Pacific Rubiales Completes Acquisition of PetroMagdalena Energy

TORONTO, July 27, 2012 /PRNewswire/ - Pacific Rubiales Energy Corp. (TSX: PRE; BVC: PREC; BOVESPA: PREB) today announced that it has completed its acquisition of PetroMagdalena Energy Corp. (TSX-V: PMD).

PetroMagdalena has working interests in 19 properties in five onshore basins in Colombia producing approximately 3.6 Mboe/d (approximately 95% light/medium crude oil and natural gas liquids) net after royalty in the first quarter of 2012 and with 2011 year-end net proved plus probable reserves of 22.9 MMboe (64% light/medium crude oil and natural gas liquids).¹

Ronald Pantin, Chief Executive Officer of the Company, commented: "We know the PetroMagdalena assets well. The Company can apply its financial resources and technical expertise to unlock and accelerate exploration and development, growing production and also achieving a reduction in consolidated G&A costs. The acquired production provides the Company with a reliable and growing supply of diluent, which is required for its heavy oil production in Colombia and adds bolt-on exploration acreage."

The acquisition was completed today pursuant to a plan of arrangement under the British Columbia Business Corporations Act.  Under the arrangement, a wholly-owned subsidiary of Pacific Rubiales, 0942183 B.C. Ltd (the "Purchaser"), acquired all of the outstanding PetroMagdalena common shares not already owned by it or its affiliates for $1.60 per share (approximately $225 million in the aggregate).  The Purchaser acquired 140,738,004 common shares of PetroMagdalena pursuant to the arrangement which, when added to the shares of PetroMagdalena already owned by the Purchaser (being 8,653,516), results in the Purchaser owning 149,391,520 common shares, representing 100% of the outstanding PetroMagdalena shares. In addition, PetroMagdalena's share purchase warrants (TSX-V: PMD.WT) were cancelled under the terms of the Arrangement for $0.25 in cash for each unexercised warrant held.

The Purchaser is a wholly-owned subsidiary of Pacific Rubiales.  The Purchaser's address is: 333 Bay Street, Suite 1100, Toronto, Ontario, M5H 2R2.  To obtain a copy of the report filed with the Canadian securities regulatory authorities relating to the acquisition of the shares of PetroMagdalena, please contact the Company's Secretary, Michael Galego at (416) 362-7735 x234.

Pacific Rubiales, a Canadian-based company and producer of natural gas and heavy crude oil, owns 100 percent of Meta Petroleum Corp., a Colombian oil operator which operates the Rubiales, Piriri and Quifa oil fields in the Llanos Basin in association with Ecopetrol, S.A., the Colombian national oil company, and 100 percent of Pacific Stratus Energy Corp. which operates the La Creciente natural gas field. The Company is focused on identifying opportunities primarily within the eastern Llanos Basin of Colombia as well as in other areas in Colombia and northern Peru. Pacific Rubiales has working interests in 43 blocks in Colombia, Peru and Guatemala.

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 Statement on Forward-looking Information

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, Guatemala or Peru; 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.

Statements concerning oil and gas reserve estimates may also be deemed to constitute forward-looking statements to the extent they involve estimates of the oil and gas that will be encountered if the property is developed. Barrels of oil equivalent may be misleading, particularly if used in isolation. A barrel of oil equivalent conversion ratio of 6 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.

Production and reserves information in this news release is based on the public disclosure of PetroMagdalena.

Definitions 

¹ Effective date of the reserves information is December 31, 2011.  Gas volumes when expressed in BOE's were converted using 6,000 cubic feet of gas equivalent to one barrel of oil.

SOURCE Pacific Rubiales Energy Corp.