Pacific Rubiales announces 2012 year-end reserves: 27% growth in net 2P
reserves and 407% reserve replacement
TORONTO, March 4, 2013
TORONTO, March 4, 2013 /PRNewswire/ - Pacific Rubiales Energy Corp. (TSX: PRE;
BVC: PREC; BOVESPA: PREB) announced today the results of an independent
evaluation of the Company's reserves in reports effective December 31, 2012,
which show that the Company's net 2P reserves grew by 27% when compared to
December 31, 2011.
José Francisco Arata, President of the Company commented: "We look at these
reserves reports for 2012 as a clear demonstration of the robustness of our
exploration and development portfolio, and the Company's business strategy
that includes growth through strategic and accretive acquisitions. The 27%
reserves growth is a strong performance, driven by exploration discoveries and
a number of accretive acquisitions the Company was able to accomplish during
the year. Pacific Rubiales continues to grow its reserves along with
production, and the addition of reserves in new areas clearly demonstrates
that the Company is diversifying its reserves base beyond the Rubiales field."
Highlights on net after royalty ("net") reserves from the independent reserve
evaluation reports include:
*Total net proved plus probable ("2P") reserves additions of 145 MMboe,
consisting of 95 MMboe from acquisitions, 40 MMboe from exploration
activities and 10 MMboe from revisions.
*Total net 2P reserves grew by 27% to 517 MMboe. Proved reserves ("1P")
represent 65% of the total net 2P reserves.
*407% reserve replacement with net 2P reserves additions of 4 boe per boe
*2P Reserve Life Index ("RLI") increased to 14 from a 2011 year-end RLI of
*Total net 1P reserves grew by 6% to 337 MMboe. Approximately 77% of net 2P
and 74% of 1P reserves are oil and natural gas liquids with the majority
of these being heavy oil.
*Continued diversification of the reserves base, with the Rubiales field
now representing less than 19% of total net 2P reserves down from 29% a
*Significant reserve additions from acquisitions, including first reserve
bookings and production in Peru in the Block Z-1 shallow water offshore,
and additional reserves and production from the PetroMagdalena Energy
Corp. ("PetroMagdalena") and C&C Energia Ltd. ("C&C Energia")
acquisitions, onshore Colombia.
2012 2P Reserves Summary
Oil Equivalent Net 2P
December 31, 2011^1 407.3
Net Additions 145.4
December 31, 2012 517.0
^1 Statement of Reserves Data and Other Oil and Gas Information as of December
31, 2011, filed on SEDAR in Form 51-101 F1, on March 14, 2012.
^2 Boe is expressed herein using the Colombian conversion standard of 5.7 Mcf:
1 bbl required by the Colombian Ministry of Mines and Energy. A reconciliation
to the National Instrument 51-101 - Standards of Disclosure for Oil and Gas
Activities ("NI 51-101") conversion standard of 6 Mcf: 1 bbl is provided in
the "Advisories" section of this news release.
^3 Production represents the twelve month period ended December 31, 2012 and
includes production from the acquisition of the 49% interest in Block Z-1 in
Peru effective as of January 1, 2012.
Note: numbers in table may not add due to rounding differences.
2012 Year-end Reserves
The following table summarizes information contained in the independent
reserves reports prepared by RPS Energy Canada Ltd. ("RPS") and Petrotech
Engineering Ltd. ("Petrotech") with an effective date of December 31, 2012.
RPS evaluated the reserves of the Company in the developed Rubiales and Quifa
SW heavy oil fields, while Petrotech evaluated the reserves in the remaining
producing oil and gas fields in Colombia, the natural gas reserves of the
Piedra Redonda in Block Z-1 Peru, and other blocks that have active and
ongoing exploration programs. These reports were prepared in accordance with
the definitions, standards and procedures contained in the Canadian Oil and
Gas Evaluation Handbook NI 51-101.
The reserves estimates for the Corvina and Albacora oil fields in Block Z-1,
Peru were prepared by Netherland Sewell & Associates Inc. (the independent
reserves auditor for BPZ Energy) with an effective date of December 31, 2012,
in accordance with the US Security and Exchange Commission ("SEC") standards.
These reserves estimates will be updated to conform with NI 51-101 standards
in the Company´s Annual Information Form.
The Company's net reserves after royalties incorporate all applicable
royalties under Colombia and Peru fiscal legislation based on forecast pricing
and production rates, including any additional participation interest ("PAP")
related to the price of oil applicable to certain Colombian blocks, as at
year-end 2012. Net reserves for the Quifa block were calculated using the
share formula of the Agencia Nacional de Hidrocarburos, as agreed with
Ecopetrol S.A., until the arbitration process pertaining to this block is
The recovery and reserves estimates of crude oil and natural gas reserves
provided in these reports are estimates only, and there is no guarantee that
the estimated reserves will be recovered. Actual crude oil and natural gas
reserves may eventually be greater than or less than the estimates provided.
All reserves presented are based on RPS and Petrotech forecast pricing and
costs effective December 31, 2012, and Netherland and Sewell & Associates 2012
un-weighted arithmetic average of the first-day-of the-month price for the
period January 2012 through December 2012.
All additional reserves information as required under NI 51-101 will be
included in the Company's Annual Information Form which is expected to be
filed on SEDAR by March 13, 2013.
The Company also plans to release its 2012 year-end certified resource report
next month, prepared by Petrotech.
Reserves at December 31, 2012 (MMboe^1)
Proved Plus Hydrocarbon
Country Field Total Proved (1P) Probable (P2) Probable (2P) Type
100% Gross Net 100% Gross Net 100% Gross Net
Rubiales 277.1 117.0 93.6 6.2 2.8 2.2 283.3 119.8 95.8 Heavy Oil
Quifa SW 115.4 69.2 58.0 29.7 17.8 15.1 145.1 87.0 73.1 Heavy Oil
Cajua 64.8 38.9 32.9 51.3 30.8 24.4 116.0 69.6 57.3 Heavy Oil
Quifa North 11.3 6.8 6.0 36.3 21.8 18.1 47.6 28.6 24.1 Heavy Oil
CPE-6 - - - 114.2 57.1 44.5 114.2 57.1 44.5 Heavy Oil
Sabanero^2 20.0 10.0 9.0 - - - 20.0 10.0 9.0 Heavy Oil
La Creciente 79.1 79.1 73.6 - - - 79.1 79.1 73.6 Natural Gas
Colombia 16.2 16.2 15.2 20.3 20.3 19.0 36.5 36.5 34.2 Condensate
Other Minor Oil &
7.1 3.0 2.7 2.5 1.5 1.2 9.6 4.5 3.9 Natural Gas
PMD Blocks Light &
19.3 10.9 10.1 12.2 7.1 6.6 31.5 18.1 16.6 Medium Oil
C&C Blocks Light &
18.0 18.0 15.1 2.0 2.0 1.8 20.0 20.0 16.9 Medium Oil
Sub-total Oil &
628.4 369.2 316.2 274.4 161.1 132.9 902.9 530.2 449.1 Natural Gas
Peru Medium Oil,
Block Z-1 42.1 20.6 20.4 99.5 48.7 47.5 141.5 69.4 67.9 Natural Gas
Dec. 31, Oil &
2012 670.5 389.8 336.6 373.9 209.8 180.4 1,044.4 599.6 517.0 Natural Gas
2011 686.6 383.9 318.8 206.5 110.1 88.5 893.2 493.9 407.3
Difference (16.2) 5.9 17.8 167.4 99.8 91.9 151.2 105.6 109.6
2012 Total Reserves
Production^3 90.2 43.4 35.7 Incorporated 241.5 149.0 145.4
^1The term ''boe'' is expressed herein using the Colombian conversion standard of
5.7 Mcf: 1 bbl required by the Colombian Ministry of Mines and Energy. A
reconciliation to the National Instument 51-101 - Standards of Disclosure for Oil
and Gas Activity ("NI 51-101") conversion standard of 6 Mcf: 1 bbl is provided in
the "Advisories" section of this news release.
^2The Company indirectly owns 49.999% of Maurel & Prom Colombia B.V., which owns
the Sabanero block.
^3Includes production attributed from the acquisition of the 49% interest in
Block Z-1, Peru effective as of January 1, 2012.
In the table above, 100% refers to total 100% field interest; Gross refers to WI
before royalties; Net refers to WI after royalties; Numbers in table may not add
due to rounding differences.
Discussion of Reserves
Approximately 94% of the Company's net 1P and 88% of 2P year-end 2012 reserves
are in Colombia, with the remainder in Peru. Over 50% of the 145 MMboe of net
2P 2012 reserve additions came from Colombia.
The Company's exploration capital expenditure in 2012 was approximately US$355
million, drilling 55 gross (33 net) exploration wells (including appraisal and
stratigraphic wells), resulting in 44 gross successful wells (80% success
rate) and adding 40 MMboe of net 2P reserves through the drill bit, for a
finding cost of approximately US$8.90/boe. The Company's five year finding
cost (2008 - 2012) is estimated at US$3.44/boe. The Company operates
approximately 98% of its production and was responsible for the majority of
Colombia's production growth during 2012.
In the Company's Rubiales field, net 2P reserves declined to 96 MMbbl from 118
MMbbl a year ago on production of approximately 22 MMbbl. The Rubiales field
is a mature oil field that will see plateau production in the next several
years before natural decline starts in 2015. The Rubiales field, which in 2008
accounted for 60% of the Company's 2P reserves base, now accounts for less
than 19% of a substantially larger total reserves base.
In the Quifa SW field, net 2P reserves grew to 73 MMbbl from 65 MMbbl a year
ago from successful infill drilling and extensions. Total net proved reserves
grew to 58 MMbbl from 56 MMbbl a year ago due to reserves movements from the
probable category. Net production during 2012 was approximately 8 MMbbl.
In the area known as Quifa North, the Company declared a new commercial field
area named Cajua in mid-August 2012. The Cajua field area is currently under
development and its production is expected to increase over the next years to
a targeted plateau of 15 to 20 Mbbl/d. The remainder of the Quifa North
block, is in an active exploration stage which is expected to continue for the
next several years. Total net 2P reserves in Quifa North (including the new
Cajua field) remained largely flat at 81 MMbbl compared to a year ago. Net
production in 2012 was approximately 0.2 MMbbl, all of which is attributed to
On the Sabanero block, where the Company has a 49.999% interest, net 2P
reserves declined to 9 MMbbl from 15 MMbbl a year ago, due to technical
revisions of probable reserves based on a change in future economic
assumptions associated with the field's operations. At the same time, total
proved reserves increased to 9 MMbbl from 5 MMbbl a year ago, due to new
drilling and extensions and movements from the probable category. The Company
and its partner Maurel et Prom Colombia B.V. are actively looking at
facilities and equipment investments which could improve the operating
economics of the Sabanero block. Net production during 2012 was approximately
On the CPE-6 E&P block some 70 km southwest of Rubiales/Quifa, net 2P reserves
remain unchanged at the 2011 year-end bookings of 45 MMbbl, due to delays in
permitting. The Company has a working interest of 50% and is operator of the
block. These reserves resulted from the evaluation of the wells drilled in the
northern portion of the block only and are expected to increase significantly
in the near future through exploration and development drilling. As soon as
the environmental permit for the block is awarded, the Company will start an
exploration and appraisal drilling campaign to confirm reservoir potential
which it believes will lead to a declaration of commerciality for the northern
portion of the block.
In the La Creciente block in the Lower Magdalena basin (northern Colombia),
net 2P reserves declined to 419 Bcf from 441 Bcf a year ago due to net
production of approximately 22 Bcf (4 MMboe) during 2012. All the reserves at
La Creciente are comprised of natural gas.
On the Company's 100% working interest and operated Guama exploration block
just to the east of La Creciente, 33 MMboe of net 2P reserves were added, a
result of a number of significant condensate rich gas discoveries, including
the Pedernalito-1X and Cotorra-1X exploration discoveries announced in 2012.
Approximately 61% of the 2P and 68% of the 1P reserves in the Guama block are
natural gas. In February 2013, the Company announced an additional
exploration discovery in the Manamo-1X exploration well, and will be drilling
a second exploration well this year and initiating a program of extended flow
testing of wells, to determine productivity and resource potential in the
block, which is expected to lead to future commercial development.
On other non-core minor producing blocks in Colombia, net 2P reserves declined
to 4 MMboe from 6 MMboe a year ago due to natural declines and small
revisions. Net production from these producing blocks in 2012 was
approximately 0.5 MMboe. Approximately 20% of the 2P and 25% of the 1P
reserves in these non-core minor producing blocks are natural gas.
The Company added 34 MMboe net 2P reserves as a result of two significant
corporate acquisitions in Colombia during 2012, consisting of the
PetroMagdalena acquisition which closed on July 27, and the C&C Energia
acquisition which closed at year-end. The majority of the acquired reserves
are medium and light oil. Net production during 2012 from these acquisitions
was approximately 0.7 MMbbl, all of which is attributed to the PetroMagdalena
In Peru, the Company acquired a 49% participating interest in the shallow
water offshore Block Z-1. The deal closed in late December 2012 and is
effective to January 1, 2012. In 2012, the Company added 68 MMboe of net 2P
reserves from Block Z-1, consisting of 43 MMbbl oil in the producing Corvina
and Albacora fields, and 148 Bcf (25 MMboe) natural gas in the undeveloped
Piedra Redonda field. Approximately 37% of the 2P oil reserves and 19% of the
natural gas reserves in Block Z-1 are in the 1P category. The Company and its
partner will be engaged in an active development drilling program on the block
over the next two years which is expected to significantly grow oil production
and result in movements in reserves from probable and proved undeveloped
("PUD") categories to proved developed producing. Net production during 2012
attributed to the Company's 49% participating interest in Block Z-1 was
approximately 0.6 MMbbl.
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, Peru, Guatemala, Brazil, Papua New Guinea or Guyana; 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
Production replacement is calculated by dividing reserves additions by
production in the same period. Reserves additions over a given period, in this
case 2012, are calculated by summing one or more of revisions and improved
recovery, extensions and discoveries, acquisitions and divestitures. Reserve
replacement cost is calculated by dividing total capital invested in finding,
development and acquisitions net of divestitures by reserve additions in the
The aggregate of the finding costs incurred in the most recent financial year
and the change during that year in estimated future finding costs generally
will not reflect total finding costs related to reserves additions for that
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.
The term "boe" is used in this news release. 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.
All of the Company's natural gas reserves are contained in the La Creciente,
Guama and other bocks in Colombia as well as in the Piedera Redonda field in
Block Z-1, Peru. For all natural gas reserves in Colombia, boe's have been
expressed using the Colombian conversion standard of 5.7 Mcf: 1 bbl required
by the Colombian Ministry of Mines and Energy. For all natural gas reserves
in Peru, boe's have been expressed using the Canadian conversion standard of
6.0 Mcf: 1 bbl. If a conversion standard of 6.0 Mcf: 1 bbl was used for all
of the Company's natural gas reserves, this would result in a reduction in the
Company's net 1P and 2P reserves of approximately 4.2 and 4.7MMboe
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.
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.
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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