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TSX: PRE BVC: PREC BOVESPA: PREB11 www.pacificrubiales.com SEPTEMBER 13, 2012 Peters & Co. Energy Conference.

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Presentation on theme: "TSX: PRE BVC: PREC BOVESPA: PREB11 www.pacificrubiales.com SEPTEMBER 13, 2012 Peters & Co. Energy Conference."— Presentation transcript:

1 TSX: PRE BVC: PREC BOVESPA: PREB11 SEPTEMBER 13, 2012 Peters & Co. Energy Conference

2 All monetary amounts are in U.S. dollars unless otherwise stated. This presentation 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, Peru or Guatemala; 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 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. PRE does not hold direct interests in Sabanero, Muisca, COR-15, CPO-17 and SSJN-9. Such blocks are owned by Maurel & Prom Colombia B.V. (“MPC”) as follows CPO-17 and SSJN-9 50% and Sabanero, Muisca and COR %. In turn PRE owns a % in MPC please note that such blocks are owned by. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 5.7 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. The estimated values disclosed in this presentation do not represent fair market value. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation. Forward Looking Statements 2

3 Pacific Rubiales Energy – Outstanding Track Record Capex (MM$): , Outstanding track record of growth and execution Gross operated field and net after royalty production up 370% EBITDA up 547% Gross Field Prod: (Mboe/d) Net A/R Prod: (Mboe/d) EBITDA (MM$): ,

4 14 fold increase in net production since 2007 Production is predominantly heavy oil (87%), natural gas (10%) and light oil (3%) Total net Proved plus Probable reserves grew by 52% (from 269 MMboe in 2010 to 407 MMboe in 2011) Steady Growth of Production and Reserves (1) At end of year 4 Average production (boe/d) 8% (2) ANH, Ministry of Mines and Company´s calculations (12 month period) 41%

5 2007 – 2011 Reserves Four fold increase in net 2P reserves Cumulative production 68.5 MMboe 80% of 2P reserves are oil, ~ 78% of 2P reserves are Proved (“P1”) 2P Reserve replacement: 4 boe per boe produced Successful diversification of reserve base, with Rubiales field percentage reduced 29%18%36%2%4%11% % 51% 56% 60% 100% Strong Reserve Growth and Diversified Reserves Base 5

6 Colombia total liquids production has grown by 351 Mbbl/d (67%) since 2005 > 70% of growth is heavy oil Heavy oil now > 40% of total liquids production Pacific Rubiales operations ~ 60% of Colombia’s heavy oil Rapid growth and resource potential suggest continuing trend Company is well positioned to capitalize on this trend Colombian Production Growth – A Tale of two Strategies Oil & Natural Gas Production (Mboe/d) (1) (1) ANH, Wood Mackenzie and internal data 6

7 Balanced Exploration & Production Portfolio 63 Blocks 7 44 PRE (exit 2011) +19 Acquisitions & JV (1H 2012) 22.4 Million Gross Acres 14.4 Million Net Acres

8 RUBIALES FIELD One of the largest onshore heavy oil fields in South America OOIP estimate 4.6 billion bbls (increased from 2.7 by PRE´s technical work) Approximately 160 development wells (65 net planned for 2012) Successful field extensions in buffer zones Gross total field production target 190,000 bbl/d (exit 2012) QUIFA FIELD Multiple fields in close proximity to existing Rubiales infrastructure. Low risk exploration and development OOIP estimate 2.8 billion bbls New lower royalty and longer term fiscal structure Gross total field production target 60,000 bbl/d (exit 2012) Rubiales and Quifa Two Main Growth Engines 8

9 Colombia heavy oil trading at a premium to WTI vs. discounted Canadian heavy oil Operating netbacks > $71/bbl in 1H2012 New production added at low cost / high capital efficiency Tidewater export access for all volumes produced PRE continues to take advantage of WTI/ Brent differentials PRE 3Q sales differential to WTI estimate: – Vasconia: +$9 to +$12 premium – Castilla: +$4 to +$8 premium Advantaged Colombia Heavy Oil 9 * MD&A: 1Q 2012, 2Q 2012 and 2Q 2011

10 Pilot test area: Nine wells have been drilled in two main clusters in 25 acre area Total cold production under primary conditions reached more than 2,000 bbl/d Production increased during initial “steam soak” and nitrogen injection test The steam and nitrogen test were done to determinate the respond of the reservoir - both test were successful 7.4 billion bbl OOIP Rubiales and Quifa - Potential to increase recovery factor from 15% (primary) to 40% + Start-up of in-situ combustion from air injection in progress February 2012 Steam Injection July 2012 Nitrogen Injection 3Q 2012 Air Injection STAR Technology – A Potential Game Changer 10

11 Bicentenario Pipeline (PRE: 32.88% equity interest) – Phase 1 currently under construction to provide ~ 40,000 bbl/d net PRE. OBC is expected to start pumping during the first quarter of 2013 – Provides additional pipeline transport from South Llanos, will largely eliminate trucking when completed in 1Q 2013 – Closed first round project financing in May 2012 Puerto Bahia New Oil export Terminal (Pacific infrastructure: 30.3% equity interest) – Provides second export terminal to overcrowded Coveñas – Construction started – 3 million barrel storage, 300 Mbbl/d pipeline from Coveñas, natural deep water port – 2014 construction completion target ODL Pipeline (PRE: 35% equity interest) – Added 170,000 bbl/d incremental capacity, upgraded to 340,000 bbl/d gross – Expansion to accommodate increasing volumes – New off load facilities being added – Pumping capacity test reaching 357 Mbbl/d 11 Pro-active Midstream Investment Sets Company Apart from Peers Oil & Gas Transportation Infrastructure

12 Accelerates monetization of company’s gas reserves, leverages exploration of gas resources 15 year toll agreement with Exmar LNG barge on the Colombian Caribbean Coast: – 69.5 MMcf/d liquefaction capacity – 14,000 m 3 built-in storage – 140,000 m 3 LNG Floating Storage Unit Targets niche markets for power generation in Central America and Caribbean 18 inch 100 MMcf/d capacity gas pipeline from La Creciente Operations to start 4Q 2014 Exmar started the construction of the FLRSU with a liquefaction capacity of 0.5 million tonnes per annum and a storage of 16,000 m 3 The environmental license for a gas pipe line to take gas to La Creciente field to the LNG facility is expected shortly Expected operating netbacks from the LNG project will significantly exceed domestic markets EXPORT TM (Colombia) Liquefaction Shuttle LNG carrier Marine Transport FSRU (Customer) Regasification Small Scale LNG – Unlocking Future Markets 12

13 63 BLOCKS (over 22.4 million gross /14.4 million net acres) High operated percentage 76 exploratory wells planned for exploration capex planned $340 million finding costs: $1.40/boe (target:$2.00/boe) Exploration portfolio – three “buckets”: –Heavy oil trend –Natural gas basin –“Big E” high risk/high reward Exploration Portfolio Provides Future Upside Potential 13

14 2011 Reserves and Resources All reserves (1) and resources (2) are independently certified 407 million boe 2P reserves (78% P1) 2.8 billion boe certified resources provides diversified portfolio for future growth Resources equal 6.5 x 2P reserves Reserves plus Resources 3,185 million boe 13% 2,777 MMboe (1)2011 Year-end Certified Reserves (2)Resources certification by Petrotech as of June, 2011 Best Estimate, 14

15 Acquisitions provide additional growth potential along with exploration and development hopper Five evaluation criteria: – Strategic – Material – Value Accretive – Balance above/below ground risk – Early stage large “resource capture” in frontier regions Evaluate projects in core areas and new countries M&A transforms Company – 49% Z-1 Block (Peru) – 100% Petromagdalena (Colombia) – 35% CGX (Guyana) – 10% Triceratops and PPL237 (Papua New Guinea) – 40% Portofino (Colombia) Acquisitions & Joint Ventures – Additional Engines of Growth and Transforms the Company into the Future 15

16 2012 Capital Expenditure Program STAR IT Other miscellaneous projects Other Projects $50MM Quifa, Rubiales and Sabanero To increase production capacity CPE-6 Development Drilling $285 MM Quifa, Rubiales and Sabanero Oleoducto Bicentenario de Colombia (“OBC”) CPE-6 provisional for early production facilities Production Facilities $560 MM $1.2 Billion Net capital program Exploration across 26 blocks Start of drilling operations in Peru ~ 60 exploration wells (including appraisal and stratigraphic) 5,700 km of equivalent 2D seismic planed for 2012 Exploration $340 MM 16 Organic Growth Self-funded by Internally Generated Cash Flow

17 Production Future: Profitable Repeatable Growth Total production expected to double through 2016 from organic growth Rubiales field declines from current 65% total production to ~20% by 2016 La Creciente gas and Quifa/Sabanero oil production doubles Additional production from heavy oil trend blocks (CPE-6, CPO-12, CPO-17, and others) STAR, exploration and M&A represent additional upside Internally generated cash flow sufficient to fully fund organic growth, exploration and M&A ~20%/yr CPE-6 CPO-12 CPO-17 CPO-14 CPE-1 Putumayo Quifa Sabanero La Creciente Rubiales 17

18 Pacific Rubiales - Summary Pacific Rubiales very well positioned in Colombia: – Largest independent E&P company – Second largest and fastest growing producer – Low cost Rubiales and Quifa fields underpin production and growth – Outstanding project execution record – Large exploration acreage portfolio offers future potential Self-funded growth, strong balance sheet Diversified portfolio: – Development and Exploration – Colombia and Peru – Exploration – Peru and Guatemala M&A provides early stage large resource capture: Z-1 block BPZ (Peru), PPL237/Triceratops structure (Papua New Guinea), CGX (Guyana) 18

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