Petro Rubiales and Pacific Stratus Merger Update

Petro Rubiales Energy and Pacific Stratus Energy have completed their respective due diligence investigations. In conjunction with positive recommendations from their financial advisors, the companies have entered into a definitive arrangement agreement on the terms described in the companies' joint news release of Nov. 12, 2007.

The parties have also applied for and obtained an Interim Order of the Supreme Court of British Columbia which, among other things, authorizes and directs that a meeting of security holders of Pacific Status be convened to consider and, if thought fit, approve the arrangement.

Under the proposed arrangement, Pacific Stratus will complete an amalgamation with a newly-formed, wholly-owned subsidiary of Petro Rubiales under which Pacific Stratus shareholders will receive 8.85 shares of Petro Rubiales for every share of Pacific Stratus previously held. Warrant and option holders of Pacific Stratus will receive warrants and options of Petro Rubiales on a basis that is proportionate to the share exchange ratio.

Petro Rubiales shares and warrants will remain unchanged. A meeting of Pacific Stratus securityholders has been convened for 10:00 a.m. in Toronto on Jan. 17, 2008. An Information Circular describing the Arrangement will be mailed to its securityholders by Pacific Stratus and will be posted on SEDAR.

Approval of the arrangement requires the concurrence of 66-2/3% of Pacific Stratus shares voted at the Meeting and the further concurrence of 66- 2/3% of Pacific Stratus shares, warrants and options in the aggregate that are voted at the Meeting. The arrangement also requires a Final Order of the Supreme Court of British Columbia, which will be applied for immediately following the Meeting provided that the requisite securityholder and stock exchange approvals have been obtained.

Endeavour Financial International Corporation is acting as the exclusive financial advisor to Petro Rubiales, and GMP Securities L.P. is acting as financial advisor to Pacific Stratus. The financial advisors have each determined that the proposed Arrangement is fair from a financial point of view to the shareholders of the parties which they represent. Pacific Stratus also received an opinion from Macquarie Capital Markets Canada Ltd. that the proposed Arrangement is fair from a financial point of view to the shareholders of Pacific.


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