What are your projections for 2012 in terms of production and reserve growth?

ARATA: For 2012, we will keep growing our production. Our estimation is that our net production will increase from 15% to 30%. We also have very intensive exploration programs that will allow us to keep growing our reserves. We plan to keep increasing our reserves. Our replacement reserve ratio last year was 5.5 barrels per every barrel that we produced. We want to keep this ratio in order to continue to produce and grow our reserves.

What is your growth strategy looking forward?

ARATA: Our long-term plan is to keep growing, fueled by active exploration and production. We plan to become a 600,000 barrels net producer, which ultimately means that we will produce a million barrels of oil and natural gas in the next 5-10 years. In order to achieve this goal, we have a capital expenditure program which will have an average of over one billion dollars per year. This capital expenditure program will be entirely financed from the cash flow generated by production. Our strategy is to become an E&P company where the two legs for growth are exploration and production.

How competitive is Colombia’s energy sector? What is your market share? 

ARATA: Colombia is very competitive. It is probably the best country in South America to invest in the oil, gas, and energy sectors. We have become who we are today because we are not only listed on the Toronto stock exchange, but also the Bogota stock exchange in Colombia, and the Brazil national stock exchange. As of today, we account for 24.6% of the main index of the local exchange. We are producing and operating at a quarter of the total national Colombian production, which is going to reach one million barrels in the next few weeks. We are producing about 250,000 barrels of the country’s total gross production.

What is the energy sector’s contribution to GDP in Colombia?

ARATA: The energy sector’s contribution to the GDP of Colombia has been increasing year by year. Last year it reached 12.5% of the total GDP. In the year 2000, the energy sector’s contribution was in the order of $8bn and last year it totaled almost $45bn.

How do recovery costs in Colombia compare to those of regional neighbors?

ARATA: In Colombia, there is a lack of transportation infrastructure from the fields to the ports where we export crude oil. Therefore, even though lifting costs in Columbia are very competitive, there is a challenge created as direct result of the transportation costs. Our company, as well as other producers, has recognized this problem and we have decided to invest in infrastructure. We are in the process of building new pipelines. We constructed the ODL Pipeline a couple of years ago that transports oil from our fields to a gathering facility in Monterey. We are now working with the National State Company and other producers to build what we call, the Bicentennial Pipeline. The Bicentennial Pipeline will have a capacity of 450,000 barrels and will be built in different phases. The first phase of this pipeline will be completed at the end of this year. Also, another posed challenge is access to ports. Colombia only has one port that transports crude oil to international markets. Pacific Rubiales is involved in the construction of the new oil terminal in Cartagena. So, to overcome theses challenges we must have access to infrastructure to reduce transportation costs. Our companies are not as competitive as other companies that have developed infrastructure over the years.

How have improvements in Columbia’s security situation change business in the energy sector? 

ARATA: Security in the areas where we are operating has been improving year to year. These improvements started with the policies implemented by President Uribe and followed by the policies of President Santos. There are still areas that touch the boundaries of Ecuador and Venezuela where there are terrorist activities. In the main areas where we are operating, our security infrastructure is developed and we haven’t had any problems.

What new and innovative technology is Pacific Rubiales currently implementing in Colombia?

ARATA: One of the technologies that we are implementing is the STAR Technology. STAR is an acronym that stands for Synchronized Terminal Additional Recovery. STAR is a technology that we are implementing in order to increase the recovery factor on those fields where we are producing heavy oil. With our primary techniques, the recovery that you can achieve is only about 15% to 16% of the oil in place. Through implementation of the STAR Technology, we can increase the final recovery of the field to 45% - 50%. This will have a great impact on the oil reserves of Colombia because with the implementation of this technology in the areas where we already have reserves, reserves can be doubled or tripled.

Where do you see the best opportunities for growth and investment in Colombia’s energy sector?

ARATA: The best opportunities that we have in the energy sector in Colombia will be driven by exploration and technology. Exploration, because even though Colombia continues to reach 1m barrels of production, the country’s reserves are still on a flat level, slightly above 2bn barrels. If we don't find more oil, then these reserves will last for no more than 6 years. Therefore, there are great opportunities because there are so many geological basins that have not yet been explored. Another way to increase the country’s reserves is through the application of new technologies. We are actively working with other companies based in Colombia to progress the application of new technologies within the energy sector.

How attractive is Colombia, and Pacific Rubiales, for investors?

ARATA: For those investors and fund managers who are in it for the long term, I recommend investing in Pacific Rubiales. Our company is based in a country that we are investing in for long term. Our plan is to keep growing and to double and triple the production of oil and reserves in the next 5-8 years. The value that we are generating is translated through a positive cash flow that self finances all of our activities. Our capital expenditure last year has been over $1bn and we want to maintain this number for years to come. All the cash flow that we are generating is not only used to pay a small dividend to shareholders, but it is also invested back into the production and reserves of the company. In conclusion, the basic message to convey is to continue to believe in South America, Colombia and Pacific Rubiales.