Pacific Rubiales Energy Announces Financial Results for the Year Ended December 31, 2010

TORONTO, March 11, 2011 /PRNewswire/ -- Pacific Rubiales Energy Corp. (TSX: PRE) (BVC: PREC) announced today the release of its audited consolidated financial results for the year ended December 31, 2010, together with its Management Discussion and Analysis ("MD&A") for the corresponding period. These documents will be posted on the Company's website and SEDAR at www.sedar.com.

Ronald Pantin, Chief Executive Officer of the Company, commented: "2010 was another year where our growth goal was achieved in many areas of the Company. Commencing with our production performance, we finished 2010 with an average net production after royalties for the year of 56,974 boe/d, a significant 67% growth rate from the 2009 average. This important production increase was accompanied by a remarkable 160% increase in revenues, going from $639.2 million in 2009 to $1.7 billion in 2010 and a 210% increase in EBITDA, ending 2010 at $922.8 million.

These key accomplishments are the result of our efforts to quickly and efficiently maintain production growth and build capacity, and ensure we can deliver our product to the right market. This has been achieved with our talented team to manage our portfolio of producing and exploration assets.

During 2010, we drilled 176 new producing wells at Rubiales and Quifa, and completed Central Processing Facilities at these two fields. This, combined with our investments in pipeline infrastructure, not only contributed to approximately 80% of the production growth in 2010, but also created the proper conditions to support the expected growth for 2011 and beyond."

Management will hold a live conference call in English on Friday, March 11, 2011, to discuss the Company's financial results beginning at 10:00 am (EST). A Spanish translator will be available. Analysts and interested investors are invited to participate as follows:

Participant Number (International/Local): (416) 644-3424

Participant Number (Toll free Colombia): 1-800-518-0337

Participant Number (Toll free North America): 1-877-974-0446

Conference ID: 4424497

A replay of the English call will be available until 23:59 pm (EST) on March 25, 2011, which can be accessed as follows:

Encore Toll Free Dial-in Number: 1-877-289-8525

Encore Local Dial-in-Number: 416-640-1917

Encore ID:   4424497

A detailed summary of the financial results for the three and twelve months ended December 31, 2010 follows:

Results, Analysis and Highlights:

In 2010, the Company experienced another twelve months of outstanding production growth and exploratory success, leveraging its technical know-how and operational expertise. The results for the year underline the strength of the Company's operational activity and its capacity to increase production, as well as management's commitment to deliver robust financial results. Management is focused on achieving challenging operational goals, while pursuing an ambitious exploration and production ("E&P") investment program under the umbrella of the Company's paramount strategic focus: Growth. During the year ended December 31, 2010, the Company increased revenues by 160% (Q4 2010 - 245%) to $1.7 billion (Q4 2010 - $516 million), as compared to $639.2 million during the same period in 2009 (Q4 2009 - $211.7 million). This was the result of a considerable increase in production and the optimization of marketing activities, coupled with higher combined crude oil and gas prices. This significant increase in revenues also yielded an increase in net after tax income for the year to $216.3 million (Q4 2010 - $103.4 million), compared to a loss of $125.8 million in 2009 (Q4 2009 - $3 million net income).

EBITDA during the year ended on December 31, 2010 totalled $923 million, representing a significant increase of 210%, as compared to 2009 EBITDA of $298 million. For the fourth quarter of 2010, EBITDA was $271 million, mainly generated from international sales (88%), while gas and domestic sales contributed 6.5% and 5.5%, respectively.

In 2010, the Company entered into currency risk management contracts, in the form of costless collars, to reduce the currency exposure associated with operating expenses, and general and administrative expenses, incurred in Colombian pesos. These contracts were designated as accounting hedges and had the positive impact of reducing the Company's operating and administrative expenses by $21.7 million, for the year 2010. At the end of 2010, the Company had entered into new currency derivatives totalling $240 million, in notional amount, to manage currency risks for the period January to December 2011.

During the fourth quarter of 2010, the Company commenced paying quarterly dividends to common shareholders. In December 2010, an aggregate amount of $25.1 million (or $0.094 per common share) had been paid as dividends to the Company's shareholders. Provisions of various trust indentures and credit arrangements, to which the Company is a part, restrict the Company's ability to declare and pay dividends to shareholders under certain circumstances, and if such restrictions apply, they may in turn have an impact on the Company's ability to declare and pay dividends. In management's opinion such provisions do not currently restrict or alter the Company's ability to declare or pay dividends.

Milestones

Throughout 2010, the Company's exploratory campaign included the drilling of 29 exploratory wells, the acquisition of 1,609 km of 2D seismic and 401 km² of 3D seismic and the acquisition of 13,133 km of high resolution aeromagnetogravimetric surveys.  During the fourth quarter of 2010, 7 exploratory wells were drilled (3 of them were spudded during the third quarter 2010) and 502 km of 2D seismic were acquired. 

• The Company achieved an 83% exploration success rate, with 24 successful wells out of 29 drilled in 2010. This performance allowed the incorporation of 45 mmbbl of 2P gross reserves or 25 mmbbl of net reserves after royalties. The reserve replacement ratio increased solely from the exploration effort, incorporating 1.2 barrels of oil for every produced barrel during 2010.
• In the Quifa Block, the Ambar-1 exploratory well was drilled in prospect "F" which confirmed the extension of the prospect to the southwest with 16 feet of net pay, located in the northern part of Quifa. In addition, a total of 294 km of 2D seismic were acquired in the north and eastern parts of the block. 
• At the CPE-6 Block, the Guairuro-3 and Guairuro-4 stratigraphic wells were drilled in the northern part of the block. The Guairuro-3 confirmed the presence of hydrocarbons with 6.5 feet of net pay in the C-7 interval.
• In October 6, 2010, the Company secured a Farm-In Agreement, by which PRE holds a 55% working interest and acts as operator, in the in the "A-7-98" Contract. This contract corresponds to the area known as "A-7-96", made of the "N-10-96" and "O-10-96" blocks in Guatemala.
• On November 4, 2010, the Company announced the results of the Visure-1X exploratory well, drilled in the Visure prospect and located south of the Buganviles Block. The well resulted in a new discovery with a total net pay of 114 feet, in three intervals: Barzalosa (24.5 feet), Upper Guadalupe (45.5 feet) and Lower Guadalupe (44 feet).
• The exploration program planned for the first quarter of 2011 includes the drilling of the Guairuro-5 and Guairuro-6 wells in the CPE-6 Block; the drilling of the Jaspe-2, Jaspe-3 and Zircon-1 wells in the Quifa Block; and to finishing the drilling of the Ambar-3 in the Quifa Block, the Tuqueque-1X in the Buganviles Block, and the Apamate-1X well and La Creciente Block.  Additionally, for the first quarter of 2011, the Company will finish the acquisition of 130 km² of 3D seismic in the Arrendajo Block.

Further detailed information with respect to the Company's exploration results in Colombia, Peru and Guatemala was announced on February 3, 2011.

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 and Piriri oil fields in the Llanos Basin in association with Ecopetrol S.A., the Colombian national oil company. 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 a current net production of approximately 85,000 barrels of oil equivalent per day, after royalties, with working interests in 40 blocks in Colombia, Peru and Guatemala.

The Company's common shares trade on the Toronto Stock Exchange and La Bolsa de Valores de Colombia under the ticker symbols PRE and PREC, respectively.

Boe may be misleading, particularly if used in isolation. A boe 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.

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, 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 10, 2011 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.

SOURCE Pacific Rubiales Energy Corp.