TORONTO, Aug. 10 /CNW/ - Pacific Rubiales Energy Corp. (TSX: PRE; BVC: PREC) announced today the release of its unaudited consolidated financial results for the three month and six month periods ended June 30, 2010, together with its Management's Discussion and Analysis ("MD&A") for the corresponding periods. These documents are posted on the Company's website and SEDAR at www.sedar.com.
Ronald Pantin, Chief Executive Officer, commented: "The outstanding financial results achieved this quarter compared to the same period last year reflect our commitment to rapidly growing our Company's total portfolio of assets. With $359.7 million in revenue this quarter, more than double the growth achieved in the same quarter last year, we are clearly demonstrating our ability to take a high quality exploration portfolio into rapid production and commercialization. This is due to our strategic position in Colombia in the areas of transportation infrastructure, commercial flexibility and exploration technology and experience."
The total accumulated revenues for the six months of 2010 totalled $740.2 million, higher by 173% in comparison to the same period of 2009. This was the result of the considerable increase in production and the optimization of marketing activities, coupled with a higher combined crude oil and gas sale price in 2010, as mentioned below. This operational success not only resulted in increased revenues but also in an increase in net income for the period to $47.9 million, compared to a $118.5 million loss for the same period of 2009.
Management will hold a live conference call in both English and Spanish on Wednesday, August 11, 2010 to discuss the Company's financial results.
The conference call will be held in English beginning at 9:00 am Bogota time (10 am EDT). Analysts and interested investors are invited to participate as follows:
Participant Number (Toll Free Canada/US): (888) 231-8191
Participant Number (International/Local): (647) 427-7450
Conference ID: 93534768
The conference call will be held in Spanish beginning at 10:30 am Bogota time (11:30 am EDT). Analysts and interested investors are invited to participate as follows:
Participant Number (Toll Free Canada and USA): (877) 407-5372
Participant Number (Canada/International): +1 (702) 894-2278
Participant Number (Toll Free Colombia): 01800-710-1835
Conference ID: 93413052
A replay of the English call will be available until August 25, 2010.
Toll Free: 1.800.642.1687
Conference ID: 93534768
A detailed summary of results for the quarter ended June 30, 2010 follows:
2010 Results Summary (figures in US$ unless otherwise stated)
Summary of Quarterly Financial Results:
(in thousands of US$ except per 2010 2009
share amounts or as noted) Q2 Q2
Average production of oil and gas sold (boe/d) 64,329 35,688
Average combined crude oil and natural gas
sales price ($/boe) 61.45 50.12
Combined operating netback ($/boe) 39.18 19.41
Net sales 359,700 160,994
Income from Operations(1) 134,852 24,504
Funds Flow from Operations(2) 154,836 38,934
Per share - basic ($) 0.59 0.18
- diluted ($) 0.53 0.18
EBITDA(3) 202,634 48,310
Per share - basic ($) 0.77 0.23
- diluted ($) 0.69 0.23
Net lncome(4) 47,928 (118,540)
Per share(5) - basic ($) 0.18 (0.56)
- diluted ($) 0.16 (0.56)
(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 MD&A.
(4) Net income for the period of $47.9 million includes a series of non-
operating expenses and non-cash items totaling $39.5 million (June
30, 2009 - gain of $141.2 million), mainly corresponding to:
a) Non-cash items of $17.2 million (same period of 2009 - loss
of $133.1 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 second
quarter of 2010, the Company entered into foreign exchange
hedging contracts to reduce its foreign currency exposure
associated with operating expenses incurred in Colombian
b) Non-operating expenses of $22.3 million (same period
of 2009 - $8.1 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 second quarter of 2010 and 2009 was 263,009,942 (diluted -
294,848,180) and 211,964,610 (diluted - 211,964,610), respectively.
Results, Analysis and Highlights:
The results for the second 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 under the umbrella of its paramount strategic focus: growth.
The average WTI price for the second quarter of 2010 was $78.05 per barrel (bbl) in comparison with $59.79/bbl for the same period of 2009, which represents an increase of 31%. As a result, the average combined realized oil and gas sales price for the Company for the second quarter of 2010 increased to $61.45 per barrel of oil equivalent (boe) from $50.12 per boe in the same period of 2009, representing an increase of 22%.
The increase in gross operated production of the Company during the second quarter of 2010 was a significant achievement, averaging 138,382 boe per day (boe/d), which is 65,325 boe/d (96%) 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 and Quifa heavy oil fields. Production continues to grow and as of August 9, 2010, the Company's total operated production has exceeded 147,514 boe/d for all its fields, which, as in previous quarters, continues to make the Company the fastest growing oil and gas Company in Colombia, as well as the country's second largest operator.
In the execution of its commercial strategy, the Company continued exporting its oil production to international markets, namely, USA, Singapore, India and Ivory Coast, while maintaining a presence in the local market with direct sales to the bunker and industrial sectors. During the second quarter of 2010, the Company exported 4.6 million bbl of crude oil, and sold 0.4 million bbl of oil to the Colombian domestic market. In addition, gas sales to the domestic market averaged 61 mmscf/d of natural gas from the La Creciente field.
During the second quarter of 2010, the Company continued its exploration campaign in the Quifa block, drilling a total of five stratigraphic wells. The stratigraphic wells, Quifa 20X and Quifa 22X, drilled in the north-western border of the commercial area, confirmed the presence of hydrocarbons, thereby indicating that the producing area located in south-west Quifa can be extended towards this part of the area. The Quifa 28X, Quifa 33X and Quifa 34X stratigraphic wells, drilled in the south-eastern and north-eastern part of the Block, did not show evidence of oil accumulation, indicating a stratigraphic control in the oil distribution in this part of the block. For the rest of the year, the Company has prepared an aggressive appraisal campaign to delineate the discoveries made on Quifa 20X and 22X, as well as the discoveries made on prospects A, F and Q during the first quarter of 2010.
- Due to higher realized crude oil prices and a substantial increase in
production volume during the second quarter of 2010, the Company was
able to significantly increase revenues by 123% in comparison to the
prior period ($359.7 million during the second quarter of 2010 versus
$161 million during the same period of 2009), mainly due to a
substantial increase in production volume, price increase and trading
- As of August 9, 2010, the Company had reached the historical
milestone of exceeding 147,514 boe/d of gross operated production,
equivalent to 60,247 boe/d, net after royalties. This milestone
resulted from the continuous growth in production of heavy oil in the
Rubiales/Piriri and Quifa 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 six months of 2010 totalled $432.3 million which
represents a significant increase of 341% compared to the same period
of 2009 EBITDA of $98.1 million. For the second quarter of 2010
EBITDA amounted to $202.6 million, mainly generated from
international sales (86%), while EBITDA from gas and domestic sales
contributed 6.5% and 7.5%, respectively.
- Capital expenditures during the second quarter of 2010 totalled
$134.7 million, of which $30.8 million went into exploration
activities including seismic, aerogravimetry, aeromagnetometry and
drilling ($20.7 million to geophysics and $10.1 million to drilling
of wells). Also, $73.9 million were invested in the expansion and
construction of production infrastructure, $29.1 million in
production drilling activities, and $0.9 million were invested in the
development of other strategic projects (STAR, Llanomulsion and gas
- On June 23, 2010 the Company announced that it had 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 Ltd., 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.
- On June 15, 2010 the Company announced that Ecopetrol S.A., the
Company's partner in the development of the Rubiales field, had given
its approval to the request to expand the commercial area of the
Rubiales field, located in the Llanos Basin in Colombia. This
approval gives the Company all it requires to grow production and
reach our stated production goal at Rubiales of 170,000 bbl per day
by the end of 2010. Capacity expansion is underway, and construction
of CPF2 is on schedule for completion by September 30, 2010. This is
an important step in the Company's growth strategy and paves the way
for future expansion not only in the block, but also in the region.
- 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 south-west area and
the Rubiales south-west 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. The drilling
of 3 wells in the northern Quifa area (one exploratory and two
stratigraphic) on Prospects "A", "F" and "Q", confirmed the presence
of a hydrocarbon column on the top of the basal sandstones
incorporating a total of 251 mmbbl of certified gross resources and
we are currently working to incorporate these new resources in the
Company's proved and probable reserves at the end of 2010 by means of
drilling appraisal and development wells on those prospects.
- The exploration program during the second quarter of 2010 resulted in
exploratory success at the Company's Guairuro-1 stratigraphic well
located in the CPE-6 Block, in the Llanos Basin, Colombia. The
results from the Guairuro-1 well confirmed the presence of
hydrocarbons in the region and reinforce the exploratory potential of
the CPE-6 Block. The Guairuro-1 well is the first of the six
stratigraphic wells to be drilled in the block in 2010.
- As a result of the above-mentioned activity at Quifa and CPE-6, a
total of six stratigraphic wells were drilled in the second quarter
of 2010 totalling net exploration expenditure of $30.8 million.
- 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. This second phase, where we are
negotiating with ECP the terms of the new contract will be agreed
before the kick off of the pilot project. During the first phase of
the STAR project a number of studies and tests were carried out which
confirm the feasibility and potential of the technology and clear the
way for the next stages of the project. Engineering design has been
contracted, the purchasing of the equipment is in progress, the area
of the pilot test has been selected and the design of the
synchronized wells is being finalized.
- During the second quarter of 2010, the Company exported a total of
4.6 million bbl of oil to USA, Singapore, and Ivory Coast refineries,
including six Castilla crude oil cargoes for 4.1 million bbl, and one
Vasconia crude oil cargo for 0.5 million bbl at an average price of
$67.08/bbl, which is a significant commercial accomplishment. 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 $66.80/bbl.
- During the second quarter of 2010 the sales of gas increased, to an
average of 61 mmscf/d of natural gas from 31 mmscf/d in the same
period of 2009 (97% increase), sold mainly from La Creciente field at
an average price of $4.69/mmbtu (equivalent to $4.62/mscf),
representing a premium of 20% over the weighted domestic regulated
price ($3.89/mmbtu) and 11% over the Henry Hub natural gas prices in
the United States Gulf Coast, and 9% over the realized sale gas price
of the second quarter of 2009. The 97% increase in gas production
during the second quarter of 2010 in comparison to the same period of
2009 was mainly due to the continuous investment in facilities and
the fact that the average production for the second quarter of 2009
was affected by maintenance activities.
- In May 2010, construction of new facilities to process crude oil
production from Quifa Block was initiated. These facilities will
gather production from the western block of Quifa. Dehydrated heavy
crude and treated water will be pumped directly to the ODL pumping
station and to CPF-1, respectively. The planned capacity of these new
facilities is 30,000 bbl/d of crude from the Quifa field.
- During the second quarter of 2010 the Company transported 63,303
bbl/d through the different trucking and pipeline systems, including
8,806 bbl/d of diluents; 80% of this volume was transported via
pipeline, generating savings of $9.02/bbl in transportation costs for
- 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
second quarter of 2010, the Company had currency risk management
contracts outstanding totalling $240.7 million with expiration dates
between July and December 2010.
- On June 30, 2010 the Company solicited consents to amend the
indenture relating to its 8.75% senior unsecured notes due 2016, to
provide the Company with needed flexibility to invest in minority
equity investments in, and provide guarantees for, joint venture
entities. This solicitation was approved by a majority of the note
holders on July 15, 2010.
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 60,000 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 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, Mr. Luis A. Pacheco, VP Planning, (416) 362 7735; Ms. Carolina Escobar, Investor Relations, +57 1 628 3970; Ms. Belinda Labatte, (647) 428 7035