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Ecopetrol and Pacific Rubiales announce decision concerning the Quifa SW STAR pilot project

TORONTO, July 24, 2014 /PRNewswire/ - Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC; TSX: ECP) ("Ecopetrol") and Pacific Rubiales Energy Corp. (TSX: PRE; BVC: PREC; BOVESPA: PREB) ("Pacific Rubiales") announced at a meeting yesterday of Ecopetrol's board of directors in which the Synchronized Thermal Additional Recovery ("STAR") pilot project being developed in an area of the Quifa SW field was considered;  and based on the technical analysis of the pilot a decision was made to adopt the recommendations included in the technical report prepared on June 6, 2014, entitled: "Joint Pacific Rubiales Energy - Ecopetrol S.A meeting, a review of the technical results of the STAR project" (the "Report").

The Report was prepared by technical teams appointed by Ecopetrol and Pacific Rubiales on April 22, 2014 to jointly examine the results of the STAR pilot project. The Report is limited to the results of the pilot project and does not constitute a ruling on the assessment of the STAR technology.

The recommendations contained in the Report are as follows:

In light of the fact that Ecopetrol and Pacific Rubiales are in agreement to consider that the STAR pilot project has provided sufficient information required for the evaluation of the technology and has reached the final approved date, both companies agree to recommend that:

  • The STAR pilot project be concluded.

  • That the process of closing the project should be carried out by reducing on a scheduled basis the injection of air in the IV2 well in order to obtain additional information concerning the extinction of the thermal front in the area of the STAR pilot project in the Quifa SW field. In the time that remains of the authorized injection approved by the Agencia Nacional de Hydrocarburos ("ANH"), the injection air flow should be reduced until it has reached zero flow by the authorized end-date. The closing process should be carried out in a manner that ensures the operational continuity of the Quifa partnership, safety conditions and environmental regulations.

  • A technical team be appointed to conduct a comprehensive post-pilot study.

Ecopetrol and Pacific Rubiales will closely monitor the conclusions resulting from this post-pilot study. The pilot project allowed the companies to acquire valuable knowledge and experience concerning the use of technologies based on in-situ combustion recovery.

The two companies reiterate their interest in continuing to work together on the analysis and development of these and other initiatives that will help increase recovery factors and hydrocarbon production in joint operated fields to the benefit of both companies and the country.

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.

Ecopetrol is the largest company in Colombia and is integrated into the oil chain; it is among the 50 major oil companies in the world and among the four main ones in Latin America. Besides Colombia - where it generates over 60% of the national production - it is present in exploration and production activities in Brazil, Peru & US (Gulf of Mexico). Ecopetrol owns the largest refinery in Colombia and most of the pipeline and multi-product pipeline network in the country, and is significantly increasing its participation in bio-fuels.

Advisories

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, Peru, Guatemala, Brazil, Papua New Guinea or 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; the impact of environmental, aboriginal or other claims and the delays such claims may cause in the expected development plans of the Company 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.

In addition, reported production levels may not be reflective of sustainable production rates and future production rates may differ materially from the production rates reflected in this press release due to, among other factors, difficulties or interruptions encountered during the production of hydrocarbons.

Translation

This news release was originally prepared in the Spanish language and subsequently translated into English and Portuguese. In the case of any differences between the Spanish version and its translated counterparts, the Spanish document should be treated as the governing version.


SOURCE Pacific Rubiales Energy Corp.

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