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TSX:PRE November 2009 Where Great Ideas Become Reality.

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Presentation on theme: "TSX:PRE November 2009 Where Great Ideas Become Reality."— Presentation transcript:

1 TSX:PRE November 2009 Where Great Ideas Become Reality

2 2 All monetary amounts in U.S. dollars unless otherwise stated This presentation contains certain “forward-looking statements” and “forward-looking information” under applicable Canadian securities laws concerning the business, operations and financial performance and condition of Pacific Rubiales Energy Corp. Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to estimated production and reserve life of the various oil and gas projects of Pacific Rubiales; synergies and financial impact of completed acquisitions; the benefits of the acquisitions and the development potential of the properties of Pacific Rubiales; the future price of oil and natural gas; the estimation of oil and gas reserves; the realization of oil and gas reserve estimates; the timing and amount of estimated future production; costs of production; success of exploration activities; and currency exchange rate fluctuations. Except for statements of historical fact relating to the company, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as “plan,” “expect,” “project,” “intend,” “believe,” “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Many of these assumptions are based on factors and events that are not within the control of Pacific Rubiales and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions, risks relating to international operations, fluctuating oil and gas prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the oil and gas industry, failure of plant, equipment or processes to operate as anticipated, acquisitions not being integrated successfully or such integration proving more difficult, time consuming or costly than expected as well as those risk factors discussed or referred to in the annual Management’s Discussion and Analysis and Annual Information Form for Pacific Rubiales filed with the securities regulatory authorities in all provinces of Canada and available at Although Pacific Rubiales has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Pacific Rubiales undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements. 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. Comparative market information is as of a date prior to the date of this presentation. 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. Forward-looking statements

3 3 Corporate history A history of strategic acquisitions to create the leading E&P company in Colombia 2004200720082009 Pacific Stratus founded Petro Rubiales acquires Rubiales Holdings and Meta Petroleum, who operate the Rubiales field Merger of Pacific Stratus Energy and Petro Rubiales Energy Corp. Acquisition of Kappa Energy Holdings for US$168 million Pacific Rubiales Energy operating as a fully integrated company with oil and gas assets in production, and significant exploration potential

4 4 Leading South American E&P company Top operator of Colombian production By the end of 2009, will be the 2 nd largest producer in Colombia Only independent company in South America with track record in strategic marketing operations for full commercial flexibility The premier independent E&P company in South America (1)As per Wood Mackenzie and company disclosure (2)As per the Agencia Nacional de Hidrocarburos; listed by operator and may not include farm-out agreements and other specific block contracts Colombia Production (1) Colombia Acreage (2) Largest independent producer in Colombia 2 nd largest exploration portfolio in Colombia Legacy acreage acquired before “land rush” High-quality acreage position

5 5 Current asset base Significant existing asset base with large exploration potential Strong 2P reserves  2P reserves of 266 mmboe – June 2009  Current production of 105,000 boe/d (gross operated) and 43,000 boe/d (net of working interest and royalties) A total of 32 blocks – Approximately 13m acres  7 producing blocks in Colombia  22 exploration blocks in Colombia  3 exploration blocks in Peru Core asset: Rubiales / Piriri field (heavy oil)  Currently producing 90 mbbl/d gross, 32 mbbl/d net  Expected to reach 170 mbbl/d (gross field) end 2010 La Creciente producing field (natural gas)  Currently delivering 54 mmcf/d (gross field)  Ultimate capacity of 120 mmcf/d (gross field) 6 other producing fields (light / medium oil)  6,000 bbl/d of production (gross operated)  ~16 mmboe of 2P reserves (gross of royalties, net of working interest) Production Exploration

6 6 Rubiales field: main producing asset and the key to the Llanos Rubiales field trend continues into the surrounding Quifa / CPO 14 blocks Significant STOIIP – 4.2 bnbbls (1) –Grown from 2.7 bnbbls through technical work –Rubiales (40% WI) and Piriri (50% WI) contracts expire at the end of May 2016 –Pacific Rubiales is operator – Ecopetrol partner Conservative recovery factor –Approximately 15% in December 2008 reserve report –182 mmbbl of 2P reserves (gross of royalties, net of working interest) as at June 2009 (2) Next leg of growth through low-risk development –Over 400 development wells planned through 2014 on Rubiales Low-risk exploration from Quifa and CPO 14 –Quifa and CPO 14 are a continuation of the Rubiales geological trend –New contracts with lower royalties and a longer term (1) Management estimate (2) Petrotech Engineering

7 7 ODL pipeline: pathway to the future ODL pipeline is highly strategic –Only infrastructure in place in Southern Llanos Basin – a key heavy oil basin in Colombia –Special Purpose Vehicle – Ecopetrol (65%) / Pacific Rubiales (35%) –Indefinite term with ability to take 3 rd party oil Benefits of ODL pipeline –Allows the Rubiales field to produce to its potential 170,000 bbl/d capacity – for transport to end markets Potential to add compression for expansion to 300,000 bbl/d –Reduces transportation costs from $15/bbl to $7/bbl Timeline –Completed on time and on budget, meeting market expectations –Pipeline is 100% complete / Pumping Station 90% complete –Inaugurated on September 14, 2009 ODL pipeline is crucial to the future development of the Rubiales and Quifa fields and other exploration activity in the Llanos Basin

8 8 Significant value from STAR (1) pilot project Based on “Fire Flood” technology –Potential to increase recoveries from 10% to 40% –Potential to triple company’s reserve base Signed binding MOU with Ecopetrol –Enhanced recovery extends economic life of field beyond 2030 In-house expertise using this technology in analogous fields (Miga and Morichal in Venezuela) Initial laboratory tests in Calgary were successful (1)STAR: Synchronized Thermal Additional Recovery Signed binding MOU – potential to triple reserves at Rubiales

9 9 Significant production potential at low cost  5 wells drilled with potential to produce over 120 mmcf/d  Current production of 54 mmcf/d with plans to increase to 90 mmcf/d by early 2010  Reserves of 455 bcf based on OGIP of nearly 600 bcf (1)  US$0.10/mcf operating costs Current facilities to provide platform for growth  Pipeline / expansion / additional compression needed for expansion Take or pay contracts  Production contracted for 2 year take or pay basis  Evaluating longer term options (CNG/LNG) Substantial resource upside  Additional resource upside of over 1 tcf of OGIP (2)  8 identified prospects La Creciente: gas in place to support substantial development plan La Creciente has the ability to deliver 120 mmcf/d through enhanced infrastructure 3D Seismic Coverage Cano Limon Pipeline La Creciente Gasline 0 5 km 5 C B E Field A Field D F J G DW H Guepajé Gasline LC-A2 LC-A3 St1 LC-A4 St1 LC-A1 LC-D1 Proven Prospects Exploration Prospects (1) Petrotech Engineering (2) Mean Success Volume (company estimate)

10 10 6 other producing properties: portfolio of light/medium production 5,800 bbl/d of light / medium crude with significant upside opportunities Multiple properties with various working interests  Rio Ceibas, Puli, Moriche, Abanico, Las Quinchas and Guaduas  Current production of ~5,800 bbl/d (gross operated)  ~16 mmboe of 2P reserves (gross of royalties, net of working interest) Significant growth through drilling  Illustrated through recent success at Abanico (900 bbl/d of medium crude)

11 11 Major oil and gas prospects Significant exploration spending in 2009 / 2010 to exploit near / long-term exploration opportunities (1) Mean Success Volume (company estimate) Large identified prospect base  Over 2.8 bnbbl (1) of oil resource  1.5 tcf (1) of gas resource  Current inventory of 1,400 seismic lines Capital budget for exploration  2009 spending of US$77 million  Includes US$29 million for drilling wells and US$40 million for seismic and US$9 million for studies  13 successful explor/appr wells during 2009  2010 budget of US$191 million  Includes US$96 million for drilling wells and US$95 million on seismic  36 wells targeting 405 mmboe of mean un- risked resource  6,000 km 2D equivalent seismic Historical drilling success of 84%  22 discoveries out of 26 since 2006 13 million (net) acres of prospective blocks 96 prospects and leads

12 12 Exploration priorities for 2009 Successful drilling campaign in 2009 YTD –Abanico 20 - well successfully tested 900 bbl/d of medium grade crude in Q2 Focus on Quifa Block –Recent results at Quifa confirm Rubiales field extension and provide confidence for further drilling plans for Quifa Block –6 exploration wells drilled (successful) –Low risk / high payoff –Synergies with the Rubiales infrastructure –Additional drilling campaign at Quifa –6 appraisal and 3 exploratory wells by end of 2009 –3 exploratory wells to be drilled on prospects "A", "B" and "C" –six appraisal wells to be spudded on prospects "D", "E" and "H” –20 explor/appr wells during 2010 Other major highlights of the remaining 2009 exploration program –Reinterpretation of seismic on Arauca Block; setting up drilling activity in 2010 –Initial seismic program in Peru Multi-faceted exploration program with Quifa being the key focus for 2H 2009

13 13 Summary financial forecast (1) Substantial free cash flow generated from core business In US$ millions2009 E2010 E2011 E2012 E WTI / bbl62 70 Net Production (boe/d) (yr average )35,00068,30093,800104,000 Revenue7671,5482,4542,774 EBITDA3917931,3651,555 Net Cash Flow Operating Activities1667001,2661,293 Capex415853560483 Free Cash Flow43(139)5291,289 (1) Management estimates

14 14 Capital structure US$250 million corporate debt facility –Syndicated May 2009 –Senior secured revolving credit facility with a 4-year term –Underwritten by BNP Paribas, Calyon, Banco Davivienda, West LB and Bancolombia –Currently drawn (net of cash) US$90 million on this facility C$240 million public convertible debenture –Issued August 2008 –Coupon of 8% –Conversion price of C$13.00 Shares outstanding – fully diluted –213.6 million basic shares outstanding (before incentive for early warrant exercise, which will convert approximately 44.3 million warrants to shares) –44.3 million warrants exercisable at C$7.80 per share will represent proceeds of C$ 279 m (net after incentive and fees) –17.7 million options (exercisable at C$1.92 - C$8.46 per share) Well–capitalized with the financial capacity to exploit growth opportunities

15 15 A world class E&P company with demonstrated success Largest resource base of any independent South American producer –266 mmboe of 2P reserves (net working interest, gross of royalties) as at June 2009 –Will become 2 nd largest producer in Colombia by the end of 2009 Rubiales field is one of the largest onshore heavy oil fields in South America –4.2 billion barrels of original oil in place –504 million barrels of 3P reserves (gross field, primary recovery) –Over 200 million barrels of working interest reserves to Pacific Rubiales –Enhanced recovery to increase reserve base from current estimate in Rubiales field (10% - 40% incremental recovery) –Field capacity of 170,000 bbl/d gross production by 2010 Track record of successful execution by a highly competent management and technical team –400% increase in production over 24 months at Rubiales –La Creciente taken from discovery to 60 mmcf/d in 15 months –Drilled more exploration wells than any other independent Colombian producer in 2008 2 nd largest exploration portfolio in Colombia and top-10 position in Peru –Strong track record of exploration success (84% - 22 out of 26 since 2006) –~100 prospects and leads (3 billion barrels of oil equivalent) –Approximately 13 million net acres of exploration land Targeting 105,000 boe/d (net or working interest and royalties) and over US$1 billion EBITDA by 2012 –Over US$1.7 billion in free cash flow expected between 2010 and 2012

16 16 Thank you

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