Pacific Rubiales Announces Agreement to Acquire a 35% Net Working Interest in Karoon Blocks in the Santos Basin, Offshore

Pacific Rubiales Announces Agreement to Acquire a 35% Net Working Interest in 
Karoon Blocks in the Santos Basin, Offshore Brazil 
TORONTO, Sept. 18, 2012 /CNW/ - Pacific Rubiales Energy Corp. (TSX:PRE; BVC: 
PREC; BOVESPA: PREB) announced today that it has reached an agreement with 
Karoon Gas Australia Ltd. (ASX: KAR) ("Karoon") to acquire a 35% net working 
interest in the following exploration blocks: S-M-1101, S-M-1102, S-M-1037 
and S-M-1165, and also has as an option to acquire a 35% interest in S-M-1166 
(collectively, the "Karoon Blocks"). In consideration for acquiring the 
interests in the Karoon Blocks, the Company will pay Karoon U.S.$40 million in 
cash as consideration for the assignment and fund up to U.S.$210 million in 
carried well costs. 
Ronald Pantin, Chief Executive Officer of the Company, commented: "This 
acquisition will represent a significant step forward in our plans to 
transform the Company for the future. It is an exciting exploration 
opportunity, is an excellent fit with the Company's strategy to target large 
resource capture in high potential basins and positions us well to expand 
further into Brazil. With these new assets, Pacific Rubiales will increase its 
presence in South America and enter into one of the most prolific oil rich 
hydrocarbon basins in the western hemisphere, building on our successful 
technical and project management record." 
The Acquisition 
The Karoon Blocks are located 220 kilometers off the coast of Santa Catarina 
state, just south of Rio de Janeiro, in the Santos basin. The blocks lie in 
300 - 400 m water depth, in an area with a number of existing or discovered 
oil and gas fields. The transaction is subject to the approval of the Agência 
Nacional do Petróleo, Gás Natural e Biocombustíveis ("ANP"), Brazil's oil 
and gas regulatory authority. 
The transaction agreement consists of a U.S.$40 million payment to Karoon as 
consideration for the assignment, plus a carry of well costs of up to U.S.$70 
million for each of the Kangaroo and Cassowary/Emu exploration wells for a 
total well carry cost of up to U.S.$140 million. After meeting up to the 
first U.S.$70 million costs for each of the first two wells, the Company will 
fund 35% of all costs thereafter. 
The Company may elect to participate in the third well of the three well 
exploration commitment program, the Bilby well. If the option is exercised, 
Pacific Rubiales must carry up to the first U.S.$70 million in costs for the 
Bilby well and contribute 35% of all costs thereafter. 
All three wells are expected to be drilled during 2013. Karoon will remain the 
operator of the Karoon Blocks until the completion of the three well 
exploration program and then Pacific Rubiales will be entitled to request the 
operatorship, subject to the Company meeting all regulatory and other legal 
requirements to the satisfaction of the ANP. 
Strategic Context 
Pacific Rubiales believes that it will acquire an interest in high quality 
exploration assets with a moderate risk but high reward profile, accessing 
large resources with the potential to develop into significant producing 
The Company has identified several multi-level post-salt and two pre-salt 
prospects on the Karoon Blocks. All of these prospects contain direct 
hydrocarbon indicators from seismic data. Management estimation of total P50 
recoverable resources reached 1.8 billion boe excluding the pre-salt 
The Karoon Blocks lie along trend with the Piracucá and Caravela oil fields 
and the Merluza gas field. In April 2009, Petrobras/Repsol declared the BM-S-7 
Piracucá light oil field a commercial discovery. The field is approximately 
five kilometers to the northeast of the Karoon acreage and is reported to 
contain 550 MMboe in place (Repsol, 2009). The Late Santonian reservoirs 
produced 3,476 bbl/d oil and liquids with approximately 4.4 MMcf/d gas in 
preliminary tests (Repsol, November 2009). Petrobras is currently considering 
an aggregate FPSO development for the field and other fields in the area. 
PanAtlantic Energy Group recently announced that its Sabia-1X exploration well 
drilled on block BM-S-72 just to the west of the Karoon Blocks, has penetrated 
multiple hydrocarbon bearing zones of interest, providing additional 
indications of the prospectivity of the area. 
The Company sees Brazil as an area of untapped potential with a strong 
resource and reserve base. The United States Geological Survey (USGS) has 
estimated ("Assessment of Undiscovered Conventional Oil and Gas Resources of 
South America and the Caribbean, 2012") that the Campos and Santos Basins, 
located off the country's southeastern coast, have undiscovered oil resources 
in the range of 26 billion barrels (P95) to 65 billion barrels (P5). 
According to the Oil and Gas Journal (OGJ), Brazil has 14 billion bbl of 
proven reserves in 2012, the second-largest in South America after Venezuela. 
The Campos and Santos Basins hold the vast majority of Brazil's proven 
reserves. In 2010, Brazil produced 2.7 MMbbl/d of oil and liquids. 
Brazil is the ninth largest energy consumer in the world and the third largest 
in the Western Hemisphere, behind the United States and Canada. Total primary 
energy consumption in Brazil has increased by close to a third in the last 
decade, due to sustained economic growth. Increasing domestic oil production 
has been a long-term goal of the Brazilian government, and recent discoveries 
of large offshore, pre-salt oil fields could transform Brazil into one of the 
largest oil producers in the world. 
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 oil fields in the 
Llanos Basin in association with Ecopetrol, S.A., the Colombian national oil 
company, and 100 percent of Pacific Stratus Energy Corp. which operates the La 
Creciente natural gas field. 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. 
The Company's common shares trade on the Toronto Stock Exchange and La Bolsa 
de Valores de Colombia and as Brazilian Depositary Receipts on Brazil's Bolsa 
de Valores Mercadorias e Futuros under the ticker symbols PRE, PREC, and PREB, 
Karoon Gas Australia Ltd, an Australian Stock Exchange listed global energy 
exploration company, with highly prospective assets in Australia, Brazil and 
Peru. Karoon is currently in the midst of a two year exploration drilling 
program that is set to include a minimum of eleven wells in three independent 
basins. Currently the Phase II exploration campaign has commenced in the 
Browse Basin, Australia, with the goal to confirm the size and composition of 
the Greater Poseidon Trend ahead of development decision making. In the 
coming months, three exploration wells will commence in the Santos Basin, 
Brazil, with the goal of making new shallow water discoveries of 
hydrocarbons. During 2013, Karoon expects to commence drilling in Block Z-38 
in the Tumbes Basin, Peru, with the goal of making new oil and gas discoveries. 
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, Guatemala 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 March 14, 2012 filed on SEDAR at 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. 
In addition, reported production levels may not be reflective of sustainable 
production rates and future production rates may differ materially from the 
production rates reflected in this press release due to, among other factors, 
difficulties or interruptions encountered during the production of 
Bcf                                               Billion cubic feet. 
 Bcfe                     Billion cubic feet of natural gas equivalent. 
bbl                                                    Barrel of oil. 
bbl/d                                            Barrel of oil per day. 
boe   Barrel of oil equivalent. Boe's may be misleading, particularly 

                                                  if used in isolation.
      The Colombian standard is a boe conversion ratio of 5.7 Mcf:1 bbl
                                                        and is based on
        an energy equivalency conversion method primarily applicable at
                                                     the burner tip and
                does not represent a value equivalency at the wellhead.

boe/d                                 Barrel of oil equivalent per day.

 Mbbl                                                 Thousand barrels.

 Mboe                               Thousand barrels of oil equivalent.

MMbbl                                                  Million barrels.

MMboe                                Million barrels of oil equivalent.

  Mcf                                              Thousand cubic feet.

  WTI                                West Texas Intermediate Crude Oil.

Christopher (Chris) LeGallais Sr. Vice President, Investor Relations +1 (647) 

Roberto Puente Sr. Manager, Investor Relations +57 (1) 511-2298

Javier Rodriguez Manager, Investor Relations +57 (1) 511-2319

Image with caption: "Map of the Karoon Blocks (CNW Group/Pacific Rubiales 
Energy Corp.)". Image available at:

SOURCE: Pacific Rubiales Energy Corp.

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CO: Pacific Rubiales Energy Corp.
ST: Ontario

-0- Sep/18/2012 22:47 GMT

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