Pacific Exploration & Production, formerly known as Pacific Rubiales, also announced today the formation of an independent committee of the board of directors to assist the full board of directors in analyzing strategic alternatives to its capital structure in this low oil price environment. The Canadian petroleum company announced today in a statement that “The company and its board of directors are committed to working with all of the company’s stakeholders, including its contracting parties in Colombia and abroad, to ensure the long-term viability of the company and the preservation of value.” The company is being advised by Lazard Frères & Co. LLC.

Pacific Exploration announced on December 28 of last year that it obtained certain waivers with respect to the: $1 billion USD revolving credit and guaranty agreement with a syndicate of lenders and Bank of America as administrative agent; the $250 million credit and guaranty agreement with HSBC Bank USA, as agent; the $109 million credit and guaranty agreement with Bank of America as lender; and the $75 million master credit agreement with Banco Latino Americano de Comercio Exterior (Bladex) as lender.

The waivers obtained by Pacific Exploration provide relief in respect of the covenant that requires its consolidated net worth to be above U.S.$1 billion and in respect of the company’s consolidated leverage ratio of 4:50:1:00, which reflects the permitted gross debt-to-trailing twelve month adjusted EBITDA. The waivers are set to expire on February 26, 2016 and are subject to the satisfaction of certain terms and conditions, including a condition that the company and the requisite threshold of the company’s lenders reaching an agreement on or before January 21, 2016 with respect to a covenant providing for the minimum amount of unrestricted cash to be retained by the company throughout the waiver period. The previous extension of the liquidity deadline was granted on January 14, 2016 through to January 21, 2016.

Pacific Exploration is involved in exploration and production of natural gas and crude oil, with operations focused in Latin America. The company has a portfolio of assets with interests in more than 85 exploration and production blocks in seven countries including Colombia, Peru, Guatemala, Brasil, Guyana, Papua New Guinea, Mexico and Belize.

Last Friday, January 15, Fitch Ratings (click here for details) has downgraded Pacific Exploration’s Long Term Issuer Default Rating and Local Currency Long Term issuer Default Rating to “C.”

Specifically, according to Pacific Exploration the following interest payments will not be paid on the scheduled payment dates: $31.3 million USD in the aggregate in respect of the 5.625% notes scheduled to be paid on January 19, 2016; and $34.9 million USD in the aggregate in respect of the 5.375% notes scheduled to be paid the end of next week, on January 26, 2016. The company has elected to use the grace period to assess strategic alternatives with respect to its capital structure.

Pacific Exploration announced its intention to utilize a 30 day grace period permitted under the indentures governing its 5.625% notes due in 2025 and its 5.375% notes due in 2019 to assess strategic alternatives and an extension to the minimum liquidity deadline under the waivers.

Pacific Exploration’s current liquidity position is being routed by the continued low international oil prices. The company says that it will use the grace period to engage with its creditors (including its lenders and holders of each series of the company’s notes) with a view to making its capital structure more suitable to current market conditions. The company states that it remains and intends to remain current with its suppliers, trade partners and contractors, as normal operations continue in Colombia and the other jurisdictions within which the company operates.

Pacific Exploration also goes on to state that the failure to make the January interest payments on the scheduled dates does not constitute an event of default under the indentures that govern the notes. In each case, the company has a 30 day period from the scheduled payment dates to cure the failure to make such payments and the company reserves the right to make the January interest payments prior to the expiry of each grace period.

As previously announced on December 28, 2015, the Pacific Exploration obtained certain waivers with respect to the: $1 billion USD revolving credit and guaranty agreement with a syndicate of lenders, and Bank of America as the administrative agent, a $250 million USD credit and guaranty agreement with HSBC Bank USA, as agent, a $109 million USD credit and guaranty agreement with Bank of America as lender, and a $75 million USD master credit agreement with Banco Latino Americano de Comercio Exterior as lender.

Pacific Exploration is being advised by Lazard Frères & Co. LLC.

The waivers obtained by the company provide relief in respect of the covenant that requires its consolidated net worth to be above $1 billion USD and with respect to the company’s consolidated leverage ratio of 4:50:1:00, which reflects the permitted gross debt-to-trailing twelve month adjusted EBITDA. The waivers are set to expire on February 26, 2016 and are subject to the satisfaction of certain terms and conditions, including a condition that the company and the requisite threshold of the company’s lenders reaching an agreement on or before January 14, 2016 with respect to a covenant providing for the minimum amount of unrestricted cash to be retained by the company throughout the waiver period.

Pacific Exploration also announced last Thursday that the company and its lenders have agreed to extend the liquidity deadline to this Thursday, January 21, 2016, or such later date as the company and its lenders shall agree.

Pacific Exploration is a Canadian public company involved in exploration and production of natural gas and crude oil, with operations focused in Latin America. The Company has a portfolio of assets with interests in more than 85 exploration and production blocks in seven countries including Colombia, Peru, Guatemala, Brasil, Guyana, Papua New Guinea, Mexico and Belize.

The waivers were obtained with respect to the: US $1 billion revolving credit and guaranty agreement with a syndicate of lenders and Bank of America as the administrative agent, a US $250 million credit and guaranty agreement with HSBC Bank as agent, a US.$109 million credit and guaranty agreement with Bank of America as lender, and a $75 million USD master credit agreement with Banco Latino Americano de Comercio Exterior, as lender.

Fitch Ratings has downgraded Pacific’s foreign and local Long-term Issuer Default Ratings (IDRs) to ‘CCC’from ‘B-‘. Fitch has also downgraded to ‘CCC/RR4’ from ‘ B-/RR4’ the long-term rating on Pacific’soutstanding senior unsecured debt issuances totalling approximately USD $4 billion with final maturities in 2019 through and 2025. The ratings were previously on Rating Watch Negative.The downgrade reflects Fitch’s expectations that the company’s capital structure could weaken to

The downgrade reflects Fitch’s expectations that the company’s capital structure could weaken to an unsustainable level over the near term as a result of slower oil price recovery expectations. The rating action also incorporates the company’s delay in the sale of assets to bolster liquidity as well as delays in reaching an agreement with the company’s syndicate of lenders under its USD $1 billion revolving credit facility and other bank loans.

Pacific Rubiales is a Canadian public company involved in exploration and production of natural gas and crude oil, with operations focused in Latin America. The Company has a portfolio of assets with interests in more than 85 exploration and production blocks in seven countries including Colombia, Peru, Guatemala, Brasil, Guyana, Papua New Guinea, Mexico and Belize.

The waivers have been granted for a period of 61 days and will expire on February 26, 2016, subject to the satisfaction of certain terms and conditions, including the company and the steering committee reaching an agreement on or before next Wednesday, January 14, 2016 with respect to a covenant providing for the minimum amount of unrestricted cash to be retained by the company throughout the waiver period. As consideration for entering into the waivers, the company has also agreed to certain restrictions on non-ordinary course transactions and agreed to work with the lenders and their financial and legal advisors during the waiver period.

According to Fitch Ratings, Pacific credit metrics have been materially affected by the sharp decline in oil prices, as well as the company’s debt increase during 2015. Total and net debt/EBITDA for the latest 12 months ended September 2015 have increased to 4.3x and 3.9x, from 1.9x and 1.8x, as of year-end 2014. This was mostly due to due to the decline in global oil prices as well as Pacific’s debt increase of more than USD $600 million during first-half 2015. On the positive side, Pacific reported zero short-term debt as of September 2015.

The Company asset base is currently allocated across seven countries, including Colombia, Peru, Guatemala, Brazil, Guyana, Papua New Guinea and Belize. The opening up of the Mexican energy sector to foreign investment provides a very large opportunity that the company states is aligned with its core expertise in light and heavy oil exploration and development, as the leading independent Latin American focused E&P company.

“This name change represents a significant milestone for the Company, reflecting that we have in fact replaced production from the Rubiales Field. Total net production after royalties has grown from well under 100,000 boe/d to current levels of just over 150,000 boe/d, despite a 14% decline in production from the Rubiales Field in 2014. We have more than replaced the Rubiales production from a combination of other heavy oil production in Colombia, light and medium oil production in Colombia and Peru, and natural gas production in Colombia. A large portfolio of undeveloped reserves plus resources underpin further potential production growth beyond 2016,” said CEO Ronald Pantin.

The new name is effective immediately, and will be implemented throughout the rest of 2015. The company’s new website is www.pacific.energy

The company has made an application to the Toronto Stock Exchange for its approval of the name change and has received conditional approval subject to the submission of the required final documentation. Common shares will continue to trade on the Toronto Stock Exchange and La Bolsa de Valores de Colombia under the ticker symbols PRE, and PREC, respectively.

The Special Meeting of Shareholders scheduled for July 28, 2015, which had been called in order for Shareholders to consider the Arrangement has been cancelled.

The senior note consent solicitations previously announced on Thursday, June 4, 2015 and the amendments to the Company’s senior credit agreements announced on Thursday, June 11, 2015 will  not become effective as they were conditional on closing of the Arrangement.

The Company will continue with its plans to reduce operating costs, divest non-core assets, reduce debt, and continue to pursue Mexico energy opportunities with ALFA, even though the merger failed. Alfa wanted to pursue the recently liberalized Mexican petroleum market, and saw Pacific Rubiales as an appropriate vehicle to do so. The two will continue to work together..

This is a reprint of a statement issued by ALFA and Harbour Energy on their tender for Colombia-focused petroleum company Pacific Rubiales. It is printed here in its entirety as a service to our readers.

• The ALFA and Harbour Energy offer for Pacific Rubiales was agreed to following an in-depth technical, operational and financial review of the Company over a period of several months and involving over 100 technical and financial experts
• Our offer of CAD$6.50 is full, fair and final
  • The offer represents  an 81% premium to shareholders as compared to the 30 day volume weighted average price prior to the announcement date
  • The offer is a 70% premium to the Bloomberg Analyst Consensus price target of CAD$3.82 at the time of the transaction announcement
  • The Pacific Rubiales board of directors unanimously recommends the offer to the shareholders
  • Fairness opinions by three reputable financial institutions  conclude the offer is fair to shareholders, other than ALFA, from a financial point of view
  • The offer is at the high end of the CAD$3.13 to $7.00 valuation from an independent valuator engaged by the Independent Committee
  • The valuation is unanimously supported by the 14 research analysts with current research reports on the Company
• ALFA and Harbour Energy have already received overwhelming approval from debtholders holding over$5 billion of debt, indicating their support for the transaction
• ALFA and Harbour Energy are disappointed with the ISS recommendation for shareholders to vote against our proposed transaction and disagree with the conclusions presented in their report
• No credible counteroffer, including from the O’Hara Group, has emerged even after the ALFA/Harbour Energy transaction was publically disclosed without deal protection on May 5, 2015 
• As a shareholder, ALFA is seriously concerned there is no credible alternative to this transaction and will be forced to seek alternative JV partners for Mexico if the transaction is not completed
• ALFA and Harbour Energy reiterate that the offer is full, fair and final

ALFA and Harbour Energy have an agreement with Pacific Rubiales whereby Harbour Energy and ALFA will acquire all of the issued and outstanding common shares of Pacific Rubiales not already owned by ALFA (or held by the Company in treasury) for CAD$6.50 per share in cash by way of a Plan of Arrangement under theBusiness Corporations Act (British Columbia) (the “Arrangement”). This agreement contains customary terms and conditions, including customary “deal protections”, that were negotiated as part of the overall purchase price that ALFA and Harbour Energy agreed to pay.  The Arrangement is scheduled to be considered by Pacific Rubiales shareholders at a special meeting to be held on July 7, 2015.

Certain shareholders calling themselves the “O’Hara Group” and led by Alejandro Betancourt López, the Chief Executive Officer of Derwick Associates, a Venezuelan company, have publicly indicated opposition to the Arrangement.  In addition, Institutional Shareholder Services Inc. (“ISS”) recently recommended that shareholders vote against the proposal.  ALFA and Harbour Energy are disappointed by the negative recommendation by ISS and disagree with its analysis.  We believe it is important to explain our viewpoint on the assertions of the O’Hara Group and conclusions of ISS.

We believe that the Board of Pacific Rubiales conducted an appropriate process.

ALFA and Harbour Energy requested an exclusive negotiating period with the Company in February 2015, but were not granted exclusivity until May 5, 2015.  Until that point and at any point before the definitive agreement was signed on May 20, 2015, any interested bidder could have made an offer for the Company without triggering any termination fee.  ALFA/Harbour Energy were only granted exclusivity after agreeing to a 30% increase to our proposed offer price and the removal of other proposed conditions.  The offer was then subject to review by the Independent Committee of the Board of Directors of Pacific Rubiales.

In fact, Pacific Rubiales had been “in play” for months before our transaction was announced, starting no later than October 2014 when there was first public speculation that ALFA would make a bid for the Company.  Furthermore, there were no deal protection provisions in place during the period between May 5, 2015, when the offer price of CAD$6.50 was publicly announced, and May 20, 2015, the date on which the Arrangement Agreement was entered into between ALFA/Harbour Energy and Pacific Rubiales. Despite this, the Company has disclosed that it received no third party proposals prior to entering into the agreement with ALFA/Harbour Energy.  The O’Hara Group were shareholders in the Company at that time and yet did not themselves come forward with an alternative proposal or even discuss with Pacific Rubiales the possibility of an alternative transaction. 

All of this contradicts assertions made by the O’Hara Group in their press releases and dissent circular that the “termination fee has been a major impediment to the O’Hara Group and others proposing an alternative transaction.” It also goes against ISS’s suggestions that other parties were not afforded the opportunity to make an offer for the Company.  ALFA and Harbour Energy strongly disagree with ISS’s assertion that there was an insufficient market check during the sale process of Pacific Rubiales or that the termination fee pursuant to the Arrangement (which equates to only CAD$0.37/share) has impeded other potential offers from coming forward.

The CAD$6.50 per share offer price is full, fair and final.

The CAD$6.50 per common share purchase price agreed to by ALFA and Harbour Energy has been unanimously approved by the Board of Directors of Pacific Rubiales, represents a very substantial premium to the unaffected share price of Pacific Rubiales, was determined to be fair to shareholders from a financial point of view by three reputable financial advisors retained by Pacific Rubiales, and is at the high end of theCAD$3.13 to CAD$7.00 per share valuation range reached by GMP Securities L.P., a financial advisor to the Independent Committee of the Board of Pacific Rubiales. ALFA and Harbour Energy believe the offer to be full and fair and therefore do not intend to increase the consideration offered under the Arrangement.

Our price of CAD$6.50 per share is the result of months of technical, operational, financial, tax and legal due diligence conducted by ALFA and Harbour Energy’s more than 100 internal and external experts.  Our view of the value of Pacific Rubiales reflects a thorough analysis of the Company’s production rates and operating costs as well as our own views (supported by technical experts) on reserves, the viability of certain oil field development programs, available cash flow in the current oil price environment and expert expectations for oil prices over the coming several years. 

The O’Hara Group and ISS have both made reference to a statement by the Company’s management in March 2015 that suggested a Company value of CAD$9.22 per share.  This statement was a management estimate, largely based upon 2014 year-end estimates of reserves and oil price forecasts. Oil price forecasts are now significantly lower. The lower oil price not only affects the revenue per barrel of oil the Company will produce but also the number of barrels to be produced as we believe that many planned drilling and development projects are not viable in the current circumstances.  Furthermore, as the Company already has a very high level of debt, it is unlikely to be in a position to borrow money to fund future projects or acquisitions to replace declining production.

The most relevant metric for oil and gas upstream transactions that the O’Hara Group never discusses is the implied dollar paid per “proved plus probable barrel of oil equivalent reserves” (adjusted, as necessary, for non-upstream assets).  We are offering approximately $12 per barrel of oil equivalent, which is a 16% premium to such amount in Repsol’s recent acquisition of Talisman Energy Inc.  This is despite the fact that 65% of Talisman’s operations are in lower risk operating environments in OECD countries, and despite the fact that nearly half of the Company’s reserves are lower-margin heavy oil barrels.  Despite the O’Hara Group’s claim that the deal compares favorably only to micro-cap Colombian transactions, the 16% premium to the Talisman transaction clearly indicates the value offered is more than fair.  In addition, the consensus equity analyst 12-months price target at the time of the transaction announcement (based on recently updated research reports as reported by Bloomberg) was CAD$3.82; our offer represents a 70% premium to this consensus view.

As is well known by all stakeholders in the Company, Pacific Rubiales’ current level of production is expected to fall by approximately 35% with the expiration of the Rubiales Field concession in June 2016.  While the Company has substantial reserves, a large portion is undeveloped heavy oil that requires a significant amount of capital to convert into revenue-generating production. Similarly, converting exploration assets into reserves and production is extremely risky by its nature and also capital intensive.  Furthermore, while the opportunities in Mexico are of great interest, the Company must compete against other bidders to secure these, and will require additional capital to invest in converting any successfully acquired opportunities into production.  Given the Company’s high level of debt, the outlook for oil prices and the upcoming loss of 35% of its existing production, our view is the Company will be extremely challenged in its current state to have sufficient funds to pursue these investment opportunities.

ALFA/Harbour Energy recognize this funding challenge and put forward a plan to address it as part of our acquisition proposal which includes a condition requiring the Company’s bondholders and lenders to waive any change of control clauses and revise their debt covenant restrictions.  The bondholders and banks have, in fact, already agreed to these terms which, if the transaction is consummated, will provide the Company with an improved opportunity to invest in necessary development opportunities.  On the other hand, the O’Hara Group has not put forward a proposal to address the Company’s liquidity and ability to fund growth. If they do come forward with an alternative proposal, we are skeptical that the O’Hara Group could secure similar consents from the Company’s bondholders and lenders, due to reasons outlined below.

The O’Hara Group refers to our offer as “opportunistic” and the ISS report points to a “recent partial rebound in oil prices” as a basis for its recommendation for shareholders to vote against our proposal.  In reality, spot oil prices have declined approximately 5% and, more importantly one-to-three-year average forward prices are down approximately 4% to 6% since the announcement of the transaction.

The ISS recommendation puts it at odds with many large Pacific Rubiales shareholders who tell the Company they support our all-cash offer and the immediate certainty it provides. It also puts ISS at odds with the views of the equity research community which has strongly endorsed the proposed transaction.  In fact, all 14 equity research analysts that published updated reports since June 20 have price targets equal to or lower than our offer.

The 81% premium implied by our offer is measured relative to the 30-day volume weighted average price prior the announcement of exclusive discussions between the Company and ALFA/Harbour Energy on May 5, 2015(when the price of CAD$6.50 was publicly acknowledged).  The implied premium is even higher, in fact in excess of 100%, if we were to eliminate the estimated impact of renewed takeover speculation between mid-April and the early-May announcement when the trading volume in the Company’s shares was nearly 60% higher than average.

The O’Hara Group has not provided a credible alternative transaction or plan.

The “O’Hara Group” is led by Alejandro Betancourt López, the Chief Executive Officer of Derwick Associates, a Venezuelan engineering, procurement and construction company.  While the O’Hara Group has raised a number of questions about the Company and the proposed transaction, it has avoided answering important questions about its own business dealings, intentions with respect to Pacific Rubiales, its experience in the oil and gas industry and corporate governance track record, its sources of funds, and the manner in which it acquired its shares in the Company.

Significant questions have also been raised in the media and in civil lawsuits about the backgrounds of Betancourt and Derwick Associates, including reports from respected publications such as the Wall Street Journal. Furthermore, we agree with Pacific Rubiales’ allegation that the O’Hara Group breached Canadian securities laws when accumulating its shareholdings of Pacific Rubiales and support the application recently made by the Company with the Supreme Court of British Colombia.  The O’Hara Group did not disclose that Mr. Betancourt was the beneficial owner of its interest in Pacific Rubiales, in apparent contravention of Canadian securities laws, until after it had purchased 19.82% of Pacific Rubiales.

Neither the O’Hara Group nor Mr. Betancourt has any significant public track record of managing oil and gas assets, let alone a large multinational oil and gas company such as Pacific Rubiales.  On the other hand, ALFA and Harbour Energy are well situated to enhance the value of the Company by supporting the Company’s leadership and expansion into new markets such as Mexico.  ALFA is one of the largest and most successful corporate entities in Mexico. Harbour Energy is managed by EIG, a globally recognized firm that specializes in private investments in energy and energy-related infrastructure, and is led by a long-time Royal Dutch Shell senior executive, Linda Z. Cook.

Summary Conclusions

“The O’Hara Group only became shareholders of the Company in the days and weeks before our offer became public and have no known track record of managing or investing in oil and gas companies,” said  Linda Z. Cook, Chief Executive Officer of Harbour Energy.  “The vehemence with which they insist our 81% premium offer undervalues the Company is curious given that the recent view of industry expert research analysts is that the offer is fair.  The O’Hara Group have offered no competing offer to our proposal nor any credible plan to address the Company’s leverage or future capital requirements to replace the impending loss of oil production from the Rubiales Field.  Basing their value argument on the past share price of Pacific Rubiales when oil prices had been over or around $100 per barrel for three years and when there was speculation of a takeover does not compare to the field by field technical analysis that ALFA and Harbour Energy have undertaken over the past several months.  Our in-house and external technical staffs have thoroughly vetted the current assets and future prospects of the Company.  As such, our offer of CAD$6.50 per share and its 81% premium is both fair and final.”

Alvaro Fernandez, the President of ALFA, stated that: “There are a number of attractive energy opportunities inMexico, and ALFA intends to pursue them. We have been approached by numerous other parties to partner in the Mexican energy industry.  If our proposed transaction with Pacific Rubiales at CAD$6.50 per share is rejected by its shareholders, we will have no choice but to pursue opportunities in Mexico with other partners.  We will also thoroughly analyze our options with respect to our investment in Pacific Rubiales, including the divestment of our current stake in the Company in the event a consideration higher than ours is offered by an alternative offeror.”

UPDATE: Toronto, Canada, Friday, May 8, 2015 –Pacific Rubiales Energy Corp. today confirmed that its first quarter 2015 results will be released before market open on Thursday, May 14, 2015 as planned. However, the Company will not be holding a quarterly results conference call and webcast for investors and analysts. The Company’s Corporate Presentation will be posted on the Company’s website after release of the First Quarter 2015 results. 

Together, ALFA and Harbour Energy have already completed technical, financial and legal due diligence. ALFA and Harbour Energy have agreed with the company to work toward completion of definitive documentation expeditiously. The contemplated transaction would be subject to a number of conditions and there remains a possbility that in the end, no transaction will be completed.

Mexican conglomerate ALFA currently holds 59,897,800 common shares of Pacific Rubiales, representing almost 19% of the outstanding common shares of Pacific Rubiales. Among the companies ALFA owns are the largest independent producer of aluminum engine components for the automotive industry in the world, and one of the world’s largest producers of polyester. In addition, it leads the Mexican market in petrochemicals such as polypropylene, expandable polystyrene and caprolactam. ALFA is the leading maker of cold cuts in North America and Europe, and of cheese in Mexico, as well as in information technologies and communication services for the business segment in Mexico. ALFA has participated in the hydrocarbon industry in the U.S. since 2006.

In 2014, ALFA’s consolidated revenue was over $17 billion, and EBITDA was approximately $2 billion. ALFA’s shares are quoted on the Mexican Stock Exchange and on Latibex, the market for Latin American shares of the Madrid Stock Exchange.

Harbour Energy is a joint venture formed byWashington, DC based private equity group EIG Global Energy Partners and the Noble Group, headquartered in Hong Kong, to own and operate a portfolio of high-quality upstream and midstream energy assets around the world. EIG makes private investments in energy and energy infrastructure around the world, and had $14.2 billion under management as of December 31, 2014. During its 33-year history, EIG has invested over $16.4 billion in the sector through more than 290 projects or companies in 34 countries on six continents. Ranked #76 in the 201 Fortune Global 500, Noble manages a portfolio of global supply chains covering a range of energy and other commodity products from over 140 locations and employing more than 70 nationalities.

Headline rendering: LNG Floating Storage Unit (CNW Group/Pacific Rubiales Energy Corp.) courtesy Pacific Rubiales

Pacific Rubiales also announced the appointment of Mr. Frederick Kozak, P.Eng., MBA as Corporate Vice President, Investor Relations. Mr. Kozak is a Professional Engineer with over 30 yearsin both oil and gas operating companies and the financial industry. He is well known as an analyst on public companies operating in Colombia, having written extensively on the country from 2008-2013. He holds a Bachelor of Applied Science in Geological Engineering from the University of British Columbia and a Master of Business Administration from the Ivey School of Business at the University of Western Ontario. He is a member of the Association of Professional Engineers and Geoscientists of Alberta.

Analysts and interested investors are invited to participate in the conference call using the following dial-in numbers:

Webcast: https://www.pacificrubiales.com.co/investor-relations/webcast.html

A replay of the conference call will be available until 23:59 pm (Toronto time), Thursday, May 28, 2015 and can be accessed using the following dial-in numbers:

The Company’s decision to delist is based on low trading volumes of its BDRs on the BOVESPA compared to its Common Shares. As a result, the Company has determined that sustaining the administrative and regulatory compliance costs associated with the listing on the BOVESPA are no longer justifiable.

Further information on the Delisting may be obtained by contacting Marcelo Nastromagario at Corrêa Meyer e Nastromagario Advogados, Rua Fradique Coutinho, 1271, 05416-011 Sao Paulo – SP – Brazil (telephone 55 11 3011-0700).

Pacific Rubiales is a Canadian public company and explorer and producer of natural gas and crude oil, with operations focused in Latin America. The Company has interests in over 90 exploration and production blocks in seven countries including Colombia, Peru, Guatemala, Brazil,Guyana, Papua New Guinea and Belize. The Company’s common shares trade on the Toronto Stock Exchange and La Bolsa de Valores de Colombiaunder the ticker symbols PRE, and PREC, respectively.