Pacific Rubiales announces joint venture in Peru with Maurel & Prom

TORONTO, Oct. 12, 2011 /PRNewswire/ - Pacific Rubiales Energy Corp. (TSX: PRE; BVC: PREC) is pleased to announce that it has signed a letter of intent with Les Etablissements Maurel & Prom S.A. ("M&P") pursuant to which the Company has acquired a 50% working interest in the exploration contract (the "Contract") for Block 116 (or Lote 116) located in northeastern Peru.

The block has an area of 6,600 km² covering most of what is known as the Santiago sub-basin, in the western-most area of the Maranon basin. Geologically, Lote 116 is located in the Peruvian Andean Foothills, a structurally complex and minimally explored area, that has important hydrocarbon potential in Paleozoic, Cretaceous and Tertiary rocks. The most recent oil discovery in Peru, the Situche Central-1X well by Talisman Energy, is located just 100 km to the northeast. The main Peruvian pipeline, the "Oleducto Norperuano" passes through the central part of the block.

Ronald Pantin, Chief Executive Officer, commented "This joint venture is yet another crucial step in the strategic alliance with M&P which was initiated earlier this year by the acquisition of a 49.999% interest in M&P Colombia. We look forward to strengthening this alliance and shall continue to look at opportunities to come together in South America."

The transaction is structured as a farm-in whereby the Company will assume a full carry obligation of up to US$75,000,000, which is initially intended to cover the first and second wells of the Contract. This carry obligation of US$75,000,000 is subject to the Company's right to receive a reimbursement through cash flows derived from future hydrocarbon production from the block. In addition, M&P shall have the right to recover its sunk costs from future cash flows, which have been estimated at US$7,800,000. The Company will be transferred operatorship of the block. The transaction is subject to government and regulatory approvals, as well as legal and financial due diligence to the Company's satisfaction.

Pacific Rubiales, a Canadian-based company and producer of natural gas and heavy crude oil, owns 100 percent of Meta Petroleum Corp., a Colombian oil operator which operates the Rubiales and Piriri oil fields in the Llanos Basin in association with Ecopetrol, S.A., the Colombian national oil company. The Company is focused on identifying opportunities primarily within the eastern Llanos Basin of Colombia as well as in other areas in Colombia and northern Peru. Pacific Rubiales has working interests in 45 blocks in Colombia, Peru and Guatemala.

The Company's common shares trade on the Toronto Stock Exchange and La Bolsa de Valores de Colombia under the ticker symbols PRE and PREC, respectively.

Cautionary Note Concerning Forward-Looking Statements

This press 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 or Peru; 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 11, 2011 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.

SOURCE Pacific Rubiales Energy Corp.