TSX: PRE BVC: PREC
WHERE TALENT AND KNOWLEDGE MEET OPPORTUNITY Investor Presentation March 2011
The past as the foundation of a further growth Largest pvt. sector oil & gas producer in Colombia Value generation through growth
MAP OF PROPERTIES Colombia Perú & Guatemala
PRODUCTION
Rubiales Field Focus on Quifa La Creciente
EXPLORATION
Major oil and gas prospects 2011 exploration drilling program
INFRASTRUCTURE & PROJECTS Securing Market Access Star – Game Changing Technology
FINANCIAL
2011 capital program & Capital structure Summary forecast Share price performance
All monetary amounts are in U.S. dollars unless otherwise stated.
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Investor Presentation, March 17th 2011
This presentation contains certain “forward-looking statements” and “forwardlooking 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 “Pacific Rubiales”, 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 August 10, 2010 Management’s Discussion and Analysis and Mar 15, 2010 Annual Information Form for Pacific Rubiales filed with the securities regulatory authorities in all provinces of Canada and available at www.sedar.com. 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 forwardlooking 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. The management estimates of resources presented herein are arithmetic sums of multiple estimates of remaining recoverable resources (unrisked), which statistical principles indicate may be misleading as to volumes that may actually be recovered. Readers should give attention to the estimates of individual classes of resources and appreciate the differing probabilities of recovery associated with each class. Estimates of remaining recoverable resources (unrisked) include prospective resources that have not been adjusted for risk based on the chance of discovery or the chance of development and contingent resources that have not been adjusted for risk based on the chance of development. It is not an estimate of volumes that may be recovered. Actual recovery is likely to be less and may be substantially less or zero.”
Content
BACKGROUND
FORWARD LOOKING STATEMENTS
2
Grow production to 500,000 boe/d
Pacific Stratus Energy founded
Petro Rubiales Energy Corp. acquires MetaPetroleum, who operates the Rubiales field.
Pacific Rubiales Energy operating as a Merger of Pacific fully integrated Stratus Energy company with & Petro Rubiales producing oil and Energy Corp. gas assets and significant Acquisition of exploration Kappa Energy. potential.
61,105boepd* 140,190 boepd
2007
220,000 boepd (Production capacity exit 2010)
STAR technology extending economic life of Rubiales field and neighboring areas Goal is to double reserves in two years Leading E&P independent in Latino America
(Exit 2009)
24,784 boepd*
2004
Pacific Rubiales Energy is listed as the 1st foreign company in the Colombian stock exchange (BVC)
Background
THE PAST AS THE FOUNDATION OF A FURTHER GROWTH
2008
2009
2010
Midterm
*Figures for 2007 and 2008 are averages for December. Figure for exit 2010.
Increase gross production to 265,000 boepd (exit 2011)
3
• 2P reserves of 316.4 mmboe1 (+51%2 from 2008) • 14 Producing blocks in Colombia • 72% crude and 28% gas
Background
LARGEST PRIVATE SECTOR OIL AND GAS PRODUCER IN COLOMBIA
• 2 New production facilities in campo Rubiales in November 2010, adding capacity for 100,000 bopd. 1 . Petrotech and RSP Scotia t 02/28/2011 2. From 208.9 mmboe 2P reserves in 2008 to February 21st 2011
Production capacity growth 2010, boepd 240.000 220.000 200.000 180.000 160.000 140.000 120.000 100.000 Ene Feb Mar
Abr May Jun
Jul
Ago Sep
Oct Nov
Dic
Significant asset portfolio with large exploration potential
4
265,000 E • 11x growth in exit production within five years • The Company produced over 25% of oil in Colombia in 2010 *
220,0001
Background
VALUE GENERATION THROUGH GROWTH
125,000
61,355 24,784
2007
2008
2009
2010
2011 E
Daily gross operated oil production: barrels of oil equivalent per day (boe/d) •Based on 864,000 boepd in Colombia •1. Production capacity
5
LOWER MAGDALENA BASIN LLANOS BASIN 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
ARAUCA LLANOS-7 CORDILLERA-24 LLANOS-55 CPE-1 ARRENDAJO CPO-1 CPO-14 CPO-12 CPE-6
LLANOS BASIN 22. PIRIRI 23. RUBIALES 24. MORICHE
UPPER & MIDDLE MAGDALENA BASIN 31. BUGANVILES 32. ABANICO 33. CHIPALO
11. 12. 13. 14. 15.
CR-1 SSJN-3 SSJN-7 GUAMA CICUCO
CAGUAN & PUTUMAYO BASIN 16. 17. 18. 19. 20. 21.
TOPOYACO CAGUAN-6 PUTUMAYO-9 TERECAY CAGUAN-5 TACACHO
Map of Properties
PROPERTIES IN COLOMBIA
UPPER & MIDDLE MAGDALENA BASIN 25. 26. 27. 28. 29. 30.
LAS QUINCHAS DINDAL RIO SECO PULI GUASIMO CAGUAN
LOWER MAGDALENA BASIN 34. LA CRECIENTE LLANOS BASIN 35. QUIFA
3 Countries; 40 Blocks (33 exploratory assets)
6
Main Producing Asset and key to the Llanos Basin Activity Significant OIIP – 4.38 bnbbl
No. Wells
(1)
• Increase from 2.7 bnbbl to 4.38 bnbbl trough technical expertise and excellence in operating practices. • Pacific Rubiales as operator, Ecopetrol as partner Conservative recovery factor
Vertical
Horizontal
Producing Well
107
259
Injector well
5
20
Total
112
279
QUIFAclusters No. of associated
Production
RUBIALES FIELD
94
• Recovery factor in the range of 10% to 20% December 2010 reserve report (2) • 172 mmbl of 2P reserves (gross of royalties, net of working interest) as at December 2010 (2) Next leg of growth through low-risk development • Over 400 development wells planned throughout 2014 in Rubiales • Rubiales CPF2 will continue supporting the production potential of Rubiales •Water disposal facilities continue to grow in order to meet production goals. (1) y(2) RPS SCOTIA Reserves Report 2010
CPO-14 Production Cluster
Injection Cluster
7
QUIFA-23X
The next Frontier
Quifa NorthQNN-9
Successful drilling In Quifa SW 8 exploration/appraisal wells and 30 development wells were drilled during 2010.
LOC-Q5 QUIFA-24XQNN-7
QNN-10 LOC-A3
LOC-F17
JASPE-3
In Quifa North, 7 successful wells on prospects “A”, “F” and “Q”, confirmed the presence of a hydrocarbon column incorporating 20.1 mmbl of net certified 2P reserves
QUIFA-26X
LOC-A6 QUIFA-6 JASPE-2
LOC-F5
PIRIRI-1
LOC-F7AMBAR-1
JASPE-1_ST2 PIRIRI-2
LOC-Q6 LOC-F18 LOC-F10 LOC-F9 LOC-F13
ZIRCON-1
LOC-F7 LOC-F3 AMBAR-3 LOC-F6 QUIFA-1
Commerciality
QUIFA-28X
Exploration
FOCUS ON QUIFA
QUIFA-4
• Approved commerciality for Quifa southwest • Target of 60,000 bbl/d by the end of 2011 (including North Quifa) • 2P gross reserve certification of 154.3 mmbl for southwest Quifa (net 63.7 mmbl net after royalties)1 Further exploration 24 exploratory/appraisal wells planed for 2011 1
Petrotech Report January 2011
Udrilled prospects Discoveries 2008-2010 Dry and partially dry prospects Possible connection D-K&L A-R
Prospects nomenclatures
Rs,n,e
Rubiales possible extension
Seismic 2005 and older Seismic 2007 Seismic 2008 3D Seismic Discoveries 2008 & 2010 Dry holes 2010-2011 Explor. & Appr. wells
Production of 35.000 bopd (March 2011)
8
Production
LA CRECIENTE
Gas in place to support substantial development Significant production potential at low cost 5 wells drilled (2006-2009) with potential to produce over 120 mmcf/d Reserves (net proved producing) 450.6 bcf @ Dec 31, 2010 in reservoirs “A” and “D”. New gas discovery in Apamate-1X well, drilled Dec´10 – Feb´11 incorporates additional 29.3 bcf net proved (undeveloped), totaling 50.2 bcf 2P @ Feb 28, 2011 US$0.30/mcf operating costs Take or pay contracts 60 mmbtu/d production contracted for 2 year take or pay basis Evaluating export options (CNG to the Caribbean markets as a substitute for liquids in electricity generation and automotive uses) Substantial resource upside 8 new prospects identified Additional resource upside of over 1 tcf of OGIP, including 178 BCF of resources associated to the Apamate (2) discovery (1) Petrotech Engineering (2) Mean Success Volume (company estimate)
Current Production of 66 mmcf/d
9
MAJOR OIL AND GAS PROSPECTS Resources/Basins
TOTAL CONSOLIDATED
1%
RESOURCES: GROSS- MSV Llanos
24%
43%
VIM
2.648 MMBOE
VMM-VSM 17%
Putumayo Peru
14%
GUATEMALA 1%
EXPECTED RESOURCES (POS * MSV) 846 MMBOE
Expected Type of Hydrocarbon CONSOLIDATED PROSPECTS 75 * Management estimates
11% 38%
51%
HEAVY L&M GAS
MSV: Mean Success Value POS: Probability of Success
10
EXPLORATION CAMPAIGN 2005 -2010 Reserves 2P - MMBOE
•
985 Km2
3D Seismic
350
•
2217 Km
2D Seismic
300
•
15.423 Km Aeromagnetogravimetric Data
250
•
1.900 Km Stress Data(SFD)
200
•
2.000 Km2 Hyperspectral Images
150
• 68 Wells
100
• 26 exploratory
50
• 30 appraisal
0
• 12 stratigraphic
2006
2007
2008
2009
2010
Total Investment: US$307 MM (net) Discovery Cost: 1.37 $/bl 56 successful wells aout of 68 drilled 80% success rate 11 11
Total Expected Resources OIL Basin
# BLOCK PROSP
GAS
NET (MMbls) P90 P50
NET
NET (Mmboe)
(BCF)
P10 Mean P90 P50 P10 Mean Mean
Llanos
10
32
342 982 3,287 1,137
VIM
5
15
9
27
76
37
VMM-VSM
3
6
7
13
24
15
-
-
-
-
15
Putumayo
6
13
85
253 1,131 462
-
-
-
-
462
Peru
3
6
157 547 1,244 637
-
-
-
-
637
GUATEMALA
1
3
-
-
-
-
37
Total Net PRE
28
75
1
9
89
37
-
-
-
- 1,137
391 1,138 4,170 1,844
360
601 1,831 5,850 2,324 391 1,138 4,170 1,844 2,648
All Volumes before royalties
Expectation = Resources * POS = 846 MMBOE
12 12
EXPLORATION CAMPAIGN 2005 -2010
350
50
300 250
40
200 30 150 20
216 wells 9.252 Km 2D Seismic 4.016 Km2 3D Seismic
Seismic Lines
100
10
50
0
0
NET MMUS$
4.000
350
3.500
300
3.000
2011 2012 2013 2014 2015
250
Net Investment (MMUS$)
60
Net Investment (MMUS$)
No. Of Wells
Drilling
Investment $1.587 MMUS$ (net)
Kms.
2.500
200
2.000
150
1.500
100
1.000
50
500
Discovery cost (projected) 2,05 US$/Bl
0
0 2011
2012
2013
2014
2015
2D 3D NET MMUS$
13 13
COLOMBIAN GEOLOGICAL BASINS VALLE INF MAGDALENA – CESAR RANCHERIA
CAGUAN - PUTUMAYO
LLANOS NORTE
LLANOS SUR
14
Focus on best balance reward/risk •Quifa. Advance environmental licensing. Infill drilling. Reserve certification. 3D seismic
•CPE-6. Migrate to E&P contract. Advance licensing. Infill drilling. 3D seismic. Reserve Certification
•CPO-1 y CPO-12. 3D seismic, Bring forward 2011 drilling. High potential
•La Creciente. Drill Apamate-1 y 2 I sem 2011. Additional potential in prospects B, G and Dw Certify reserves
•Putumayo. Advance licensing in Tacacho-Terecay. Drill Topoyaco-3 in prospect D 15
Exploration Drilling and Seismic Program for 2011 BLOQUE
QUIFA
CPE-6
CPO-1
POZO
TIPO DE POZO
AMBAR-3
S
JASPE-3
S
JASPE-2
D
ZIRCON-1
S
EXPLORATORIOS (5)
E
DELINEADORES (15)
D
Quifa N 3D (resguardos)
400 km
Quifa Desarrollo 3D
280 Km2
GUAIRURO-5
S
GUAIRURO-6
S
ESTRATIGRAFICO (8)
E
EXPLORATORIO (1)
E
DELINEADOR (11)
D
CPE6
366 km
CPO-1X
E E 300 km
ARRENDAJO
AR-1X
E
TOPOYACO
TOPOYACO-3
E
GUAMA
GUAMA-1X
E
APAMATE-1X
E
LCD-DW1
E
ARAUCA
ART-1X
E
ARP-1X
E
GUADUAS
CAPIRA-1X
E
VENCEJO-1X
E
SSJN3
GECKO-1
E
ABANICO-N-1
E
SSJN3 (suspendido
388km)
ABRIL
MAYO
JUNIO
JULIO
AGOSTO
SEPTIEMBRE
OCTUBRE
NOVIEMBRE
DICIEMBRE
2
BUGANVILES ABANICO
MARZO
2
CPO12
LA CRECIENTE
FEBRERO
2
CPO-12-1X
CPO-12
2011 ENERO
112 km
CR1
CR1
319 km
SSJJN7
SSJJN7
332 km
CPE1
CPE1
500 km
Terecay
Terecay
528 km
Peru Lote 138
Peru Lote 138
555 km
Peru Lote 135
Peru Lote 135
704 km
Guatemala
Guatemala
300 km2
Type of wells: E: Exploratorio D: Delineador S: Estratigrafico
Esperando permisos Ambientales Peru Esperando aprobacion del MEM Guatemala Adquisici贸n Sismica
2D 3D
16
BICENTENARIO PIPELINE (OBC)
Cartagena
The Oleoducto Bicentenario will be the largest of its kind in Colombia and will be developed in four phases that are expected to be finalized by December 2012.
Coveñas
Phase 2-3
The Company has committed to participate in Phases 0 and 1, acquiring the right to access approximately 40,000 bbl/day of transportation capacity by the end of 2011. Phase 0: Phase 1: Phase 2-3: Partners:
BICENTENARIO Pipeline
CAÑO LIMÓN-COVEÑAS Pipeline
ODC Pipeline
40,000 bbl/d (Banadia Uploading) Araguaney – Banadia 120,000 bbl/d (40,000 bbl/d net for PRE) Banadia-Coveñas 330,000 bbl/d (exit 2012) PRE 33% - Ecopetrol 56% - Others (6) 11%
Phase 1 GUADUAS-DORADA Pipeline
ODL PIPELINE Currently the pipeline transports 170,000 barrels per day, with a projected figure for the year 2011 of 340,000 barrels per day. Investment: Length: Diameter: Capacity: Partners:
US$560 million 235 Km 24 Inches 330.000 bpd PRE 35% - Ecopetrol 65%
OCENSA Pipeline
OAM Pipeline
Monterrey
ODL Pipeline
Infrastructure & Projects
SECURING MARKET ACCESS
Rubiales
Tumaco Tumaco TRANSANDINO Pipeline
OCENSA Acquired access to Ocensa pipeline for 160 mboe for a 10 yr period beginning Feb 1, 2010.
The OBC will offer additional transportation capacity of 40,000 bbl/d by the end of 2011
17
Synchronized Thermal Additional Recovery
Uses existing Pacific Rubiales well configuration to sweep oil into producing wells • Potential to increase recoveries from 10% to 40% Signed binding MOU with Ecopetrol • Enhanced recovery extends economic life of field beyond 2030 • Phase I completed – April 2010. Equipment for pilot project in transit to the field. STAR is a proprietary technology based on the company’s in-house experience.
Infrastructure & Projects
STAR – Game Changing Technology
H1 H2
Potential to triple company’s reserve base
V1
H4 H3
18
Revenue USD$M
Volumes sold BPE/d
$ 2.000.000
80.000 69.992
$ 1.661.544 160 %
$ 1.500.000
$ 1.000.000
$ 579.064
98 %
60.000
10 %
40.000 $ 639.201
Financials
Revenue and Volumes Sold
56 %
35.374
22.670
$ 500.000
20.000
-
$0 2008
2009
2010
2008
2009
2010
During the year 2010 both the growth in production and the increase in the oil price, coupled to trading activities, resulted in outstanding financial numbers. 19
Net Income USD $M $ 250.000
EBITDA USD $M 217.606
$ 1.000.000
$ 922.853
$ 200.000
$ 100.000
$ 800.000
Cumulative Net Income Last 3 years 168,511
$ 150.000
Financials
Indexes
$ 600.000
76.698
68% 10%
$ 50.000 $ 400.000 $-
$ 268.065 2008
2009
2010
$ (50.000) $ (100.000) $ (150.000)
$ 297.832
$ 200.000
$0 (125.793)
2008
2009
2010
Net Income went into positive territory to the order of MM$ 217
EBITDA increased 210% versus 2009.
20
Financials
Reserves 2P versus Production 2009-2010 350
13%
316,4
300
280,6
34% 250
208,9
Production 2010 21.30 Mmbpe (56.974) Mbpe/d yr/avg
200
M M150 B o100 e
Production 2009 11,95 MMbpe (43,126) Mbpe/d yr/avg
50
0 2008
2009
Reserves
Feb de 2011
Production
Reserve addition in the last year amounts to 12.8% net reserves 2P when compared to 2009 21
WTI WTI US$/bbl Net production (BOEPD) (yr average)1
(best management estimates)
2010 A
2011 E
2012 E
2013 E
2014 E
80
75
80
80
90
56,974
99,413
116,039
130,934
147,617
1,662
2,643
3,203
3,591
4,639
EBITDA
923
1,396
1,973
2,192
2,969
Net Cash Flow Operating Activities
829
1,103
1,471
1,652
2,280
CAPEX
954
1,123
882
953
1,271
Closing Cash
608
457
851
1,270
2,146
Revenues2
1
After royalties
2
Includes 2P Reserves and 3P if management believes oil production is highly probable
Financial
SUMMARY FORECAST
Substantial free cash flow generated from core business 22
Over US$1 billion capital program
US$ MM
EXPLORATION
DRILLING
PROJECTS
FACILITIES
Exploration
340
Drilling
139
STAR/SPV*
204
Facilities
438
* Equity in OBC and PetroElectrica de los llanos
CAPITAL STRUCTURE Exploration $340 MM
Production Facilities $438 MM
• Exploration across 26 blocks
• Quifa and Rubiales
• Start of operations in Peru and Colombia
• Oleoducto Bicentenario de Colombia (“OBC”)
• 20 exploratory wells1; 36 Appraisal wells2, 3 stratigraphic wells3
• Quifa expanding capacity from 60 k boepd to 100 k boepd
Financial
2011 CAPITAL PROGRAM
Other Projects $204 MM
Development Drilling $139 MM • To increase production capacity • QUIFA
• STAR • IT • Transport and port projects
• 5.390 km of 2D seismic and 440 km2 of 3D seismic planned for 2011 1
1 LC 1, 1 Guama, 1 Guaduas, 2 Arauca, 4 CPE-6, 1 CPO-1, 1 CPO-12, 5 Quifa, 1 Buganviles, 1 Abanico, 1 Topoyaco & 1 Guatemala
2
1 Guama, 16 CPE-6, 2 CPO-12, 15 quifa, 1 Buganviles & 1 Abanico
3
1 CPE-6 & 2 Quifa
23
20.000.000
40,00
18.000.000
TSX CAN$
BVC COP$1
Share Price
$ 27,94
COP$ 53,300
Market Cap
$7.57b
COP$14.54b
52 Week High
$ 35.67
COP$67,800
52 Week Low
$ 18.80
COP$36,000
As of March 17, 2011
Financial
SHARE PRICE PERFORMANCE
35,00
16.000.000 30,00 14.000.000 25,00
12.000.000
20,00
10.000.000 8.000.000
15,00
6.000.000 10,00 4.000.000 5,00
2.000.000
0,00
-
March Average Volume 2
3.86 million shares 1.
PRE Volume
2.95 million shares
C$1=COP$ 1,864, As of Jan 31, 2011 2. Daily Traded Volume
PRE Price
*The IGBC is the general index of the Colombian stock exchange.
Ranked #1 in the IGBC*with the 24.2% of participation, index for the first Quarter 2011
24
Canada Office 333 Bay Street, Suite 1100 Toronto, Canada MSH 2R2 PBX: +416 362-7735 Fax: +416 360-7783
Corporate Office Carrera 11A No. 94 - 45 Torre OXO - Piso 9 Bogotรก D.C., Colombia PBX: +57 1 756 0080 Fax: +57 1 756 0203
Colombia Technical Office Calle 95 No. 13 - 35 Bogotรก D.C., Colombia PBX: +57 1 628 3970 Fax: +57 1 256 6085