Pacific Rubiales Announces Second Quarter 2013 Results: Continued Strong Production and Cash Flow Generation, Cost Reduction Initiatives Showing Early Results, Star Pilot Results Encouraging
TORONTO, Aug. 8, 2013 /PRNewswire/ - Pacific Rubiales Energy Corp. (TSX: PRE; BVC: PREC; BOVESPA: PREB) announced today the release of its unaudited consolidated financial results for the quarter ended June 30, 2013, together with its Management Discussion and Analysis ("MD&A"). These documents will be posted on the Company's website at www.pacificrubiales.com, SEDAR at www.sedar.com, the SIMEV website at www.superfinanciera.gov.co/web_valores/Simev, and the BOVESPA website at www.bmfbovespa.com.br/. All values in this release and the Company's financial disclosures are in U.S.$, unless otherwise stated.
The Company has scheduled a teleconference for investors and analysts on Friday August 9, 2013 at 8:00 a.m. (Bogotá time), 9:00 a.m. (Toronto time) and 10:00 a.m. (Rio de Janeiro time) to discuss the Company's second quarter results. Analysts and interested investors are invited to participate using the dial-in instructions provided at the end of this news release.
Overview and Highlights
Gross production was 156,099 boe/d, an increase of approximately 2,100
boe/d compared to the first quarter of this year. Although gross
production increased compared to the first quarter, net production was
in-line after accommodating for the additional volumes associated with
the high-prices clause arbitration decision at Quifa SW ("PAP").
Net production was 127,555 boe/d, an increase of 38% compared to the
same period in 2012. Net production during the quarter was at the high
end of the Company's annual guidance.
Sales volumes were 127,398 boe/d, an increase of 9% compared to the same
period in 2012.
Revenues were $1.1 billion, a 2% increase compared to the same period in
EBITDA was $604 million, a 7% increase compared to the same period in
2012, representing a 57% margin on total revenues for the period, up
from 54% in the same period in 2012.
Cash Flow (Funds flow from Operations) was $475 million, a 14% increase
compared to the same period in 2012.
Operating netbacks on combined crude oil and natural gas production
remained strong for the second quarter at $60.54/boe compared to
$60.88/boe for the first quarter of 2013, despite a 6% decrease in the
combined realized prices due to the narrowing of the Brent-WTI
benchmark price spread.
The Company achieved a $6.19/bbl reduction on its oil operating costs to
$32.53/bbl due to a reduction in transportation and upgrading costs,
offset by an increase in the cost of production. The Company continues
to focus on cost reduction projects and initiatives, which are expected
to result in a reduction in future oil operating costs by approximately
$8/bbl on a pro-forma basis by the end of 2013, compared to average
Net earnings were $58 million, compared to $224 million in the in the
same period in 2012, impacted mainly by non-cash items, including
higher depletion, depreciation and amortization and the effect of
foreign exchange losses from the Colombian peso depreciation during the
second quarter of 2013; and a 5% lower combined realized price.
During the quarter, the Company announced an increase of 50% to its
quarterly cash dividend to U.S.$0.165 per common share from the
previous U.S. $0.110 per common share.
Local public hearings, relating to the blanket exploration and
development environmental permit for the Company's CPE-6 block are
expected to commence in early August and the Company expects to receive
the permit approval within three to six weeks following the hearings.
The environmental licence required to increase water injection at the
Rubiales field by an additional 1 MMbbl/d was received, allowing the
Company to grow oil production in the field to a target level of
approximately 220,000 bbl/d total field production by the end of this
- The Company entered into an agreement with International Finance Corporation ("IFC"), a member of the World Bank Group, pursuant to which the IFC agreed to invest $150 million in Pacific Infrastructure Ventures Inc. ("Pacific Infrastructure").
Ronald Pantin, Chief Executive Officer of the Company, commented:
"I am pleased that we have achieved another strong quarter of operational and financial performance. Pacific Rubiales focuses on production growth and cash generation as other financial metrics, such as net earnings, are impacted by non-cash accounting items. The Company's financial performance in the second quarter, measured by cash generated as EBITDA and Cash Flow (Funds Flow from Operations), continues to grow, increasing 7% and 14% respectively from a year ago. EBITDA Margin (EBITDA/Revenues), an important indicator of financial strength, increased to 57% from 55% in the previous quarter and 54% in the same quarter last year. Both EBITDA and Cash Flow in the quarter were impacted by a large build in oil inventory of approximately 855 Mbbl compared to 203 Mbbl and 875 Mbbl of oil inventory build in the prior quarter and a year ago, respectively.
"Production volumes continue to be at record levels and we are on track to achieve the high end of our annual production guidance range of 15% to 30% growth over 2012 average production (113 to 127 Mboe/d net). Net production in the quarter of 128 Mboe/d was essentially level with the prior quarter despite the impact of accommodating for the additional Quifa SW current PAP volumes (approximately 2.3 Mbbl/d) which, starting in the second quarter is being paid in-kind, in the field. Net production in the quarter increased 38% compared to the same period a year ago.
"Sales volumes in the quarter increased 9% compared to the same period a year ago driven by higher production, but decreased from the prior quarter, largely due to the impact of the significant inventory build versus inventory draw in the prior quarter and the same period in 2012. Sales volumes were also impacted by lower oil for trading and purchased diluent volumes in the quarter.
"Large inventory swings are normal and the result of the Company's reliance on the Coveñas export terminal, but tend to rebalance over multiple periods. In the first week of July, the Company shipped a 1 MMbbl cargo that significantly reduced the oil inventory in storage which will be recognized in the Company's third quarter financial and operating results. These inventory swings are anticipated to decrease with the completion of the new Puerto Bahía oil export terminal, which is expected to be completed in 2014.
"Despite a 6% decrease in the realized oil price compared to the prior quarter, driven by the narrowing of the WTI/Brent differential, oil operating netbacks remained in-line with the prior quarter and were 5% lower than the same quarter of 2012, mainly due to lower operating costs.
"The Company is delivering on its promise to reduce oil operating costs by approximately $8/bbl pro-forma by the end of 2013, and we expect there will be more to come. During the current quarter the total of oil transportation plus diluent costs decreased by approximately $5/bbl compared to the prior quarter and the same quarter last year. This reduction was achieved as a result of a decrease in trucked oil volumes due to contracting additional pipeline space secured through the new business arrangement on the OCENSA pipeline, the reduction of purchased diluent volumes and transportation of diluent resulting from the consumption of larger volumes of our own light oil production as diluent, and the start-up of the new diluent mixing station at Cusiana.
"Further reductions in transportation costs are expected to materialize in the second half of the year with the start-up of the new Bicentenario pipeline which will provide the Company with approximately 37 Mbbl/d of additional pipeline capacity, largely eliminating the need for crude oil truck transportation by year-end. The Bicentenario pipeline started first line-fill in July.
"Although production costs increased in the quarter, driven largely by increased infield transportation of water and oil volumes, we expect significant cost reductions to materialize in the fourth quarter driven by the start-up of the new Petroelectrica de los Llanos ("PEL") power transmission line (100% owned by Pacific Rubiales), which will connect the Rubiales and Quifa SW fields with Colombia's electrical grid, supplying less expensive energy to power field operations.
"It is important to keep in mind that all of these cost reduction initiatives will result in a permanent structural reduction in our total field operating costs and will also have a positive impact on the Company's new heavy oil field production, expected in the south Llanos basin.
"Earlier this week we announced the receipt of the environmental licence required to increase water injection at the Rubiales field by 1 MMbbl/d, allowing the Company to grow oil production in the field to a target level of approximately 220 Mbbl/d total field production by the end of this year, increasing from the 210 Mbbl/d total field production (71 Mbbl/d net production) achieved during the first half of this year. The necessary water injection facilities have already been built, which will allow us to increase oil production relatively quickly.
"The Rubiales field provides an important source of revenue for our Company, our partner Ecopetrol, S.A. ("Ecopetrol") and for Colombia, in the form of royalties, taxes and spin-off economic activity. We would like to again acknowledge the efforts that the Colombian environmental authority, ANLA has made to improve and streamline the licencing process including the new resolution of July 31, 2013 ratifying an expedited process to allow minor changes to existing environmental licences. We look forward to working with them to obtain the necessary blanket exploration and development license required to develop the Company's CPE-6 Block, southwest of the Rubiales field.
"In August, the Company expects to conclude a public hearing with local communities and stakeholders. In July, the same local communities and stakeholders showed strong support for the development of the CPE-6 Block. The Company expects to receive the blanket exploration and development license within three to six weeks of the conclusion of this process.
"On other projects, we are very pleased to have an investing partner of the stature of the IFC joining us in Pacific Infrastructure. This is the first IFC equity investment in an infrastructure project in Colombia and the largest greenfield equity investment by IFC globally. The investment indicates a premium on Pacific Rubiales' early investment and provides an important endorsement of Colombia's stable and growing economic and business environment. It also confirms the vision and strategic importance of Pacific Infrastructure's Puerto Bahía import-export terminal and the OLECAR pipeline projects, which are currently underway. With the closing of the IFC investment, Pacific Infrastructure is in a position to acquire debt financing of approximately $350 million in order to proceed with the next stage of development.
"Pacific Rubiales has made significant investments in Colombia's infrastructure over the last five years, which have enabled it to control the timing and pace of its oilfield developments, and capture additional components of the value chain. Pacific Infrastructure's assets are strategic to the Company's plans to substantially increase its oil production and export sales from Colombia over the next three years and will reduce the current dependence on Coveñas, the sole oil export terminal on the Colombian Caribbean coast.
"Although it is still early days, we continue to be encouraged by the results we are seeing in our STAR pilot project at Quifa SW. Reservoir ignition has been sustained since early in the year, resulting in incremental oil production and a lowering of water cuts in the production wells, in the vicinity of the air injection well. During the second quarter, successful synchronization of the producing wells was achieved. The results to date are indicating a more than doubling of the primary recovery factor in the test area of the reservoir and the Company expects to certify an increased recovery factor in the pilot test area this month. These results are providing the Company with the confidence to proceed with field trials of the STAR secondary recovery in other areas of the Quifa SW field, in 2014.
"In the Block Z-1, offshore Peru, the Company and its partner BPZ Resources Inc., commenced the Corvina field development drilling program from the new CX-15 development platform in late July and expect to start infill drilling at the Albacora field in the third quarter. These development activities are expected to contribute to a significant growth in oil production from the block over the next two years.
"On the exploration side of the business, I am pleased with our recent success in northern Colombia, where we have drilled two natural gas and condensate wells in our 100% owned La Creciente and Guama Blocks. This follows a string of successful exploration and appraisal wells drilled on both blocks over the last several years. This activity confirms the large resource potential of the blocks and will underpin our plans to increase natural gas production starting next year with our LNG export project.
"In the Brazil offshore Santos Basin, our partner and operator of the blocks, Karoon Australia Gas Ltd., recently announced a significant increase in their estimate of Contingent Resources and we are looking forward to drilling a series of appraisal wells in 2014 on the previously announced Kangaroo-1 and Bilby-1 light oil discoveries.
"Overall I am looking forward to a year of continued production growth, improving cost structure and an exciting exploration program, as we build for the long-term benefit of our shareholders and employees, the leading E&P company focused in Latin America."
|Oil & Gas Sales Revenues ($ millions)||1,055.6||1,258.8||1,035.9|
|EBITDA ($ millions)1||604.0||694.7||564.0|
|EBITDA Margin (EBITDA/Revenues)||57%||55%||54%|
|EBITDA per share1||1.87||2.16||1.91|
|Cash Flow (Funds Flow from Operations) ($ millions)1||475.0||506.2||415.2|
|Cash Flow (Funds Flow from Operations) per share1||1.47||1.58||1.41|
|Adjusted Net Earnings from Operations ($ millions)1||98.1||146.9||195.0|
|Adjusted Net Earnings from Operations per share1||0.30||0.46||0.66|
|Net Earnings ($ millions) 2||57.6||121.9||224.3|
|Net Earnings per share||0.18||0.38||0.76|
|Net production (boe/d)||127,555||127,889||92,611|
|Sales volumes (boe/d)||127,398||143,650||117,408|
|(COP$ / US$) exchange rate3||1,929.00||1,832.20||1,784.60|
|Average shares outstanding - basic (millions)||323.0||321.3||294.6|
|1The terms EBITDA, funds flow from operations, adjusted net earnings from operations, are non-IFRS measures. Please see advisories and reconciliations in the MD&A.|
|2Net earnings attributable to equity holders of the parent.|
|3COP/USD exchange rate fluctuations can have a significant impact on the Company's accounting net earnings, due in the form of unrealized foreign currency translation on the Company's financial assets and liabilities and deferred tax balances that are denominated in COP.|
|Net Production Summary|
|Oil and Liquids (bbl/d)|
|Total Oil and Liquids (bbl/d)||116,604||116,779||81,472|
|Natural Gas (boe/d)1|
|Total Natural Gas (boe/d)||10,951||11,110||11,139|
|Total Equivalent (boe/d)||127,555||127,889||92,611|
|1Colombian standard natural gas conversion ratio of 5.7 Mcf/bbl.|
|Additional production details are available in the MD&A.|
The Company's net production of 127,555 boe/d increased 38% in the quarter compared to a year ago, driven by strong growth in oil production from the Company's Rubiales and Quifa heavy oil fields, and added volumes and growth in light oil production resulting from the PetroMagdalena Energy Corp ("PetroMagdalena") and C&C Energy Ltd. acquisitions completed in July and December 2012, respectively.
Average daily net production from the Rubiales field increased to 70,687 bbl/d from 57,286 bbl/d a year ago (an increase of 23%), and from the Quifa SW field to 23,464 bbl/d from 20,826 bbl/d (an increase of 13%), primarily due to environmental permits received in August 2012, allowing for increased water injection.
Net production (mostly light oil) from the PetroMagdalena assets has grown to approximately 6.4 Mboe/d from an estimated 3.0 Mboe/d at the time of acquisition, more than doubling through successful exploration and development activity.
Revenues and costs associated with the Company's 49% participating interest in production from Block Z-1 have been recognized in the Company's financial results since December 12, 2012 as a result of the approval by the applicable Peruvian authorities. The acquisition had an effective date of January 1, 2012.
Production and Sales Volumes
|Production to Total Sales Reconciliation|
|Net Production (boe/d)|
|Total Net Production (boe/d)||127,555||127,889||92,611|
|Sales Volumes (boe/d)|
|Production Available for Sale (boe/d)1||127,555||127,889||90,871|
|Diluent Volumes (bbl/d)||5,427||9,607||9,025|
|Oil for Trading Volumes (bbl/d)||3,810||3,895||7,899|
|Inventory Balances and Other (boe/d) 2||(9,394)||2,259||9,613|
|Total Volumes Sold (boe/d)||127,398||143,650||117,408|
|1Production available for sale includes all net production in Colombia and the Company's 49% of net production from Block Z-1, Peru from December 12, 2012.|
|2Includes change in inventory levels and 2,145 bbl/d in the second quarter of 2013 (1,271 bbl/d in first quarter of 2013 and 1,598 bbl/d in second quarter 2012) of inventory set aside to settle previously accumulated PAP volumes.|
|Additional production and sales volume details are available in the MD&A.|
The Company produces and sells crude oil and natural gas. It also purchases liquids and crude oil from third parties for use as diluents to mix with its heavy oil production and for trading purposes, which are included in the reported "volumes sold". Sales volumes are also impacted by the relative movement in inventories during a reporting period. Both revenues and costs are recognized on the respective volumes sold during the period.
Production available for sale in the quarter increased to 127,555 boe/d from 90,871 boe/d in the same period in 2012 (an increase of 40%), due to rising production volumes in producing fields. Despite a 23% rise in the Company's net heavy oil production from the Rubiales, Quifa SW and Cajua oil fields, diluent volumes decreased due to the Company increasing the volume of its own crude used in blending and consequently reducing the volume of purchased diluents. Oil for trading volumes in the current quarter decreased to 3,810 bbl/d from 7,899 bbl/d, while inventory balances moved to a 9,394 boe/d build from a 9,613 boe/d draw, in the same quarter a year ago.
Total volumes sold composed of production volumes available for sale, diluent volumes added to heavy oil production, oil for trading volumes and inventory balance changes, increased to 127,398 boe/d in the current quarter from 117,408 boe/d a year ago (an increase of 9%). Total volumes sold during the second quarter decreased from the 143,650 boe/d sold in the first quarter of 2013 due essentially to lower diluent volumes and the swing from inventory draw to large inventory build. In the first week of the third quarter, the Company shipped a one million barrel cargo which has reversed the second quarter inventory build.
Operating Netbacks and Sales Volumes
|Oil and Gas Production Volumes and Netbacks|
|2013 Q2||2013 Q1||2012 Q2|
|Volumes Sold (boe/d)||112,701||10,887||123,588||128,641||11,114||139,755||98,507||11,002||109,509|
Crude Oil and Natural
Gas Sales Price ($/boe)
|Production Costs ($/boe)||16.41||5.45||15.44||12.89||4.49||12.22||8.13||5.16||7.84|
|Diluent Costs ($/boe)||6.34||-||5.78||9.32||-||8.58||11.07||-||9.95|
|Other Costs ($/boe)||(0.21)||2.72||0.04||0.68||2.91||0.86||3.95||2.48||3.80|
|Total Costs ($/boe)||32.53||8.17||30.37||38.72||7.74||36.26||34.90||7.83||32.18|
|Additional cost and netback details are available in the MD&A.|
In a news release dated April 9, 2013, the Company disclosed plans for a structural reduction in its oil operating costs on a pro-forma basis starting in the second quarter of 2013 from a number of initiatives and projects, including a new electrical transmission line supplying less expensive energy, increased pipeline transportation replacing more expensive trucking of crude oil, and efficiencies and optimizations related to its diluent costs and supply.
Total oil operating cost per bbl for the second quarter of 2013 decreased by $6.19/bbl to $32.53/bbl from $38.72/bbl for the first quarter of 2013 mainly due to a reduction in transportation, diluent and other costs, partly offset by an increase in cost of production. The Company continues to execute the measures to reduce oil operating costs.
|Oil for Trading Volumes and Netbacks|
|Volumes Sold (bbl/d)||3,810||3,895||7,899|
|Sales Price ($/bbl)||95.78||105.24||119.85|
|Cost of Purchases ($/bbl)||95.62||101.55||116.86|
|Operating Netback ($/bbl)||0.16||3.69||2.99|
|Additional oil for trading details are available in the MD&A.|
The Company also reports separately its netback on crude oil for trading which was $0.16/bbl in the second quarter, compared to $2.99/bbl in the same period in 2012.
During the second quarter, the Company continued with its exploration activities in Colombia, offshore Brazil and Peru, which included the drilling of five exploration wells, and the acquisition of 789 kilometres of 2D seismic and 1,785 kilometres of aeromagnetic and aerogravimetric surveys.
In the Guama Block, located in the lower Magdalena Valley Basin, the Company finished drilling the Capure-1X well which was drilled at approximately two km northeast of the previously drilled Pedernalito-1X well. The well's petrophysical evaluation indicated a total of 137 feet of net pay, averaging 8% porosity, which resulted in a new gas condensate discovery in the block. Hydraulic fracturing and a production short-test have been planned for the third quarter 2013.
In the La Creciente Block, also located in the Lower Magdalegna Valley Basin, the Company started drilling the LCI-1X exploration well with an estimated total depth ("TD") of 12,944 feet measured depth ("MD"). At the end of the second quarter, the well had reached a depth of 8,620 feet MD. Preliminary petrophysical evaluation of the well indicates 63 feet of net pay within the Ciénaga de Oro Formation, resulting in a new natural gas discovery. The Company will continue its drilling and logging operations before proceeding to test the Cienaga de Oro interval.
In the Yamu Block, located in the eastern Llanos Basin, Geopark (operator of the block) drilled the Potrillo-1 exploration well with the C-7 and C-8 Units of the Carbonera Formation as the main exploration objectives. The well encountered 14 feet of net pay in the C-7 Unit resulting in a new light oil discovery. An initial test in the C-7 interval showed a production rate of 580 bbl/d with a water cut of 60%.
In the Santa Cruz Block, located in the Catatumbo Basin, the Company finished drilling the Phobos-1X exploration well. The well showed presence of hydrocarbons in the Mirador and Barco formations, but the pressure and fluid tests only showed hydrocarbon traces, so the well was plugged and abandoned.
In the Arrendajo block, located in the eastern Llanos Basin, the Mirla Blanca 1 exploration well was drilled in the north central part of the block with the Carbonera C-5 as the main exploration objective. The petrophysical evaluation did not show the presence of hydrocarbons, therefore the well was plugged and abandoned.
In the Quifa Block, located in the eastern Llanos Basin, the Company started mobilization for the 721 km2 of 3D seismic survey in the northwestern portion of the block. The seismic program will be conducted during the second half of 2013.
In the CPE-6 Block, the Company began the seismic processing of 366 km2 of 3D seismic data acquired in the northern part of the block. Completion of the processing is expected by the third quarter of 2013.
In the COR-15 and COR-24 Blocks, Maurel et Prom Colombia B.V. (operator of the block) completed 1,785 km of aeromagnetic and aerogravimetric surveys. Final survey results are expected in the third quarter of 2013.
In the Portofino Block, Canacol Energy Ltd. (operator of the block) began the contracting process for civil work for the Tachuelo-1 stratigraphic well, which is expected to begin drilling in August 2013.
In Block 138, located in the Ucayali Basin, the Company drilled the Yahuish-1X exploration well to a total depth of 8,417 feet MD, with the Cretaceous and Paleozoic as the main exploration targets. The well's preliminary results showed fair to good oil shows in two sand intervals in the Paleozoic. Fluid sampling was attempted unsuccessfully; by the end of the quarter the first of two production tests programmed for these intervals were in progress.
In Block 135, the Company finished the acquisition of a 789 km 2D seismic survey. Processing and interpretation of this seismic program is now in progress.
In Block Z-1, located in the offshore Tumbes Basin in northern Peru, the data of the 1,542 km2of 3D seismic survey is currently being processed. Results are expected during the second half of 2013.
In Block 116, in the Santiago Basin in northern Peru, Maurel et Prom Peru, S.A., (operator of the block) continued preparation of the proposed location for the Fortuna 1X well, which is expected to begin drilling during the fourth quarter of 2013. The Company holds a 50% working interest and Maurel et Prom S.A. holds the remaining 50% in Block 116.
In the Guatemala Blocks (N-10-96 and O-10-96), Compañía Petrolera del Atlántico S.A. (operator of the block) continued with the civil works for the Balam-1X exploration well. As a result of abnormal flooding in the area, the well has been re-scheduled for spudding during the third quarter of 2013.
In the S-M-1166 Block, Karoon Gas Australia Ltd. (operator of the block) finished drilling the Bilby-1 exploration well at a total depth of 4,416 meters (14,489 feet). Petrophysical evaluation of the well indicated presence of 33° API oil within an oil bearing column of 70 meters (230 feet). The operator is now evaluating the well data to define an appraisal program to confirm the extent of this discovery.
Second Quarter 2013 Conference call Details
The Company has scheduled a telephone conference call for investors and analysts on Friday August 9, 2013 at 8:00 a.m. (Bogotá time), 9:00 a.m. (Toronto time) and 10:00 a.m. (Rio de Janeiro time) to discuss the Company's second quarter results. Participants will include Ronald Pantin, Chief Executive Officer, José Francisco Arata, President, and selected members of senior management.
The live conference call will be conducted in English with simultaneous Spanish translation. The Company will post a presentation on the Company's website prior to the call, which can be accessed at www.pacificrubiales.com.
Analysts and interested investors are invited to participate using the dial-in numbers as follows:
|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):||16232320|
|Conference ID (Spanish Participants):||16236941|
The conference call will be webcast, which can be accessed through the following link: http://www.pacificrubiales.com.co/investor-relations/webcast.html.
A replay of the call will be available until 23:59 pm (Toronto time), August 23, 2013, and can be accessed using the following dial-in numbers:
|Encore Toll Free Dial-in Number:||1-855-859-2056|
|Encore ID (English Participants):||16232320|
|Encore ID (Spanish Participants):||16236941|
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, respectively.
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 13, 2013 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 hydrocarbons.
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.
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.
Readers should give attention to the estimates of individual classes of resources and appreciate the differing probabilities of recovery associated with each class. Estimates of remaining recoverable resources (unrisked) include Prospective Resources that have not been adjusted for risk based on the chance of discovery or the chance of development and Contingent Resources that have not been adjusted for risk based on the chance of development. It is not an estimate of volumes that may be recovered. Actual recovery is likely to be less and may be substantially less or zero.
Prospective Resources are those quantities of oil and gas estimated to be potentially recoverable from undiscovered accumulations. There is no certainty that the Prospective Resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the Prospective Resources. Application of any geological and economic chance factor does not equate Prospective Resources to Contingent Resources or reserves. In addition, the following mutually exclusive Classification of Resources were used:
Low Estimate - This is considered to be a conservative estimate of the
quantity that will actually be recovered from the accumulation. This
term reflects a P90 confidence level where there is a 90% chance that a
successful discovery will be equal to more than this resources
Best Estimate - This is considered to be the best estimate of the
quantity that will actually be recovered from the accumulation. This
term is a measure of central tendency of the uncertainty distribution
and in this case reflects a 50% confidence level where there is a 50%
chance that the successful discovery will be equal to or more than this
- High Estimate - This is considered to be an optimistic estimate of the quantity that will actually be recovered from the accumulation. This term reflects a P10 confidence level where there is a 10% chance that the successful discovery will be equal to or more than this resources estimate.
Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingent Resources have an associated chance of development (economic, regulatory, market and facility, corporate commitment or political risks). The estimates herein have not been risked for the chance of development. There is no certainty that the Contingent Resources will be developed and, if they are developed, there is no certainty as to the timing of such development or that it will be commercially viable to produce any portion of the Contingent Resources.
In this news release total volumes of resources have been expressed for high case estimates, low case estimates and best case estimates for both Contingent and Prospective Resources. These total volumes are arithmetic sums of multiple estimates of Contingent and Prospective Resources, as the case may be, which statistical principles indicate may be misleading as to volumes that may actually be recovered. Readers should give attention to the estimates of individual classes of resources and appreciate the differing probabilities of recovery associated with each class as explained in this section.
|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.|
|Mboe||Thousand barrels of oil equivalent.|
|MMboe||Million barrels of oil equivalent.|
|Mcf||Thousand cubic feet.|
|WTI||West Texas Intermediate Crude Oil.|
|Total Field Production||100% of total field production before accounting for working interest and royalty deductions|
|Gross Production||Company working interest production before deduction of royalties|
|Net Production||Company working interest production after deduction of royalties|
SOURCE Pacific Rubiales Energy Corp.
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