In July 2007, Petro Rubiales reached a deal with the owners of Rubiales Holdings to sell 75% of Rubiales Holdings to Consolidated AGX Resources, which immediately changed its name to Petro Rubiales Energy Corp. At the same time, Petro Rubiales raised $421 million in public equity, to finance the acquisition and provide working capital. By November 2007, Petro Rubiales had acquired the remaining 25% of Rubiales Holdings.
Management of Petro Rubiales recognized that the cash flows from the Rubiales field could be expanded greatly through a combination of workovers, capital investment, and innovative marketing. Production at Rubiales, already on the rise throughout 2007, continued its increase under Petro Rubiales, reaching record levels by the end of 2007. These production records have continued ever since, most recently reaching an average gross production of 220,000 bbl/d (December 31, 2010).
While both companies were well-acquainted and had entered into joint ventures in Colombia, they soon realized that the best diversification strategy was to combine. Both companies had strengths, but in complementary areas: Petro Rubiales in production, Pacific Stratus in exploration. Each was also complementary in resources: Petro Rubiales in heavy oil, Pacific Stratus in natural gas. Just as importantly, the combination of the two would place the combined company in a position where its finances, production and exploration profile could open up opportunities in Colombia that were normally reserved to the majors. On January 23, 2008, the merger of the two companies created Pacific Rubiales Energy Corp, a company that is one of the most dynamic and exciting production and growth stories in Latin America. The company added to its resource and production potential by acquiring Kappa Energy Holdings for US$168 million in the fall of 2008 and has been able to take advantage of its increased size to obtain opportunities, such as the award in 2008 of properties in two Colombian bidding rounds, that would not have been available to it prior to the combination.
In 2009, Pacific Rubiales Energy continued to be a key driver of growth in oil production and infrastructure development in Colombia by bringing the Oleoducto de Los Llanos (“ODL”) pipeline, of which we own a 35% stake, into full operation in September 2009. The Company increased its combined proved plus probable (“2P”) reserves for the Rubiales-Piriri, Quifa, La Creciente, Guaduas, Rio Ceibas, Abanico and Puli blocks by 34.3%, amounting to a net after royalties total to the company of 280.6 million barrels of oil equivalent (“mmboe”) as at December 31, 2009. Also the company drilled 19 successful wells out of 22, for a success rate of 86%, far exceeding the industry average. And In December 2009, the Company was listed on the Colombian stock exchange, the Bolsa de Valores de Colombia, becoming the first international issuer to go through this process with the Colombian regulatory authorities.
2010 was a year of major accomplishments on the operational front. The Company´s gross production grew 75%, a 61,683 boe/d increase, reaching an average of 144,307 boe/d at the end of the year. The main contributing assets to our production increase were the Rubiales, Quifa and La Creciente fields. Eight new blocks were added to our exploration acreage: two in Guatemala and six in the Llanos and Putumayo basins in Colombia. The Rubiales field continued to be the largest producing field in Colombia throughout 2010, growing by another 80%. The 2010 was a year of important financial growth; the results went from a net loss of $125.8 million in 2009 to net earnings of $217.6 million in 2010. The revenues increased by 160%, ending the year at $1.7 billion, and our EBITDA rose to $922.9 million, up 21o% year-over-year.