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Pacific Rubiales announces preliminary independent evaluation of the progress of the Star Pilot Project in Quifa SW, demonstrating a potential doubling of the ultimate recovery factor

Thursday, September 19, 2013

  • The Quifa SW field's In-Situ Combustion Project is an unqualified success.
  • The STAR pilot project has established incremental oil mobility and recovery by thermal stimulation by in-situ combustion.
  • Once injection of gases started, water cuts ceased increasing and conversely oil cut ceased decreasing.

Pacific Rubiales Energy Corp. (TSX: PRE; BVC: PREC; BOVESPA: PREB) announced that it has received independent reports relating to the progress of its proprietary Synchronized Thermal Additional Recovery ("STAR") enhanced oil recovery pilot project in the Quifa SW heavy oil field. The reports include estimates of the Original Oil In Place ("OOIP") for the project, which combined with the accumulated production from the area since the inception of the project, allows the Company to estimate that at least a doubling of the recovery factor has been achieved from commencement of air injection in February, 2013 to date.

Ronald Pantin, Chief Executive Officer of the Company, commented:

"The estimates from the independent engineers of the OOIP and the drainage areas that will be affected by the pilot test area, the cumulative oil volumes produced to date and the sustained thermal ignition of the reservoir and successful synchronization of the producing pilot wells, have led Pacific Rubiales to estimate at least a potential doubling the recovery factor can be achieved by STAR. These results represent an important inflection point in the path to successful commercial application of STAR in one of Colombia's most important heavy oil fields.

"Based on these results, the Company is planning on converting two contiguous well clusters in the pilot test area, which are currently producing on primary flow, to STAR before the end of 2013. Additionally, the Company has initiated planning for full commercial rollout of STAR in the Quifa SW field beginning in 2014.

"We believe that the success of STAR has important implications beyond the Quifa SW field because more than 75% of Colombia's total oil production growth since 2004 has come from heavy oil, with the majority of that coming from the Company operated Rubiales and Quifa fields, producing under primary recovery flow methods only. The success of STAR also provides an important launching pad for the future of the Rubiales field, currently under evaluation."

The Quifa SW field is located just southwest of and adjacent to the Company's Rubiales field, the largest producing oil field in Colombia today. According to the year-end 2012 reserve report from the Company's external engineering firm, this field has an estimated OOIP of 1.331 Bbbl which covers a total field area of approximately 44 thousand gross acres with net pay thickness greater than 10 feet. During the first half of 2013, the field produced oil at a rate of 54.4 Mbbl/d gross total field (24.4 Mbbl/d net after royalties). The Quifa SW field is currently producing under primary recovery techniques resulting in a recovery factor ("RF") of approximately 14%. As of year-end 2012, the Company had 73.1 MMbbl of net 2P reserves at Quifa SW, representing approximately 21% of its total net 2P certified oil and liquids reserves base in Colombia. Pacific Rubiales has a 60% working interest and is operator of the field, while Ecopetrol, S.A. holds the remaining interest. The Quifa contract was signed in December of 2003 and expires in December of 2031.

The Company has received technical reports analyzing the progress of the STAR pilot project from three independent engineering firms: Hot-Tec Energy Inc. ("Hot-Tec"), RPS Energy Canada Ltd. ("RPS") and GLJ Petroleum Consultants Ltd. ("GLJ") which have provided professional opinions on the STAR Pilot project performance to date.

The drainage areas and OOIP that will be affected by the STAR Pilot project were estimated by these three firms, depending on their particular assumptions, as follows:

Given that the cumulative production from the project, as a result of primary recovery, steam and nitrogen injection and in-situ combustion, is approximately 506 Mbbl to date, it is possible to calculate that the range of RF attributable to the Project is 27.1% - 31.2%, which at least doubles the RF estimated for the rest of the field, producing under primary recovery.

The Company considers these RF results as preliminary and expects them to further increase as the production in the STAR pilot project area continues as planned for at least a few more months.

Additional highlights from each of the reports include:

Hot-Tec

RPS

GLJ