TORONTO, April 23, 2014 /CNW/ - Pacific Rubiales Energy Corp. (TSX: PRE)
(BVC: PREC) (BOVESPA: PREB) today provided an operational update for
its first quarter 2014 operating results, which includes estimates of
production and sales volumes, price realizations, and operating
netbacks, summarized as follows:
|
1Q 2014
(Estimated)
|
4Q 2013
(Actual)
|
3Q 2013
(Actual)
|
2Q 2013
(Actual)
|
1Q 2013
(Actual)
|
|
|
|
|
|
|
Net Oil Production (Mbbl/d)
|
137 - 138
|
123
|
117
|
117
|
117
|
Net Natural Gas Production (Mboe/d)
|
10 - 11
|
11
|
11
|
11
|
11
|
Total Net Production (Mboe/d)
|
147 - 149
|
134
|
128
|
128
|
128
|
|
|
|
|
|
|
Sales Volumes (Mboe/d)
|
151 - 153
|
143.9
|
123.7
|
127.4
|
143.7
|
|
|
|
|
|
|
Oil Price Realization ($/bbl)
|
$98 - $100
|
$95.54
|
$103.00
|
$95.84
|
$102.06
|
Natural Gas Price Realization ($/boe)
|
$31 - $33
|
$32.69
|
$36.35
|
$39.78
|
$40.26
|
Combined price realization ($/boe)
|
$92 - $94
|
$90.66
|
$97.29
|
$90.91
|
$97.14
|
|
|
|
|
|
|
Oil Operating Netback ($/bbl)
|
$62 - $64
|
$62.31
|
$65.73
|
$63.31
|
$63.34
|
Combined Operating Netback ($/boe)
|
$59 - $61
|
$59.43
|
$62.52
|
$60.54
|
$60.88
|
Note: All values in this release are in U.S.$ unless otherwise stated.
First Quarter 2014 Results
Total net production for the quarter is expected to be in the range of
147 to 149 Mboe/d, an increase of approximately 16% from the same
period a year ago. Total production was impacted by lower volumes
produced in the Rubiales Field as a result of two factors:
|
|
1)
|
Restrictions in surface water disposal due to the ongoing drought in
Colombia; and
|
2)
|
Lower than expected capital expenditures on water treatment facilities
pending ongoing negotiations with Ecopetrol S.A.
("Ecopetrol") related to the division of capital investment in advance of the 2016
contract expiry.
|
|
|
The lower production at the Rubiales Field was offset by the
contribution of volumes from the acquired Petrominerales Ltd. assets
which produced in line with production reported in the fourth quarter
2013 (approximately 24 to 25 Mbbl/d net). The Company expects its total
production to increase throughout the year and is on track to achieve
its 2014 guidance of average net production of approximately 148 to 162
Mboe/d, an increase of between 15 to 25% over 2013 production levels.
The Company reports its sales volumes made up of produced volumes, plus
purchased diluent volumes (mixed with its heavy oil production to form
a sales blend), plus oil for trading ("OFT") volumes, plus/minus sales inventory adjustments. Sales volumes can
vary significantly from quarter to quarter as a consequence of
fluctuating diluent and OFT volumes, and significant swings in oil
inventories which are related to the timing of export cargo liftings.
Sales volumes in the first quarter are expected to be in the range of
151 to 153 Mboe/d and do not include approximately 450 Mbbl (5 Mbbl/d)
of oil from prior period accumulated PAP volumes. As previously
announced, these volumes relate to the agreement the Company reached
with Ecopetrol to begin delivery 'in kind' of prior period PAP volumes
associated with the Quifa SW arbitration decision announced last year.
As of the end of the first quarter 2014, the Company has delivered in
full all of the outstanding PAP volumes to Ecopetrol.
The OFT volumes in the first quarter are expected to be in the range of
10 to 11 Mbbl/d (3.4 Mbbl/d in the fourth quarter 2013). The OFT
business is opportunistic in nature and therefore volumes can vary
significantly from quarter to quarter. Diluent volumes in the first
quarter are expected to be similar to the prior quarter (2.3 Mbbl/d in
the fourth quarter 2013).
The Company expects oil price realization in the first quarter to be in
the range of $98 to $100/bbl, approximately 3% higher than the prior
quarter reflecting the increase of WTI from $96.42/bbl in the fourth
quarter 2013 to $97.90/bbl in the first quarter 2014. Most of the
Company's oil production in Colombia and Peru is exported at prices
linked to international oil prices. Combined realized prices are
expected to be in the range of $92 and $94/boe.
Due to factors outside of the Company's control, total operating costs
increased during the quarter driven by the following:
|
|
1)
|
Production costs - increased by approximately $1.50 to $2.50/bbl
reflecting lower oil volumes produced at the Rubiales Field.
|
2)
|
Transportation costs - increased by approximately $2.00 to $2.50/bbl as
a result of the use of additional trucking and alternate pipeline
transportation costs following terrorist attacks on the Bicentenario
pipeline.
|
3)
|
Bicentenario pipeline tariffs paid during force majeure - the terrorist
attacks on the Bicentenario pipeline resulted in the loss of
approximately 47 Mbbl/d of the Company's pipeline transportation
capacity beginning in mid February. The tariffs paid during force
majeure are expected to cost an additional $2.00 to $2.50/bbl.
|
|
|
The increase in operating costs was mitigated by the 3% increase in
realized prices and as a result the Company's combined operating
netbacks for the quarter remained in-line with the prior quarter, with
margins exceeding 60%. Additionally, the Company did not experience any
disruption in production despite the pipeline attacks, highlighting the
flexibility of its business model and multiple alternative
transportation options available.
The Company calculates its operating netback for both revenues and costs
based on total sales volumes, rather than produced volumes. Total
operating costs are reported as a combination of: production,
transportation, and diluent costs, plus other costs and
overlift/underlift costs. The latter two (other costs and
overlift/underlift) largely relate to movements in storage and cargo
lifting inventory and can consequently significantly impact total costs
either positively or negatively, in any given quarter.
Pacific Rubiales, a Canadian company and producer of natural gas and
crude oil, owns 100% of Meta Petroleum Corp., which operates the
Rubiales, Piriri and Quifa heavy oil fields in the Llanos Basin, and
100% of Pacific Stratus Energy Colombia Corp., which operates the La
Creciente natural gas field in the northwestern area of Colombia.
Pacific Rubiales has also acquired 100% of Petrominerales Ltd, which
owns light and heavy oil assets in Colombia and oil and gas assets in
Peru, 100% of PetroMagdalena Energy Corp., which owns light oil assets
in Colombia, and 100% of C&C Energia Ltd., which owns light oil assets
in the Llanos Basin. In addition, the Company has a diversified
portfolio of assets beyond Colombia, which includes producing and
exploration assets in Peru, Guatemala, Brazil, Guyana and Papua New
Guinea.
The Company's common shares trade on the Toronto Stock Exchange and La
Bolsa de Valores de Colombia and as Brazilian Depositary Receipts on
Brazil's Bolsa de Valores Mercadorias e Futuros under the ticker
symbols PRE, PREC, and PREB, respectively.
Advisories
Cautionary Note Concerning Forward-Looking Statements
This news 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, Guatemala, Peru, Brazil, Papua New
Guinea and Guyana; 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 March 13, 2014 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.
Boe Conversion
Boe may be misleading, particularly if used in isolation. A boe
conversion ratio of 5.7 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 estimated values
disclosed in this news release do not represent fair market value. The
estimates of reserves and future net revenue for individual properties
may not reflect the same confidence level as estimates of reserves and
future net revenue for all properties, due to the effects of
aggregation.
Definitions
Bcf
|
Billion cubic feet.
|
Bcfe
|
Billion cubic feet of natural gas equivalent.
|
bbl
|
Barrel of oil.
|
bbl/d
|
Barrel of oil per day.
|
boe
|
Barrel of oil equivalent. Boe's may be misleading, particularly if used
in isolation. The Colombian standard is a boe conversion ratio of 5.7
Mcf:1 bbl and is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.
|
boe/d
|
Barrel of oil equivalent per day.
|
Mbbl
|
Thousand barrels.
|
Mboe
|
Thousand barrels of oil equivalent.
|
MMbbl
|
Million barrels.
|
MMboe
|
Million barrels of oil equivalent.
|
Mcf
|
Thousand cubic feet.
|
WTI
|
West Texas Intermediate Crude Oil.
|
Translation
This news release was prepared in the English language and subsequently
translated into Spanish and Portuguese. In the case of any differences
between the English version and its translated counterparts, the
English document should be treated as the governing version.
SOURCE Pacific Rubiales Energy Corp.
PDF available at: http://stream1.newswire.ca/media/2014/04/23/20140423_C4702_DOC_EN_39522.pdf