Pacific Rubiales Energy announces new exploration success in CPE-6 Block, Llanos Basin, Colombia

Pacific Rubiales Energy Corp news release with annotations

TORONTO, July 12 /CNW/ - Pacific Rubiales Energy Corp. (TSX: PRE; BVC: PREC) announced today new exploratory success at its Guairuro-1 stratigraphic well (the "Guaiuro-1 Well"), located in the CPE-6 Block, in the Llanos Basin, Colombia. The CPE-6 Block is a Special TEA awarded in 2008 by the ANH, in which Meta Petroleum, Corp. (a wholly-owned subsidiary of the Company) is the operator and holds a 50% working interest. The remaining 50% is held by Talisman (Colombia) Oil & Gas Ltd., a wholly owned subsidiary of Talisman Energy Inc.

The Guairuro-1 Well reached a total depth of 3,495 feet measured depth (MD), or 2,658 feet true vertical depth below sea level (TVDSS), and found the top of the C7 interval of the Carbonera Formation at 3,229 feet MD, or 2,392 feet TVDSS, the Mirador Formation (Basal sandstones) at 3,332 feet MD, or 2,495 feet TVDSS, and the top of the Paleozoic Basement at 3,428 feet MD, or 2,591 feet TVDSS.

The well was drilled with a 6 1/8" slim design, and was continuously cored along the main exploratory objectives, the Carbonera C7 interval and the Basal Sandstones of the Mirador Formation, obtaining a core recovery up to 145.7 feet (66%) from a total cored section of 220 feet. The cores are presently being analyzed and the results will be used to complete the evaluation of the exploration potential of this block.

The petrophysical analysis of the well indicates a net pay zone of 28 feet with 28% average porosity, and has identified oil bearing sandstones down to 3,377 feet MD, or 2,540 feet TVDSS, resulting in an oil column of 45 feet gross at the well (see table below).

      Well       Gross_Res     Net_Res     Net_Pay     Phi_Pay       Sw_Pay
                    (ft)         (ft)        (ft)        (%)          (%)
    GUAIRURO-1      74.0         70.0        28.0       28.0         50.3
    Cutoff : Ø greater than 10 %; Vshl less than 30 %, Sw less than 70%

The results from the Guairuro-1 Well confirm the presence of hydrocarbons in the region and reinforce the exploratory potential of the CPE-6 Block. The well cores also showed evidence of possibly lighter oil in two intervals at the Carbonera C7 sands, which may indicate that oil accumulations at these upper levels could also extend to the northern portion of the CPE-6 Block.

Since the Guairuro-1 Well is a stratigraphic well, and cannot be tested for long-term production potential, the Company is preparing the well to perform pressure tests on 30 levels, from C-7 to the Basal Sandstones of the Mirador Formation, and collect two fluid samples from the upper C-7 intervals.

The Guairuro-1 Well is the first of the six stratigraphic wells to be drilled in the Block in 2010. The Company is now planning to drill five additional wells during the third quarter to honor the minimum work program committed on this Contract.

At this block, the Company wanted to investigate the regional extension of the Basal Sandstone play found in the Rubiales and Quifa Blocks, which are located approximately 100 km to the east-northeast of the CPE-6 Block. The interest of the Company in the CPE-6 Block was based on the information provided by 4 wells drilled during the early 1980's - Manacacias 1 & 2, Los Kioskos 1 and SM-5. These wells showed oil bearing sandstones in the northern part of the block and these oil-bearing sandstones were interpreted to represent the same play found on Rubiales and Quifa. Three of the wells were tested (Manacacias-1 & 2 and Los Kioskos) but were plugged and abandoned because, at the time, they were considered uneconomic due to the gravity of the oil (10.5 to 12 degrees API) and the distance of the wells from any production facilities, which made the operating cost extremely high. The fourth well, SM-5 was abandoned due to a mechanical condition that did not allow for it to be tested.

The Guairuro-1 Well exhibited oil-impregnated cores in every single sandstone from Carbonera C-7 down to 3,377 feet MD within the Basal Sandstones (Mirador Formation), indicating that oil had enough mobility to reach, possibly through faults, more than 100 feet vertically from the basal sandstones into the C-7 units.

Based on the petrophysical results of the Guairuro-1 Well, the Company decided to re-evaluate the petrophysical parameters on the previous four wells and found net pay intervals on the basal sandstones varying from 20 to 38.5 feet, and porosities ranging from 25.5 to 28.6% (see table below).

        Well         Gross_Res    Net_Res     Net_Pay     Phi_Pay     Sw_Pay
                        (ft)       (ft)         (%)         (%)       (v/v)
    LOS KIOSKOS-1      114.5      114.5        20.5        28.6       61.4
    MANACACiAS-1        70.5       70.5        20.0        26.1       58.5
    MANACACiAS-2        57.0       57.0        33.0        27.7       49.6
    SM-05               90.0       90.0        38.5        25.5       53.9
    Cutoff : Ø greater than 10 %; Vshl less than 30 %, Sw less than 70 %

The revised petrophysical evaluation on wells Manacacias 1 & 2, Los Kioskos, SM-5 and the new information from Guairuro-1 Well (especially the net pay and the depth of oil water contacts identified in all five wells), additional to the seismic interpretation of the stratigraphic pinch-out of the Basal Sandstones, has allowed the Company to re-map the prospect on which those five wells are located and has established that the possible area for the stratigraphic trap can reach at least 100 km(2) (25,200 acres from the pinch-out to the average oil-water contact). This acreage corresponds with the existence of a regional belt of heavy oil that may extend further northeast and reach the Rubiales-Quifa areas.

As part of the work commitment for the CPE-6 Block, the Company recently acquired 678 km of 2D seismic lines focused on the northern part of the block where the stratigraphic trap was identified. This new seismic information is currently being processed and will be integrated with the existing data to re-map the stratigraphic trap. The new interpretation will be used to identify the locations for the next five wells that need to be drilled during the third quarter of 2010.

The Company, as the operator of the Rubiales and Quifa heavy-oil fields, has the proven expertise to put into commercial production heavy oils. Accordingly, with this new information on the CPE-6 Block, production should be underway once the Company elects to convert this Special Technical Evaluation Agreement (Special TEA) to an Exploration and Production contract. Conversion will be requested of the Colombian National Hydrocarbon Agency (ANH) once the Company completes the exploratory commitments mentioned above and defines the area with the highest exploratory potential and subject to the technical evaluation of the TEA Area.

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 at 57,672 barrels of oil equivalent per day, after royalties, with working interests in 38 blocks in Colombia and Peru.

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 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 9, 2010 filed on SEDAR at 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.

For further information: Mr. Ronald Pantin, Chief Executive Officer and Director; Mr. Jose Francisco Arata, President and Director, (416) 362 7735; Ms. Belinda Labatte, (647) 428 7035

Agency carries out trades on behalf of an investor and acts as stockbroker.