Spanish beginning at 10:30 am Bogota time or 11:30 am EST. Analysts and interested investors are invited to participate as follows:
Participant Number (US/ Canada) (877) 407 5372
Participant Number (International): 1 (702) 894 2278
Participant Number (Toll Free Colombia): 01800 710 1835
Conference ID: 75545230
Three months ended March 31,
2010 2010 2010 2009
Oil Gas Combined Combined
Average daily production sold
(boe/day) 55,734 9,968 65,702 34,283
Operating netback ($/boe)(1)
Crude oil and natural
gas sales price 70.50 29.99 64.35 35.65
Cost of Production(2) 4.10 1.76 3.74 3.75
Transportation 7.68 0.47 6.59 6.76
Upgrading cost (diluent
including transportation) 15.15 - 12.85 5.91
Other costs(3) (0.42) 1.44 (0.14) (0.93)
Overlift/Underlift(4) (0.97) - (0.82) (0.21)
Operating netback 44.96 26.32 42.13 20.37
(1) Combined operating netback data based on weighted average daily
production sold which include diluents necessary for the upgrading of
the Rubiales blend.
(2) Cost of production mainly includes lifting costs and other production
costs such as personnel, energy, security, insurance and others.
(3) Other costs mainly correspond to royalties on gas production,
external road maintenance at Rubiales field, inventory fluctuation,
and the net effect of the currency hedges of operating expenses
incurred in COP during the period.
(4) Corresponds to the net effect of the overlift position for the period
amounting to $4.9 million, which generated a reduction in the
combined production costs of $0.82 per boe.
(in thousands of US$ except 2010 2009
per share amounts or as noted) Q1 Q1
Average production of oil and gas sold (boe/d) 65,702 34,283
Average combined crude oil and
natural gas sales price ($/boe) 64.35 35.65
Combined operating netback ($/boe) 42.14 20.37
Net sales 380,523 110,000
Income from Operations(1) 159,954 5,849
Funds Flow from Operations(2) 150,727 31,548
Per share - basic ($) 0.63 0.15
- diluted ($) 0.60 0.15
EBITDA(3) 229,655 49,797
Per share - basic ($) 0.96 0.24
- diluted ($) 0.91 0.24
Net lncome(4) 32,125 52,636
Per share(5) - basic ($) 0.13 0.25
- diluted ($) 0.13 0.25
(1) Income from operations includes revenues less operating costs,
depletion, depreciation & amortization and G&A expenses, and excludes
effect of the overlift, stock-based compensation and other income and
(2) Calculated based on cash flow from operations before changes in non-
cash operating working capital.
(3) See Non-GAAP Financial Measures in the company's full management and
(4) Net income for the period of $32.1 million includes a series of non-
operating expenses totaling $78.5 million (March 31, 2009 - gain of
$50.5 million), mainly corresponding to:
a) Non-cash items of $62.7 million (same period of 2009 - gain of
$67.0 million), due to unrealized exchange losses resulting
from the strengthening of the Canadian dollar and Colombian
peso against the US dollar, and unrealized loss on risk
management contracts outstanding as of the end of March 2010,
which may or may not materialize in future periods and stock-
based compensation costs. During the first quarter of 2010, the
company entered into foreign exchange hedging contracts to
reduce its foreign currency exposure associated with operating
expenses incurred in Colombian Pesos.
b) Non-operating expenses of $15.8 million (same period of 2009 -
$16.5 million) consisting of interest primarily due to
financial costs associated with financing facilities for the
development of the oil infrastructure to increase the
production capacity of the Rubiales field and other costs.
(5) The basic weighted average number of common shares outstanding for
the first quarter of 2010 and 2009 was 240,126,671 (diluted -
251,582,984) and 210,600,249 (diluted - 211,543,738), respectively.
First Quarter 2010 Results Summary
The results for the first quarter of 2010 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. The average WTI price for the period was $78.45 per barrel (bbl) in comparison with $44.53/bbl for the three months ended March 31, 2009, which represents an increase of 76%. As a result, the average combined realized oil and gas sales price for the company for the first quarter of 2010 increased to $64.35 per barrel of oil equivalent (boe) from $35.65 per boe in the same period of 2009, representing an increase of 81%. This last figure demonstrates how the company was able to execute above the norm through its trading and commercial initiatives.
The increase in gross operated production of the company during the first quarter of 2010 was a significant achievement, averaging 129,686 boe per day (boe/d), which is 60,496 boe/d (88%) greater than operated production for the same period of 2009. This growth in operated production came mainly through the increase in production at the Rubiales heavy oil field. As of April 30, 2010, the company's total operated production exceeded 136,000 boe/d for all its fields, which makes the company the fastest growing oil and gas company in Colombia.
In the execution of its commercial strategy, the company continued exporting its oil production to international markets mainly to the USA, China, and Europe, while maintaining a presence in the local market with direct sales to the bunker and industrial sectors. During the first quarter of 2010, the company exported 4.5 million bbl of crude oil, and sold 0.4 million bbl to the Colombian domestic market.
The company significantly increased revenues by 246% to $380.5 million as compared to $110 million in the same period of 2009. This was the result of the considerable increase in production and the optimization of marketing activities, coupled with higher combined crude oil and gas sale prices, as mentioned above. This operational success resulted in increased revenues and increased net income for the period to $32.1 million.
The Oleoducto de los Llanos Orientales ("ODL") pipeline was fully commissioned in this quarter and this project is now a reality that will allow the development of the Rubiales field to its full potential, as well as the leveraging of Quifa and the company's surrounding exploration blocks. Also, in a strategic move due to projected full capacity projected for Colombian pipelines, the company bought firm pipeline capacity in the Ocensa system for 50,000 bbl/d in 2010 and 60,000 bbl/d from 2011 until 2016, which ensures that the company will not experience pipeline transport limitations in the future.
During the first quarter of 2010, the company focused its exploration and appraisal campaign on the Quifa, Rubiales and Moriche blocks, drilling a total of 10 wells at those locations (two exploratory, three stratigraphic and five appraisal wells). The results of one exploratory and two stratigraphic wells, drilled in the northern part of Quifa Block, confirmed the presence of hydrocarbons in prospects "A", "F" and "Q", incorporating a total of 251 mmbbl of certified gross resources for these prospects, and the four appraisal wells, drilled in the southwest of Quifa, confirmed the extension of prospects "H" and "E" to the northeast. At the Rubiales field, one successful appraisal well extended the area of the Rub-147 (prospect "D") to the northeast. In the Moriche Block, one successful exploratory well incorporated a total of 1.22 million bbl of combined proved plus probable (2P) gross reserves, or 0.46 million bbl net reserves before royalties. The total net reserves after royalties reached 0.43 million bbl.
- On April 26, 2010 the company announced the final results of the
first phase of its exploration campaign from late 2007 through to
April 2010, on its Quifa and Rubiales Blocks. These results have led
to a declaration of commerciality for the Quifa southwest area and
the Rubiales southwest area, an important event for the company as it
has focused significant effort and capital to bring these areas into
production. The closing of this first phase is a key milestone in the
company's strategy to continuously grow our resources, prove new
reserves and rapidly bring new areas into our existing production
infrastructure. The success of the exploration campaign within Quifa
in particular, leading to over 40,000 ha of declared commerciality,
is also very significant since it demonstrates the long term
viability of the Rubiales region and the Llanos Basin.
- On April 7, 2010, the company announced the successful completion of
the first phase of the Synchronized Thermal Additional Recovery
(STAR) project, and the kick-off of the second phase, as contemplated
by the Memorandum of Understanding (MOU) executed with Ecopetrol on
April 6, 2009. During the first phase of the STAR project a number of
studies and tests were carried out at the University of Calgary's
research laboratories, and on the basis of the same, it has been
determined that the Rubiales crude has a stable and controllable
ignition point at reservoir conditions, that the fire front thereby
generated is stable, and that there is evidence of significant
additional recovery potential by using the STAR process at the
Rubiales field. These results confirm the feasibility and potential
of the technology and clear the way for the next stages of the
- On March 16, 2010, the company announced a new oil discovery at the
Quifa-24X exploratory well, as well as results of the Quifa-32
appraisal well located in the Quifa Block. The sustained effort and
focus in this area continues to show positive results and extends the
company's understanding of the Quifa region and its hydrocarbon
- 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 bbl of net 2P reserves per outstanding share as of December 31,
- During the first quarter of 2010, the company exported a total of
4.5 million bbl of oil mainly to US and China refineries, including
eight Castilla crude oil cargoes for 4 million bbl, and one Vasconia
crude oil cargo for 0.5 million bbl at an average price of
$70.37/bbl, which is a significant commercial accomplishment
typifying the quality of our production. The company also maintained
its flexible commercial strategy by selling 0.4 million bbl of
Rubiales production in the Colombian domestic market, at an average
price of $68.26/bbl.
- During the first quarter of 2010 the sales of gas increased,
achieving an average of 59.7 mmscf/d of natural gas sold from the La
Creciente field at an average price of $4.95/mscf, representing a
premium of 41% over the weighted domestic regulated price
($3.51/mscf) and only 7% lower than the Henry Hub natural gas prices
in the United States Gulf Coast.
- During the first quarter of 2010, exploration activity mainly
concentrated on drilling campaigns at the Quifa, Rubiales and Moriche
blocks for a total of 10 wells drilled in these three areas. As a
result of this activity, a total of two exploratory, three
stratigraphic and five appraisal wells were drilled. The total gross
exploration expenditure in the drilling campaign was $25.48 million.
As a result of the drilling campaign, the company incorporated a
total of 1.43 million bbl gross of oil reserves, and 251 million bbl
of certified gross resources. The total net exploration expenditure
was $13.42 million. The company incorporated a total of
0.43 million bbl oil net reserves before royalties.
- On March 2, 2010, a capacity test of the ODL pipeline was performed
reaching a total of 167,642 bbl during 24 hours of continuous
pumping. Over 16 million bbl of diluted crude have been transported
from Rubiales to Monterrey since the pipeline entered in operation in
- During the first quarter of 2010 the company transported 55,934 bbl/d
through the different trucking and pipeline systems, 39,043 bbl/d of
Rubiales crude (12.5degrees API), and 16,891 bbl/d of diluents and
other crudes produced, and 92% of this volume was transported via the
pipeline systems. During this quarter, the company transported
through the ODL pipeline a combined volume of 3.64 million bbl of
heavy oil and diluents, generating savings in transportation costs
for the company of approximately $8 per bbl, or 45% lower in
comparison to the truck transportation cost.
- Due to higher realized crude oil prices and a substantial increase in
production volume during the first quarter of 2010, the company was
able to significantly increase revenues by 246% in comparison to the
prior period ($380.5 million during the first quarter of 2010 versus
$110 million during the same period of 2009), mainly due to a
substantial increase in production volume and trading optimisation.
- As of April 30, 2010, the company had reached the historical
milestone of exceeding 136,000 boe/d of gross operated production,
equivalent to 55,123 boe/d net after royalties. The 136,000 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 the La Creciente block and other
- EBITDA during the first quarter of 2010 totalled $229.7 million,
which represents a significant increase of 361% compared to the first
quarter of 2009 EBITDA of $49.8 million. EBITDA from international
sales represented 82% of this amount, while EBITDA from gas and
domestic sales contributed 10% and 8%, respectively.
- The company entered into currency risk management contracts in the
form of costless collars to reduce the foreign currency exposure
associated with operating expenses, as well as general and
administrative expenses, incurred in Colombian Pesos. During the
first quarter of 2010, the company had currency risk management
contracts outstanding totalling $319 million with expiration dates
between April and December 2010.
- Total capital expenditures during the period totalled $81.0 million
($72.3 million net of the 30% tax benefit effect in Colombia), of
which $13.42 million went into exploration activities including
seismic, aerogravimetry, aeromagnetometry and drilling ($1.42 million
to geophysics and $12.0 million to drilling of wells). Also,
$36.66 million were invested in the expansion and construction of
production infrastructure and $30.92 million in production drilling
- 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 to reach
92,000 boe/d before royalties 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. As of March 31, 2010, a
total of $81.0 million of capital investments had been made.
- On April 17, 2010 the company closed the syndication of a
$250 million unsecured revolving credit facility. Pricing of the
facility varies in accordance with the rating assigned to the
company's senior debt securities by Standard & Poor's Ratings Group
and Fitch Inc. The company will pay commitment fees on the unutilized
portion of any outstanding commitments under the facility and regular
spread over any disbursed amounts. Based on the company's current
rating and expected usage, the commitment fee will be 100 basis
points and the applicable margin will be LIBOR plus 325 basis points.
Subject to customary acceleration events set out in the credit
agreement, or unless terminated earlier by the company without
penalty, repayment of the outstanding principal on the facility will
be made in full on the second anniversary of the closing date.
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 at 56,700 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.
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