Pacific Rubiales Reaches Production Milestone of 100,000 barrels per day;

Pacific Rubiales Reaches Production Milestone of 100,000 barrels per day; Provides Corporate Development Update 17:01 EDT Thursday, October 22, 2009

TORONTO, Oct. 22 /CNW/ - Pacific Rubiales Energy Corp. (TSX: PRE) announced today that it has reached the historical milestone of exceeding the 100,000 barrels of oil equivalent per day (boepd) of gross operated production, equivalent to 41,138.14 boepd net after royalties.

Mr. Ronald Pantin, Chief Executive Officer, commented: "This milestone is the result of the growth strategy that the company has been pursuing since the merger in January 2008 with Pacific Stratus. On the strength of our technical knowledge, our high quality assets and an ongoing focus on low-cost and rapid production growth, we were able to achieve this milestone. This success is a clear signal of our management team's ability to deliver on our objectives now and going forward, as the pre-eminent independent operating company in the Colombian basin."

The 100,000 boepd milestone is a result of the sharp growth in production of heavy oil in the Rubiales/Piriri blocks, principally as a result of the ODL pipeline now in full use, and the volumes coming out of the exploratory wells in the Quifa Block. It also incorporates the development of the light and medium oil blocks and the natural gas volume produced from La Creciente block and other smaller fields. A breakdown of production is below:

    <<     -------------------------------------------------------------------------     PRODUCT                        GROSS                NET (after royalties)     -------------------------------------------------------------------------     Heavy Oil             85,317.98 bopd                      30,518.15 bopd     -------------------------------------------------------------------------     Light/Medium Oil       5,813.00 bopd                       1,841.99 bopd     -------------------------------------------------------------------------     Natural Gas             53.95 mmscfd           52.67 mmscfd (8,778 boepd)                             (8,992 boepd)     -------------------------------------------------------------------------     Total               100,122.91 boepd                     41,138.14 boepd     -------------------------------------------------------------------------     >> 

Corporate Development Update

Management estimates that for the three months ended September 30, 2009, the company produced approximately 2,363,692 barrels (bbl) of oil and 642,141 boe of natural gas. Average daily production for the month of September 2009 was approximately 24,390 bbl/d of oil and 6,669 boe of natural gas. Average prices for the third quarter of 2009 were approximately US$64.01 per barrel of oil and US$23.89 per boe of natural gas.

Third quarter 2009 financial statements are still in the process of preparation and therefore financial statements for this period are not yet available. However, based on information reviewed to date, management estimates that net sales for the third quarter of 2009 were approximately US$156.5 million.

Construction of the ODL Pipeline

The ODL joint venture company was initially financed through capital contributions. The joint venture company has obtained bank and capital markets financing and, as a result, it is now able to distribute back to the company and to Ecopetrol a portion of the initial capital contributions. The company expects to receive US$21 million in the last quarter of 2009 and an additional US$21 million by early 2010.

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 41,000 of oil equivalent per day (after royalties), with working interests in 32 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 April 1, 2009 filed on SEDAR at www.sedar.com. 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.

DEALTALK-Canada's oil patch, mines tempt Asian giants

DEALTALK-Canada's oil patch, mines tempt Asian giants

Thomson Reuters


* More deals seen as Asian economies grow

* Squeezed Canadian balance sheets make for bid targets

* State-owned firms can take long-term view

By Jeffrey Jones and Pav Jordan

CALGARY/TORONTO, Oct 22 (Reuters) - Canada's energy and
mining sectors are riding a wave of acquisitions by Asian
companies that are flush with cash and hungry for resources to
fuel rapidly expanding economies, a trend not expected to let
up soon.

Deals such as Korea National Oil Corp's C$1.8 billion ($1.7
billion) bid for Harvest Energy Trust on Thursday
are aided by difficulties some Canadian companies have in
funding their operations because of the financial crisis.

"We've been saying that the sectors which are the most
susceptible to such M&A are the resource and energy sectors,
and I still believe this to be the case," said Alain Auclair,
head of investment banking for UBS Securities Canada.

"You still see the Asian countries with access to capital
or strong balance sheets that can deploy cash quickly to seize
opportunities.

"I think it's a trend that we're going to keep seeing,
especially for companies who might be under pressure from a
balance sheet perspective."

That is the case with debt-heavy Harvest, known for its
Western Canadian oil and gas operations and a refinery on the
East Coast, one it could not afford to expand by itself.

Last week, China's No. 2 nickel miner, Jilin Jien Nickel
Industry , and Canada's Goldbrook Ventures
offered to buy mining developer Canadian Royalties Inc
for nearly C$200 million to help feed China's appetite for
metals.

The number of such deals will only increase as China, Korea
and other Asian nations seek to own the production of resources
such as nickel or oil, instead of having to buy them on
international markets.

South Korea, for example, aims to pump 300,000 barrels of
oil a day by 2012 as it expands its manufacturing economy. It
is currently the world's fifth-largest oil importer.

In August, state-owned PetroChina paid C$1.9 billion for a
60 percent stake in two planned oil sands projects owned by
Athabasca Oil Corp. That was China's largest Canadian oil
acquisition to date.

The deal helped fuel the shares of small developers such as
Opti Canada Inc and UTS Energy Corp , as
investors wagered they might be the next to be absorbed by the
Asian wave. Both are minority partners in large projects in
Western Canada.

CASH IS KING

At a time when publicly traded businesses are struggling
under the weight of a global economic crisis, state-owned oil
companies can deploy cash for multibillion-dollar projects
without having to seek shareholder approval.

"They couldn't care less about the balance of this year, or
next year, even the year after," FirstEnergy Capital Corp
analyst William Lacey said. "They're looking at the next 10-20
years, and the internal demands and they are going to meet
those demands."

Bob Schulz, a professor of strategy and global management
at the University of Calgary's Haskayne School of Business,
said big, but not blockbuster deals will continue to be the
order of the day in Canada's oil patch.

"Big, positive and probably in C$1 billion to C$2 billion
bite-size chunks," said Schulz.

Those transactions are large enough to give new companies a
a foothold in long-term projects like oil sands developments,
but not of a scale to cause alarm in the United States,
Canada's largest energy and minerals export market, Schulz
said.

Canada has been coveted as a storehouse for natural
resources for hundreds of years, and investors in oil, gas and
minerals enjoy minimal political risk.

In energy circles, it is best known for Alberta's oil
sands, the largest deposits of crude outside the Middle East.

Developing the unconventional oil using mining or
underground steam techniques is costly, and numerous small
players have been culled to make way for major companies with
deep pockets.

Harvest is not an oil sands developer, but KNOC made a
foray into that part of the business in 2006 by acquiring an
oil sands property from Newmont Mining Corp .

Analysts say buyers will get a boost from legal changes in
Canada that force most Canadian income trusts to convert to
traditional corporations by 2011, when their favored tax status
terminates.

The changes will force many, sometimes highly leveraged,
trusts to either become corporations, merge or get squeezed
financially, making many into attractive targets.

($1=$1.05 Canadian)
(Editing by Rob Wilson)