2014

Pacific Rubiales provides additional information related to the proposed acquisition of Petrominerales

TORONTO, Oct. 15, 2013 /PRNewswire/ - On September 29, 2013 Pacific Rubiales Energy Corp. (TSX: PRE) (BVC: PREC) (BOVESPA: PREB) announced that it had entered into an agreement with Petrominerales Ltd. (TSX: PMG) (BVC: PMGC) (the "Arrangement") to acquire all of the issued and outstanding shares of Petrominerales through an acquisition (the "Proposed Acquisition" or transaction) governed by a plan pursuant to the Business Corporations Act (Alberta) ("ABCA"). Under the ABCA, these types of acquisitions are known as a Plan of Arrangement.

Pursuant to the Arrangement, Petrominerales shareholders will receive Cdn. $11.00 in cash for each Petrominerales share held plus one share of a newly formed exploration and production company ("ExploreCo" as referred to in our news release of September 29, 2013, and from now on referred to as "ResourceCo"). ResourceCo's assets will consist of Petrominerales' Brazilian assets, which will be segregated from Petrominerales in favor of ResourceCo along with Cdn. $100 million in cash.

In order to assist shareholders to better understand the Arrangement and the Proposed Acquisition, as well as the procedures and rights granted to Petrominerales shareholders, the following is some basic information in regards to the transaction.

General Information on the Plans of Arrangement

The transaction between Pacific Rubiales and Petrominerales is known under the ABCA as a plan of arrangement. A plan of arrangement is usually a multistep transaction regulated by different laws, including the ABCA, through which mergers and acquisitions of companies, among other operations, can be completed.

Plans of Arrangement are commonly used in Canada and have been used in the past when acquiring companies with assets or operations in Colombia. Some examples of the aforementioned are: the acquisition of Shona Energy by Canacol Energy Ltd.; the acquisition of Petrolifera Petroleum Ltd. by Gran Tierra Energy Inc.; the merger of Pacific Stratus Energy Ltd. and Petro Rubiales Energy Corp.; the merger between Medoro Resources Ltd. and Gran Colombia Gold Corp.; the acquisition of PetroMagdalena Energy Corp. by Pacific Rubiales Energy Corp.; and the acquisition of C&C Energia Ltd. by Pacific Rubiales Energy Corp. In Plans of Arrangement resulting in a newly formed entity that carries on a portion of the business previously conducted by the target company, the practice has been to list the shares of such new entities on a Canadian stock exchange (see, for example, Platino Energy Corp. that resulted from C&C Energia Ltd.). The Information Circular will provide shareholders with information in this regard.

A Plan of Arrangement under the context of an acquisition can only be successful upon receipt of approval of shareholders of the company being acquired and the relevant court. To complete a Plan of Arrangement, it is first important to prepare the Information Circular aimed to provide detailed information to the shareholders in relation to the transaction. Once the document has been prepared, the following three steps should be fulfilled: (i) an initial court application to seek an interim order, (ii) a shareholders' meeting with the purpose of obtaining approval of the proposed arrangement; and, (iii) finally, a second court application before a judge seeking final approval of the Arrangement.

The Information Circular is a document that includes (i) detailed information related to the transaction and its economic conditions, (ii) a "fairness opinion" issued by an independent investment bank in relation to the financial terms of the transaction; (iii) a copy of the arrangement agreement; (iv) voting procedures and shareholder rights, including dissent rights; and (v) relevant information about both companies involved in the Plan of Arrangement.

The Information Circular will also provide information on how shareholders can exercise their voting rights at the shareholders' meeting which will consider the approval of the proposed Plan of Arrangement and the right to dissent (see section 2 below), as well as information related to tax and currency exchange matters. Pursuant to the Arrangement, the Information Circular will be prepared by Petrominerales and will include ResourceCo's financial, corporate and technical information. The Petrominerales Information Circular will be available in English and Spanish.

1.     First Court Application - Interim Order

The Information Circular prepared by Petrominerales must be filed before a judge in Alberta - Canada, accompanied by an application to issue the interim order that approves the calling of Petrominerales special shareholders meeting (see section 2 below). The application includes: (i) the calling for Petrominerales shareholders special meeting, and (ii) the procedural matters to be completed in relation to the approval of and performance of the Arrangement.

At this point, the judge will review the draft of the Information Circular to ensure that: (i) it includes adequate information for Petrominerales shareholders; and (ii) all shareholders are granted equal rights, including the right to dissent.

In relation to this Arrangement, the application will be submitted before the "Queen's Bench" court of the Province of Alberta - Canada, and the interim order is expected to be issued during the last week of October 2013.

2.     Shareholders Meeting

Once the interim order is issued by the judge, Petrominerales will distribute the Information Circular to its shareholders, formally calling the shareholders meeting to consider the Arrangement.

The Information Circular is expected to be distributed to Petrominerales shareholders on or around November 4, 2013 and the shareholders' meeting is scheduled to take place on November 27, 2013. The Information Circular will also be simultaneously published under Petrominerales' profile on SEDAR in English and on SIMEV of the Financial Superintendence of Colombia in Spanish language.

All Petrominerales shareholders are entitled to vote to approve the Arrangement at the called shareholders' meeting, voting in person or by proxy under similar terms to those used in other shareholder meetings of the company. The Arrangement will be approved if there is an affirmative vote of at least 2/3 of the shares voted in person or by proxy at the meeting. The Information Circular will include detailed instructions as to how Petrominerales shareholders may vote at the shareholders' meeting.

In addition to the right to vote, Petrominerales shareholders may exercise their right to dissent. Petrominerales dissenting shareholders, instead of the consideration provided for under the Arrangement, will receive the "fair value" of their shareholding participation in Petrominerales, which will be finally determined by a judge of "Queen's Bench" of the Province of Alberta - Canada. The Information Circular will include detailed information about the right to dissent and the applicable procedure to exercise such right.

3.     Second Court Application - Final Order

Provided that Petrominerales shareholders approve the Arrangement at the shareholders' meeting, a second court application of approval shall be initiated before a judge in the Province of Alberta - Canada, aimed to obtain a final order from the judge approving the Arrangement. Shareholders or any other interested party may attend this hearing and provide opposition to the transaction, as well as the relevant evidence supporting such opposition.

To issue the final order, the judge will review the compliance with procedures set forth in the applicable law and determine whether the Arrangement, all aspects considered, is "fair" for Petrominerales shareholders. The judge may approve the Arrangement as proposed or modify it under exceptional circumstances. If the judge approves the Arrangement, it will become effective once the necessary documents, which include the final order, are filed before the applicable corporate registry in Alberta, Canada.

The performance of the Arrangement is subject to the notifications and the required regulatory approvals necessary in Canada and to the notification to the Superintendence of Industry and Commerce of Colombia as provided for in Article 9 of Law 1340 of 2009, and Resolution 12193 of 2013 issued by said entity, which shall be completed before closing of the Proposed Acquisition. At this time, it is expected that the closing of the Proposed Acquisition will take place before the end of November 2013, at which time, all Petrominerales shares will be acquired by Pacific Rubiales (including shares of those shareholders who voted for or against the Arrangement, and of all those shareholders who did not vote or attend the shareholder meeting), except for those who exercised dissent rights.

The information provided through this public statement is only a general summary of the Arrangement and the applicable procedures. Petrominerales shareholders must review the Information Circular that will be distributed by Petrominerales, which contains detailed information on the Arrangement; shareholder rights; and the procedures to exercise such rights.

For further details on the Arrangement, the Company is planning on posting a Q&A document on its corporate website, aimed at addressing potential questions from shareholders.

About Pacific Rubiales

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, which includes producing and exploration assets in Peru, Guatemala, Brazil, Guyana and Papua New Guinea.

About Petrominerales

Petrominerales Ltd. is a Latin American focused exploration and production company with a high-quality land base of exploration and development opportunities in Colombia, Peru and Brazil.

Advisories

Cautionary Note Concerning  Forward-Looking Statements

This news 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, anticipated integration of acquisitions, 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.

This press release also contains forward-looking statements and information concerning the anticipated completion of the Arrangement and the anticipated timing for completion thereof. Pacific Rubiales has provided these anticipated times in reliance on certain assumptions that they believe are reasonable at this time, including assumptions as to the timing of receipt of the necessary regulatory and court approvals and the time necessary to satisfy the conditions to the closing of the Arrangement. These dates may change for a number of reasons, including unforeseen delays in preparing meeting materials, inability to secure necessary regulatory or court approvals in the time assumed or the need for additional time to satisfy the conditions to the completion of the Arrangement. There is no guarantee that the Arrangement will close at the anticipated time or at all. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release concerning these times and the Arrangement.

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, Peru, Brazil, Papua New Guinea and 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 news release due to, among other factors, difficulties or interruptions encountered during the production of hydrocarbons.

Translation

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.

SOURCE Pacific Rubiales Energy Corp.




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