Pacific Rubiales Energy Corp.: Oil & gas

THE COMPANY: Pacific Rubiales Energy Corporation (PREC) is the largest independent exploration and production company in Colombia, and the second-largest oil and gas producer after Ecopetrol. With more than 12m net acres of exploration lands, it also holds the second-most important exploration portfolio in Colombia. Despite the fact that most of its production and exploration activities are currently concentrated in Colombia, PREC also has operations (mainly exploratory) in Peru, Brazil, Guatemala and Papua New Guinea. The company also has a significant presence in the midstream segment through equity and capacity participations in the main pipelines of the country: Oleoducto Central de los Llanos (Ocensa), Oleoducto de los Llanos (ODL) and Oleoducto Bicentenario (OBC), currently under construction. It also has subsidiaries in the oil and gas port infrastructure and coal exploitation businesses. In the past five years, Pacific Rubiales has become the fastest-growing producer in the country, with a gross production that increased from 61.1 KBOED in 2008 to 240 KBOED in September 2012. In the same manner, the company’s 2P reserves (proved and probable) have doubled from 210 MMBOE to 457 MMBOE in 2012 through exploration and acquisitions. PREC's main production assets are the Rubiales and Quifa heavy oil fields which represent around 81% of the company’s total production, and are located in the Llanos Orientales basin, the most prolific area of the country in terms of hydrocarbons potential. Gas production (11% out of the total) is concentrated in La Creciente Field located in the northwest. In 2011 the company discovered large amounts of oil in block CPE-6, located in the Llanos Orientales basin. This asset, along with the Quifa block, is meant to replace the Rubiales field production in the near term, since the latter’s exploitation period ends in 2016.

DEVELOPMENT STRATEGY: In terms of production, the goal of Pacific Rubiales is to achieve gross production of 500 KBOED by the end of 2015, which implies a composed annual growth rate of around 20%. To achieve this, the company will continue to develop its current production fields, especially Rubiales, Quifa, La Creciente and the newly-discovered CPE-6. In order to support production enhancement, the company has already started multiple projects such as the expansion of the crude production facilities in Quifa, additions in the transport and port capacity, and a residual water irrigation project in Rubiales and Quifa, which will allow the firm to avoid any restriction in water disposal in those fields and to reduce lifting costs. Another important project to improve production that is expected to become operational in 2014 is the offshore plant for the liquefaction of natural gas, which will allow the company to export LNG to Central America and to faster monetise its gas reserves. Since most of the Pacific Rubiales production is heavy oil, the company has in the past few years been working to develop an enhanced oil recovery technology called STAR (Synchronised Thermal Additional Recovery). One of the company’s major projects, this could, if successful, as much as double its oil reserves and thereby extend its productive and commercial life.

This project is currently on a test stage on the Quifa field and its results are expected to be released by the end of 2013. In terms of exploration, in the short and medium term PREC will be focusing on its assets located in Colombia and Peru, while in the long term it will be looking to make major discoveries in its assets in Brazil and Papua New Guinea. In addition, it is very likely that its cash flow generation will allow it to continue with a dynamics of acquisitions and farming contracts, in Colombia and internationally.

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The Report: Colombia 2013

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