TORONTO, Sept. 18, 2012 /PRNewswire/ – Pacific Rubiales Energy Corp. (TSX: PRE;
BVC: PREC; BOVESPA: PREB) announced today that it has reached an
agreement with Karoon Gas Australia Ltd. (ASX: KAR) (“Karoon“) to acquire a 35% net working interest in the following exploration
blocks: S-M-1101, S-M-1102, S-M-1037 and S-M-1165, and also has as an
option to acquire a 35% interest in S-M-1166 (collectively, the “Karoon Blocks“). In consideration for acquiring the interests in the Karoon Blocks,
the Company will pay Karoon U.S.$40 million in cash as consideration
for the assignment and fund up to U.S.$210 million in carried well
costs.

Ronald Pantin, Chief Executive Officer of the Company, commented: “This
acquisition will represent a significant step forward in our plans to
transform the Company for the future. It is an exciting exploration
opportunity, is an excellent fit with the Company’s strategy to target
large resource capture in high potential basins and positions us well
to expand further into Brazil. With these new assets, Pacific Rubiales
will increase its presence in South America and enter into one of the
most prolific oil rich hydrocarbon basins in the western hemisphere,
building on our successful technical and project management record.”

The Acquisition

The Karoon Blocks are located 220 kilometers off the coast of Santa
Catarina state, just south of Rio de Janeiro, in the Santos basin. The
blocks lie in 300 – 400 m water depth, in an area with a number of
existing or discovered oil and gas fields. The transaction is subject
to the approval of the Agência Nacional do Petróleo, Gás Natural e
Biocombustíveis (“ANP”), Brazil’s oil and gas regulatory authority.

The transaction agreement consists of a U.S.$40 million payment to
Karoon as consideration for the assignment, plus a carry of well costs
of up to U.S.$70 million for each of the Kangaroo and Cassowary/Emu
exploration wells for a total well carry cost of up to U.S.$140
million. After meeting up to the first U.S.$70 million costs for each
of the first two wells, the Company will fund 35% of all costs
thereafter.

The Company may elect to participate in the third well of the three well
exploration commitment program, the Bilby well. If the option is
exercised, Pacific Rubiales must carry up to the first U.S.$70 million
in costs for the Bilby well and contribute 35% of all costs thereafter.

All three wells are expected to be drilled during 2013. Karoon will
remain the operator of the Karoon Blocks until the completion of the
three well exploration program and then Pacific Rubiales will be
entitled to request the operatorship, subject to the Company meeting
all regulatory and other legal requirements to the satisfaction of the
ANP.

Strategic Context

Pacific Rubiales believes that it will acquire an interest in high
quality exploration assets with a moderate risk but high reward
profile, accessing large resources with the potential to develop into
significant producing assets.

The Company has identified several multi-level post-salt and two
pre-salt prospects on the Karoon Blocks. All of these prospects contain
direct hydrocarbon indicators from seismic data. Management estimation
of total P50 recoverable resources reached 1.8 billion boe excluding
the pre-salt opportunities.

The Karoon Blocks lie along trend with the Piracucá and Caravela oil
fields and the Merluza gas field. In April 2009, Petrobras/Repsol
declared the BM-S-7 Piracucá light oil field a commercial discovery.
The field is approximately five kilometers to the northeast of the
Karoon acreage and is reported to contain 550 MMboe in place (Repsol,
2009). The Late Santonian reservoirs produced 3,476 bbl/d oil and
liquids with approximately 4.4 MMcf/d gas in preliminary tests (Repsol,
November 2009). Petrobras is currently considering an aggregate FPSO
development for the field and other fields in the area. PanAtlantic
Energy Group recently announced that its Sabia-1X exploration well
drilled on block BM-S-72 just to the west of the Karoon Blocks, has
penetrated multiple hydrocarbon bearing zones of interest, providing
additional indications of the prospectivity of the area.

The Company sees Brazil as an area of untapped potential with a strong
resource and reserve base. The United States Geological Survey (USGS)
has estimated (“Assessment of Undiscovered Conventional Oil and Gas Resources of South
America and the Caribbean, 2012″) that the Campos and Santos Basins, located off the country’s
southeastern coast, have undiscovered oil resources in the range of 26
billion barrels (P95) to 65 billion barrels (P5).

According to the Oil and Gas Journal (OGJ), Brazil has 14 billion bbl of proven reserves in 2012, the
second-largest in South America after Venezuela. The Campos and Santos
Basins hold the vast majority of Brazil’s proven reserves. In 2010,
Brazil produced 2.7 MMbbl/d of oil and liquids.

Brazil is the ninth largest energy consumer in the world and the third
largest in the Western Hemisphere, behind the United States and Canada.
Total primary energy consumption in Brazil has increased by close to a
third in the last decade, due to sustained economic growth. Increasing
domestic oil production has been a long-term goal of the Brazilian
government, and recent discoveries of large offshore, pre-salt oil
fields could transform Brazil into one of the largest oil producers in
the world.

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, Piriri and Quifa
oil fields in the Llanos Basin in association with Ecopetrol, S.A., the
Colombian national oil company, and 100 percent of Pacific Stratus
Energy Corp. which operates the La Creciente natural gas field. 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.

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.

Karoon Gas Australia Ltd, an Australian Stock Exchange listed global
energy exploration company, with highly prospective assets in
Australia, Brazil and Peru. Karoon is currently in the midst of a two
year exploration drilling program that is set to include a minimum of
eleven wells in three independent basins. Currently the Phase II
exploration campaign has commenced in the Browse Basin, Australia, with
the goal to confirm the size and composition of the Greater Poseidon
Trend ahead of development decision making. In the coming months,
three exploration wells will commence in the Santos Basin, Brazil, with
the goal of making new shallow water discoveries of hydrocarbons.
During 2013, Karoon expects to commence drilling in Block Z-38 in the
Tumbes Basin, Peru, with the goal of making new oil and gas
discoveries.

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, 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 14, 2012 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.

Definitions

Bcf	Billion cubic feet.
Bcfe	Billion cubic feet of natural gas equivalent.
bbl	Barrel of oil.
bbl/d	Barrel of oil per day.
boe	Barrel of oil equivalent. Boe’s may be misleading, particularly if used in isolation. The Colombian standard is a boe conversion ratio of 5.7 Mcf:1 bbl and is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
boe/d	Barrel of oil equivalent per day.
Mbbl	Thousand barrels.
Mboe	Thousand barrels of oil equivalent.
MMbbl	Million barrels.
MMboe	Million barrels of oil equivalent.
Mcf	Thousand cubic feet.
WTI	West Texas Intermediate Crude Oil.

SOURCE Pacific Rubiales Energy Corp.

Image with caption: “Map of the Karoon Blocks (CNW Group/Pacific Rubiales Energy Corp.)”. Image available at: http://photos.newswire.ca/images/download/20120918_C6903_PHOTO_EN_18058.jpg