Pacific Rubiales Energy Corp. announced the results of an independent evaluation of the Company's reserves in reports dated February 23, 2012 and effective December 31, 2011, which show that the Company's net 2P reserves grew by approximately 52 percent when compared to December 31, 2010.
José Francisco Arata, President of the Company commented: "We look at these reserves reports for 2011 as a clear demonstration of the robustness of our exploration and development portfolio, and the Company's business strategy. The 52 percent reserve growth is very strong, driven by the 83 percent exploration success rate. The Company continues to grow its reserves along with production, and the addition of reserves in new areas clearly shows that the Company is diversifying its reserve base beyond the Rubiales field."
Highlights on net after royalty ("net") reserves from the independent reserve evaluation reports include:
2011 Year-end Reserves
The following tables summarize information contained in the independent reserves reports prepared by RPS Energy Canada Ltd. ("RPS") and Petrotech Engineering Ltd. ("Petrotech") dated February 23, 2012 with an effective date of December 31, 2011. RPS evaluated the reserves of the Company in the developed Rubiales and Quifa SW fields, while Petrotech evaluated the reserves in the remaining fields and areas that have active ongoing exploration programs. These reports were prepared in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and the National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Additional reserve information as required under NI 51-101 will be included in the Company's Annual Information Form which will be filed on SEDAR by March 14, 2012.
The Company's net reserves after royalties incorporate all applicable royalties under Colombian fiscal legislation based on forecast pricing and production rates, including any additional participation interest ("PAP") related to the price of oil applicable to certain blocks. For further information concerning the PAP interest, please see the Company's Management Discussion and Analysis dated November 8, 2011.
The recovery and reserve estimates of crude oil and natural gas reserves provided in these reports are estimates only, and there is no guarantee that the estimated reserves will be recovered. Actual crude oil and natural gas reserves may eventually be greater than or less than the estimates provided. All reserves presented are based on RPS and Petrotech forecast pricing and costs effective December 31, 2011. All of the Company's reserves are in Colombia.
Discussion of Reserves
The Company's exploration capital expenditure in 2011 was approximately $266 million, adding 169.5 MMboe of net 2P reserves through the drill bit, for a finding cost of $1.57/boe. A drilling program of 69 gross (38.7 net) exploration wells (including appraisal and stratigraphic wells) resulted in 57 discoveries for an 83 percent success rate and was instrumental in increasing the Company's reserves in 2011. The Company operates approximately 99 percent of its production and on a gross 100 percent basis was responsible for adding an estimated 360 MMboe of 2P reserves to Colombia's total reserve base, and an estimated 40 percent of Colombia's production growth during the year.
In the Company's Rubiales field, net 2P reserves declined to 118 MMboe from 137 MMboe a year ago on production of approximately 20 MMboe. The Rubiales field is a mature oil field that will see plateau production in the next several years before natural declines start in 2015. The Rubiales field, which in 2008 accounted for 60 percent of the Company's 2P reserve base, now accounts for less than 30 percent of a larger base.
In the Quifa SW field, net 2P reserves grew to 65 MMbbl from 25 MMbbl a year ago, but more significantly total Proved reserves grew from 20 MMbbl to 56 MMbbl. Net production during 2011 was 6.5 MMbbl.
In the area known as Quifa Norte, the exploration activity continued and allowed the net 2P reserves to grow from 20 MMboe a year ago to 81 MMboe, an increase of over 300 percent. Early production at Quifa Norte started in late December 2011 under the exploration license and all year-end 2P reserves were classified as undeveloped. Full development will commence on obtaining development permits expected in early 2012. Both exploration and commerciality declaration, along with development activity, will continue in Quifa Norte during 2012.
On the Sabanero block, where the Company has a 49.999 percent interest, net 2P reserves grew to 15 MMbbl from zero a year ago. Similar to Quifa Norte, the operator Maurel et Prom Colombia B.V. started production on the Sabanero block in late December 2011 under both exploration and development permits and the production is expected to grow during 2012.
On the CPE-6 E&P block some 43 miles (70 kilometers) southwest of Rubiales/Quifa, net 2P reserves of 44 MMbbl were booked for the first time on this important exploration block. The Company has a working interest of 50 percent and is operator of the block. These reserves resulted from the evaluation of all the wells drilled in the northern portion of the block. As soon as the environmental permit for the block is awarded, the Company will start an exploration and appraisal drilling campaign to confirm reservoir potential and declare commerciality for the northern portion of the block. After commerciality approval by the ANH, the Company intends to advance the block to an appraisal-development phase through a drilling campaign planned in the second half of 2012. In the La Creciente natural gas producing block, net 2P reserves declined to 441 Bcfe from 452 Bcfe a year ago due to net 2011 production of 23 Bcf partly offset by technical revisions.
On other exploration and minor non-core producing blocks, net 2P reserves declined to 6.8 MMboe from 7.4 MMboe, a result of production of approximately 1 MMboe partly offset by small technical revisions.
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