Pacific Rubiales Has $1 Billion for Mexico Expansion, CEO Says

Pacific Rubiales Energy Corp has more than $1 billion ready to invest in Mexico with the aim of doubling oil output by 2020, according to Chief Executive Officer Ronald Pantin.

Pacific Rubiales’s oil production would increase to 700,000 barrels per day from current output of 330,000 barrels “easily” if the company enters Mexico’s recently opened energy industry, he said. Mexico passed legislation last year to allow private companies to tap the country’s 13.4 billion barrels of proven oil reserves for the first time since 1938.

“We really want to focus on Mexico and we are thinking that Mexico is our next stage,” Pantin said yesterday in an interview at the World National Oil Companies Congress in Cancun. “We have over $1 billion waiting for Mexico and no long-term debt. Everything is ready.”

Pacific Rubiales is in conversations with “everybody” and is looking to partner with Mexican companies to develop some of the 169 oil blocks available for bidding to private companies next year, Pantin said. The Bogota-based company is interested in onshore, shallow water and heavy and light oil production in Mexico, he said.

Alfa Stake

Alfa SAB, the Mexican auto parts and petrochemical company, raised its stake in Pacific Rubiales to more than 17 percent on Aug. 20 after buying an additional 9 million shares. Pacific Rubiales is not worried about Alfa’s potential buyout of the company, Pantin said.

“This is a public company. If they want to do it, the board will have to decide and our shareholders will have to vote,” Pantin said. “We are very happy to have Alfa as one of main investors because we think it is very important to have a Mexican company investing in us to take advantage of the opportunities we are planning to have here.”

Alfa, which is the second-largest shareholder in Pacific Rubiales after Lazard Ltd., which has 19 percent, has not requested a seat on the company board of directors, Pantin said. If Alfa acquires more than 20 percent of the company, they would have to make a bid for a complete buyout.

Alfa increased its stake in Pacific Rubiales to “build a more robust exploration and production business in order to take advantage of potential opportunities in Mexico,” Chief Financial Officer Ramon Alberto Leal said in July.

Production Guidance

Pacific is on track to meet this year’s production guidance of 148,000 to 162,000 barrels of oil equivalent net to the company per day, despite delays due to flooding at the Rio Ariari and CPE-6 blocks, Pantin said.

Pacific Rubiales and Colombia’s state-controlled Ecopetrol SA are discussing a new contract in the Rubiales field, Pantin said.

“We are negotiating that and we have been talking with Ecopetrol,” he said. “We are right now looking into the offer made. I think at the end, we’re going to have it.”

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