Pacific Rubiales is the story of two companies - Pacific Stratus Energy Corp and Petro Rubiales Energy Corp. that merged in January 2008 to form Pacific Rubiales Energy Corp.
Pacific Stratus was founded in 2004 by a group of Venezuelan oil veterans who were looking to leverage the expertise they had gained over many years of working for, or with, PDVSA in the Sub - Andean Basins in Venezuela. Pacific Stratus wanted to transfer their expertise to prospects outside of Venezuela, and was initially focused on acquiring interests, starting with its first exploration and exploitation contract at La Creciente, in Colombia. Over the next three years, Pacific Stratus continued to expand its holdings, carefully evaluating its portfolio, prioritizing the most likely prospects, and raising money on the public market to finance its activities.
Its exploration strategy proved to be very successful. Following successful wells at Ortega (no longer held by the company) and Puli - 7, Pacific Stratus commenced drilling at La Creciente, which turned out to be a very significant natural gas discovery. Success at La Creciente was followed by another successful well at Moriche, as well as further success defining the La Creciente gas field.
Petro Rubiales began with the discovery of oil in the Rubiales Block of Colombia in 1982. Though extracting the block's heavy oil was uneconomic at the time, the field was explored and had sporadic production between 1988 and 2000. In late 2000, Petrolex Energy Corporation recommenced production at 1,300 barrels per day (bbl/d). The Rubiales oil field was ultimately sold by Petrolex to Rubiales Holdings Ltd., which continued to develop and explore the field through its wholly-owned subsidiary, Meta Petroleum.
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 58,000 bbl/d (March 31, 2009).
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.
