Pacific Rubiales 2013 outlook and guidance: Targeting 15 to 30% production
growth, E&D capital spending of $1.7 billion, and a significant high impact
TORONTO, Jan. 8, 2013
TORONTO, Jan. 8, 2013 /PRNewswire/ - Pacific Rubiales Energy Corp. (TSX: PRE;
BVC: PREC; BOVESPA: PREB) announced today its capital spending plans for
2013. The Company plans to spend $1.7 billion this year in exploration and
development (E&D) expenditures, an increase over spending in 2012, reflecting
a larger exploration budget and increased development drilling. Pacific
Rubiales expects to release its year-end 2012 audited results on March 13,
2013. All values in this release are in U.S.$ unless otherwise stated.
The Company is targeting 15 to 30% growth in average daily production for 2013
and has scheduled a conference call at 8:00 a.m. ET (Toronto and Bogotá time)
/ 11:00 a.m. (Rio de Janeiro time) on Wednesday January 9, 2013 to discuss its
2013 Outlook and Guidance. Analysts and interested investors are invited to
participate using the dial-in instructions available at the end of this news
"Our plans for 2013 are shaped by our expanded exploration portfolio and oil
focused production that continues to grow and enjoy strong netbacks and robust
economics," said Ronald Pantin, Chief Executive Officer of Pacific Rubiales.
"During 2012, we transitioned the Company's portfolio through select strategic
acquisitions, to setup and secure long-term growth through early stage large
resource capture, and by adding value to the existing business through
accretive reserves and production development and acquisitions. Although
Colombia remains the Company's core producing area and the focus of most of
its activities and expenditures in 2013, we are taking our first major steps
outside its borders, with a significant high impact well program planned for
Peru, Guatemala, Brazil and Papua New Guinea.
"The Company estimates that it will achieve average production net after
royalties of approximately 99 Mboe/d in 2012 (including volumes attributed to
the Company's acquisition of Block Z-1 in Peru). Despite being at the low end
of our guidance range, this was a very strong performance given the largely
flat production through the first eight months of the year caused by
unexpected permit delays in Colombia. Exit production in 2012 was an
estimated 293 Mboe/d total gross field (average last week in December) or
approximately 117 Mboe/d net after royalty (excluding volumes from the C&C
Energia Ltd. acquisition which closed on December 31, 2012), an increase of
approximately 17% from 2011's exit production and exceeding our targets of 280
to 285 Mboe/d gross total field (112 to 114 Mboe/d net after royalty).
"It is likely that 2013 production growth for Pacific Rubiales and other
companies in Colombia will continue to be affected by the pace of
environmental permitting approval. However, in an attempt to take a prudent
and realistic view on this issue over which we have no control, we are
starting the year by targeting 15 to 30% overall average production growth in
2013. The Company has a stronger than expected beginning to 2013 as we are
currently producing above Plan at approximately 310 Mboe/d gross total field
or 129 Mboe/d net after royalty (including the acquired C&C Energia Ltd.
volumes), and we expect to be able to update the range as the year
"Production at the Company's landmark Rubiales and Quifa heavy oil fields
(including the Cajua new commercial field area in Quifa North) is expected to
continue to grow. First oil production is expected from Block CPE-6, during
the second half of the year, after receipt of the blanket environmental
permit. The Block Z-1 asset and the blocks acquired from C&C Energia Ltd.
which both closed at year-end 2012, are expected to contribute significant
light oil production volumes in 2013.
"Our oil price realizations and operating netbacks strengthened in 2012 and
the Company expects to achieve an operating netback on its oil production
exceeding $65/bbl on average WTI prices of approximately $94, generating an
estimated EBITDA of $2.1 billion in 2012. In 2013 we expect to generate
EBITDA in the range of $2.5 to $2.8 billion in an expected WTI oil price
environment of $85 to $90.
"In summary, Pacific Rubiales enters 2013 on a very solid financial standing,
our Balance Sheet remains strong and our growth targets in the medium term are
underpinned by our extensive low cost and high return heavy oil exploration
and development assets in Colombia. We have stepped beyond Colombia, building
first production in Peru and layering in future longer-term production
potential through the exploration bit. I am looking forward to an exciting
year in 2013 as we continue our strategy of repeatable, profitable growth,
building for the long-term future, the leading E&P company focused in Latin
Highlights of the 2013 capital program include:
In 2013, we expect to have total E&D capital expenditures of $1.7 billion, an
increase of approximately 30% over estimated 2012 expenditures, largely driven
by the expanded exploration activities outside Colombia and increased
development drilling in Colombia and Peru. The capital program is expected to
be funded by internally generated cash flow, in an expected WTI oil price
environment of $85 to $90, and consists of the following major expenditures:
*$495 million in exploration, a significant increase over 2012 reflecting a
larger number of planned wells in frontier and offshore basins outside of
Colombia. The Company plans to drill approximately 35 gross exploration
wells (including appraisal and stratigraphic wells) and acquire 4,682 km
and 1,040 km^2 of 2D and 3D seismic data respectively. The planned well
program includes 15 wells in blocks along the Company's core heavy oil
belt in the southern Llanos basin, Colombia. In total, approximately 19
wells are targeting high impact prospects, including the Company's first
exploration wells in Peru, Brazil, Guatemala and Papua New Guinea. A
table of planned gross and net exploration wells is available at the end
of this news release.
*$520 million in development drilling with a total of 283 gross wells
planned (excluding work-overs and water injector wells), and with
activity driven by development of the Cajua field (new commercial field
area in Quifa North), continued on-going infill drilling in the Quifa SW
and Rubiales fields, stepped up light oil development in the Cubiro block
in Colombia, and a significant program of development drilling on Block
Z-1 in Peru. A table of planned gross and net development wells is
available at the end of this news release.
*$555 million in facilities and infrastructure, with approximately 85%
directed to the Company's core producing Rubiales, Quifa SW, Cajua and
Sabanero^1 heavy oil fields, and the remainder for the planned development
of the CPE-6 block, as well as other mostly light oil field developments
^1The Company holds a 49.999% participation in Maurel et Prom Colombia B.V.,
which indirectly owns a 49.999% working interest in the Sabanero block.
Colombia will remain the predominant focus of the Company's activities and
capital expenditures in 2013 with $1.2 billion in total E&D capital
allocation, including exploration, development and facilities expenditures.
Of that amount, $300 million will be directed to the drilling of 31 gross
exploration wells, seismic and other G&G expenditures. Exploration wells of
particular interest include high impact wells on the La Creciente, SSJN-7,
Cordillera-15, Muisca, CPE-6 and Tacacho blocks.
Development drilling expenditures will account for another $390 million, which
will be directed to the drilling of 274 gross wells: about 125 planned for the
Rubiales field, 80 at Quifa SW, 45 at Cajua, and the remainder on the
Company's light oil blocks.
All of the $555 million of planned facility and infrastructure expenditures
will be spent in Colombia, roughly level with facilities expenditures in
2012. The majority of the expenditures will be directed to the Company's
heavy oil producing Rubiales, Quifa, and Cajua fields including flowlines,
power grid distribution, oil dehydration and water treatment facilities
required to handle increasing volumes of water production in these fields.
Funds will also be directed to early development facilities at CPE-6 and the
Company's light oil fields. The Company operates the vast majority of its
Colombia blocks and activities.
Capital expenditures in Peru is expected to range between $190 million to $200
million in 2013, with approximately 70% of this directed to development
activities on Block Z-1, including the drilling of eight development wells.
There will also be planned exploration expenditures of between $60 to $70
million directed to the drilling of the first well in the high impact Block
138 during the first quarter 2013, along with seismic acquisition and other
G&G expenditures on blocks 135, 137, 116 and the exploration areas of Block
Z-1, through the year.
Capital expenditure in Brazil is expected to range between $85 to $90 million
in 2013, all directed to the drilling of two high impact exploration wells on
the Karoon offshore Santos Basin, expected during the first half of the year.
Capital expenditures of between $15 million to $20 million are expected on the
Company's blocks in Guatemala in 2013, including expenditures directed to the
drilling of one exploration well plus seismic and other G&G activities.
Additional capital spending of between $30 million to $35 million are
associated with the Company's participation in exploration activities in Papua
New Guinea, including its share of the costs of drilling two planned appraisal
wells on the Triceratops structure.
2013 Exploration Well Plan Schedule
Country Block PRE WI % Number of Wells 1Q 2Q 3Q 4Q
Quifa North 60% 6 3.6 1 1 2 2
Sabanero^(1) 50% 1 0.5 1
CPE-6 E&P 50% 6 3.0 1 2 3
CPO-12 40% 1 0.4 1
CPO-17 25% 1 0.3 1
Portofino^(2) 40% 3 1.2 3
Guama 100% 1 1.0 1
Colombia SSJN - 7 50% 1 0.5 1
COR-15^(1) 50% 2 1.0 1 1
Muisca^(1) 50% 1 0.5 1
Topoyaco 100% 1 1.0 1
Tacacho 51% 1 0.5 1
Cubiro C 58% 1 0.6 1
Santacruz 71% 1 0.7 1
Arrendajo 68% 2 1.4 2
Peru 138 100% 1 1.0 1
Guatemala O-96-4 55% 1 0.6 1
Brazil S-M-1101 & S-M-1165 35% 1 0.4 1
S-M-1102 & S-M-1137 35% 1 0.4 1
Papua New Guinea Triceratops 10% 2 0.2 1 1
Total 35 18.6 14 6 7 8
(1)The Company holds a 49.999% participation in Maurel et Prom Colombia B.V.
which holds 100% of the Sabanero and Cor-15 blocks and 50% of the CPO-17 and
(2)The Company holds a 40% participating interest in the Portofino block owned
by Canacol Energy Inc.
2013 Development Well Plan^(1)
Country Field PRE WI % Number of Wells
Rubiales 45% 122 54.9
Colombia Quifa SW 60% 80 48.0
Cajua 60% 45 27.0
Light Oil Fields^(2) 78% 28 21.8
Peru Corvina / Albacora 49% 8 3.9
Total 283 155.6
(1)Excludes existing well bore work-overs and drilling of injector wells
(2)Development wells on various light oil blocks (including: Abanico, Cubiro,
Carbonera, Cravoviejo, Cachicamo, Llanos 19)
During December 2012, the Company focused its exploration activity in the in
the eastern Llanos and Lower Magdalena basins in Colombia, and in the Santos
basin, offshore Brazil. Four exploration wells were drilled, one each in the
Sabanero and SSJN-9 blocks, and two on the CPO-12 block. Also in the month
of December, four exploration wells started drilling, one each on the CPO-1,
CPO-12 and Guama blocks in Colombia and on the Karoon blocks in Brazil, all of
which are expected to reach final depth and their operations during January or
The Chaman-1 exploration well in the northeastern part of the Sabanero Block,
resulted in a new oil discovery and is currently under production test.
In the SSJN-9 block, located in the Lower Magdalena Valley basin, Maurel et
Prom Colombia, the operator of the block, drilled the Santa Fe-1 exploration
well. The well was dry and it was plugged and abandoned.
In the CPO-12 block, two exploration wells were drilled as partof the
exploration commitments with the ANH: The Espiguero-1X well was drilled in the
southeastern border of the block, encountered two feet of net pay and the
wellbore was plugged and abandoned as uneconomic. The Escarabajo-1X well was
drilled in the northwestern border of the block. The well showed hydrocarbon
traces in the interval of interest but the petrophysical evaluation did not
show any commercial discovery, and the well was plugged and abandoned. The
third commitment well, the Hayuelo-1X exploration well is currently being
drilled, targeting the basal sands of the Carbonera Formation, and is expected
to reach final depth during the second week of January.
In the CPO-1 block, the Altillo Oeste-1 exploration well is currently being
drilled, targeting sands in the Eocene Mirador Formation as its main
In the Guama block, the Manamo-1X exploration well started drilling during the
second week of December and it is expected to reach final depth during January
The Kangaroo-1 exploration well within blocks S-M-1101 and S-M-1165 in
offshore Brazil commenced drilling at the end of December 2012. The well has
multiple targets in the late Cretaceous, Eocene and Miocene rocks, and its
drilling operations are expected to continue into February 2013.
2013 Outlook and Guidance Conference Call
The Company has scheduled a conference call for investors and analysts on
Wednesday January 9, at 8:00 a.m. (Toronto and Bogotá time) / 11:00 a.m. (Rio
de Janeiro time), to discuss the Company's 2013 Outlook and Guidance. Analysts
and interested investors are invited to participate using the dial-in numbers
as follows (a presentation will be posted on the Company's website at:
www.pacificrubiales.com prior to the call):
Participant Number (International/Local): (647) 427-7450
Participant Number (Toll free Colombia): 01-800-518-0661
Participant Number (Toll free North America): (888) 231-8191
Conference ID (English Participants): 82827621
Conference ID (Spanish Participants): 82848382
The conference call will be webcast which can be accessed through the
A replay of the call will be available until 23:59 pm (Toronto time), January
23, 2013, which can be accessed as follows:
Encore Toll Free Dial-in Number:1-855-859-2056
Local Dial-in-Number:(416) 849-0833
Encore ID (English Participants): 82827621
Encore ID (Spanish Participants):82848382
Pacific Rubiales, a Canadian company and producer of natural gas and crude
oil, owns 100% of Meta Petroleum Corp., which operates the Rubiales, Piriri
and Quifa heavy oil fields in the Llanos Basin, and 100% of Pacific Stratus
Energy Colombia Corp., which operates the La Creciente natural gas field in
the northwestern area of Colombia. Pacific Rubiales has also acquired 100% of
PetroMagdalena Energy Corp., which owns light oil assets in Colombia, and 100%
of C&C Energia Ltd., which owns light oil assets in the Llanos Basin. In
addition, the Company has a diversified portfolio of assets beyond Colombia,
which includes producing and exploration assets in Peru, Guatemala, Brazil,
Guyana and Papua New Guinea.
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,
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 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.
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
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. The estimated values disclosed in this news
release do not represent fair market value. The estimates of reserves and
future net revenue for individual properties may not reflect the same
confidence level as estimates of reserves and future net revenue for all
properties, due to the effects of aggregation.
This news release was prepared in the English language and subsequently
translated into Spanish and Portuguese. In the case of any differences between
the English version and its translated counterparts, the English document
should be treated as the governing version.
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
The Colombian standard is a boe conversion ratio of 5.7 Mcf:1 bbl and is
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.
SOURCE Pacific Rubiales Energy Corp.
Christopher (Chris) LeGallais
Sr. Vice President, Investor Relations
+1 (647) 295-3700
Sr. Manager, Investor Relations
+57 (1) 511-2298
Manager, Investor Relations
+57 (1) 511-2319
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