PACIFIC RUBIALES EGY (OTCMKTS:PEGFF) provided an operational update for 4Q 2014 operating results, including estimates of sales volumes, production, operating netbacks and price realizations. The company expects net oil production in 4Q2014 to be in a range of 135 to 138 Mbbl/d compared to 123 Mbbl/d in 4Q2013.

The expectations

PACIFIC RUBIALES EGY said that it expects the net natural gas production to be in a range of 8 to 11 Mboe/d compared to 11 Mboe/d in 4Q2013. The total net production can cross 143 Mboe/d in 4Q compared to 134 Mboe/d in same quarter last year. Pacific estimated sales volumes to in a range of 160-164 Mboe/d compared to 144 Mboe/d in 4Q2013. The combined price realizations guidance for 4Q 2014 is $64 – $66 per Boe, down from $90.66 per boe in 4Q2013.

The reasons

Pacific Rubiales expects net production to increase by as much as 9% from 4Q2013 mainly due to an increased production from its light and medium oil fields. However, heavy oil production was dismal from Rubiales field due to continued problem of restricted water disposal capacity. The sales volume is expected to vary QOQ due to fluctuating OFT and diluents volumes. The company faced significant volatility in oil inventories, associated with the timing of export cargo liftings.

Oil price realization

The oil price realizations are expected to drift lower compared to 3Q2014 and 4Q2013 due to the sharp decline in oil prices. The oil production of Pacific in Peru and Columbia is exported at prices related to international oil prices. Both WTI and Brent benchmark oil prices plunged almost 33% in 4Q. However, the oil price realizations are in line with the sharp plunge in benchmark oil prices. The drop in global oil prices was partly offset by Pacific’s cost reduction measure in FY2014. Coast reductions will continue in FY2015.

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