Rubiales Tumbles as Depreciation Erodes Earnings: Bogota Mover

Pacific Rubiales Energy Corp., Latin America’s most valuable non-state crude producer, fell the most in four months after second-quarter profit declined more than analysts estimated on foreign-exchange losses and higher costs.

The shares tumbled 6.4 percent to 36,600 pesos at the close in Bogota, the steepest drop since April 3. The Bogota-based company said in a statement late yesterday that net income fell 74 percent to $57.6 million, or 18 cents a share, from $224 million, or 76 cents, a year earlier. Per-share profit before some items was expected at 45 cents, the average of nine analysts’ estimates tracked by Bloomberg.

Earnings were dragged down by accounting items including losses associated with depreciation of the Colombian peso and a 97 percent surge in production costs. Sales rose 1.9 percent to $1.1 billion while earnings before interest, taxes, depreciation and amortization increased 7 percent.

“Production costs, largely outside of management control, continue to rise,” Justin Anderson, a Calgary-based analyst at Salman Partners, said in a research note dated today, cutting his recommendation to hold from buy.

Record Production

Colombia’s oil industry has attracted unprecedented foreign investment over the past decade, boosting output to more than 1 million barrels a day this year. Quarterly net production at Pacific Rubiales climbed 38 percent from a year earlier to 127,555 barrels of oil equivalent a day.

“Production volumes continue to be at record levels and we are on track to achieve the high end of our annual production guidance,” Chief Executive Officer Ronald Pantin said in the statement.

Pacific said Aug. 6 it secured a license for additional water injection at its namesake Rubiales field, enabling the company to boost production. Rubiales accounts for 65 percent of its production, according to a July presentation, with the company’s license scheduled to expire in 2016.

Pacific Rubiales has applied for a license to develop its CPE-6 Block, with a public hearing with local communities and stakeholders scheduled to conclude this month. The company expects to receive an exploration and development license within three to six weeks of the conclusion of this process.

CPE-6 may be producing at 5,000 barrels per day by the end of the year, Pantin said on a conference call with investors today. Both the CPE-6 block and Rubiales field are located in the Llanos basin.

Colombia’s peso weakened 5.1 percent against the dollar in the second quarter.

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