Pacific Rubiales Energy expects to increase output to 265,000 barrels of oil equivalent per day at the end of 2011, more than doubling its output for the end of 2010.
Colombia’s second-largest oil producer plans to expand in 2011, dedicating $1.12 billion to capital investment, a 30% increase from a year earlier. The company is raising its investments in exploration by 78% from a year earlier as it plans to drill 60 wells.
Pacific Rubiales, which trades in Bogota and Toronto, fell short of its production target for the closing of 2010 as a result of overhaul in a key oil pipeline. “We were restricted by the pipeline system,” said Chief Executive Ronald Pantin in a conference call on Tuesday. The company’s gross production capacity stands at 220,000 barrels of oil equivalent per day.
The company struggled because of the holiday season to hire all the necessary trucks to make up for the loss in transportation capacity in the OCENSA pipeline, located in the eastern province of Arauca, Pantin said. Other oil companies were also hurt by drop in OCENSA’s oil transportation capacity in December, which were the result of new pump installations, Pantin said.
Pacific Rubiales has become one of the great success stories in Colombia’s booming oil industry. The company’s stock price has more than doubled over the last year as the firm, run by former executives of state-oil firm Petroleos de Venezuela, or PDVSA, continues to increase output. In mid-day trading on Tuesday it rose 4.35% to 32.84 Canadian dollars.
In December 2009 it became the first foreign company to be traded on the Colombia Stock Exchange, a path that is being followed by other Canada-based oil and mining firms as they seek to benefit from Colombian investors’ appetite for commodity-related stocks.
Pacific Rubiales has a medium-term production target of 500,000 barrels of oil equivalent per day. The company’s ambitions underscore the recent boom in Colombia’s oil patch. A series of government victories against Marxist rebels, combined with investor-friendly regulations, have enticed private oil companies to flock to the South American country. Colombian oil officials expect oil output to close 2011 at more than one million barrels per day.
The increased oil production is testing Colombia’s shaky oil transportation network. Pacific Rubiales has secured a 33% stake in a $4.2 billion oil pipeline project.
The pipeline, called Oleoducto Bicentenario, is being run by Colombian state-oil firm Ecopetrol SA and has six partners, including Pacific Rubiales. Its first phase is expected to be completed at the end of this year, helping the company reach its year-end production target.