Pacific Rubiales Energy Corp. has executed, in conjunction with Ecopetrol, S.A. and on a several basis, a mandate letter with WestLB AG, New York Branch, for structuring and underwriting the financing of the construction of the "Oleoducto de los Llanos Orientales" Pipeline in Colombia.
Under the terms of the letter, WestLB will structure and underwrite up to $329 million in acquisition financing for a holding company incorporated in Panama, to be owned 35% by Pacific Rubiales and 65% by Ecopetrol, for the purpose of acquiring all of the outstanding share capital of, and any future issuances of share capital of, "Oleoducto de los Llanos Orientales S.A." (ODL), a special purpose vehicle organized specifically for the pipeline project. ODL will utilize the proceeds from the sale of its share capital to fund the construction of the proposed pipeline. The execution of this mandate paves the way for the continued development of the project, for which engineering and procurement is already well advanced.
The ODL pipeline, which will be 235 kilometers in length and 24 inches in diameter, will connect the Rubiales oil field to the Monterrey Station in the Casanare Province of Colombia and will have an initial estimated transport capacity of 170,000 barrels of oil per day. Additional financing for up to $61 million may also be provided for a separate 26 kilometer branch, to be owned by Pacific Rubiales, connecting to the Cusiana Station, also situated in the Casanare Province of Colombia.
This pipeline project is a key element of the company's master plan for the expansion of the Rubiales oil field, and should allow the company to develop the field to its maximum potential by 2010. In addition, it is anticipated that when the pipeline commences operations, it will also encourage the future development of Colombia's Llanos Basin, regarded by the Colombian government as one of the most prospective areas for heavy oil exploration in the country.
Endeavour Financial International Corporation is acting as exclusive financial advisor to Pacific Rubiales and ODL.
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