Colombian oil stocks are undervalued

Mid tear Colombian oil and gas producer Pacific Rubiales Energy (TSX:PRE) today announced plans to buy back up to 10% of their public float, which would cost over $650 million at current prices. Read the press release here.

Colombia's oil producers in general are undervalued, according to the analysts we talk to.

Frank Giustra backed Petroamerica Oil Corp (TSXV:PTA), an explorer and producer in that country's Llanos Basin, continues to market their light oil production for prices above Brent, with netbacks averaging over $70 in 2012.

Petroamerica's light oil production is required by companies such as Pacific Rubiales as a diluent for their heavy oil production.

Today Petroamerica announced 2012 financial results, and provided an operational update and outlook for the company. Copies can be viewed or downloaded at the Company's website at or at www.sedar.com.

Petroamerica 2012 Highlights:

(all balances in Canadian dollars, unless otherwise noted)

Commencement of production and oil sales from the Las Maracas field on the Los Ocarros Block. This field has contributed 451,317 barrels ("bbls") of oil (Company working interest, before royalties) of production in the year, and 361,338 bbls in sales (net of royalties) in the year;

Generated revenue of over $42 million for the year, after royalties, leading to positive funds flow from operations of $15.6 million ($0.03 per share) with an operating netback of over US $71 per barrel;

Achieved average daily production for the year of 1,392 bbls of oil per day ("bopd") (Company working interest, before royalties), with the fourth quarter average production of 3,247 bopd (Company working interest, before royalties);

Exited the year with production of 4,156 bopd (Company working interest, before royalties), an 845% increase over the December 31, 2011 exit rate of 422 bopd (Company working interest, before royalties);

Year on year increase of 68% in 2P reserves, from 3.03 million barrels at December 31, 2011 to 5.08 million barrels at December 31, 2012;

Drilled La Casona light oil discovery (El Eden Block) and two new deeper pool discoveries (Gacheta and Une Formations) at the Las Maracas fields (Los Ocarros Block);

Drilled five successful appraisal and development wells (Las Maracas-3, 4, 5 and 6 and Balay-4); and

Securing of the $35 million debt financing on April 19, 2012.

Quarterly highlights include:

Commencement of production and oil sales from the Las Maracas-5 and Las Maracas-6 wells on the Los Ocarros Block. These wells have contributed a combined 91,459 barrels of production in the current quarter;

Generated revenue of over $27 million, after royalties, leading to positive funds flow from operation of $15.1 million ($0.03 per share) with an operating netback of approximately US $71 per barrel;

Achieved average daily production of 3,247 bopd, exiting the quarter at daily production of 4,156 bopd.

Operations Update

March production averaged 4,296 bopd (Company working interest), compared to 4,669 in February and 4,232 in January. Production for April to date has averaged 4,542 bopd (Company working interest) and the current year production forecast is for 4,500 bopd (Company working interest).

On the Los Ocarros block, the Las Maracas-8 well was spud on March 24, 2013, and on its completion the Las Maracas-9 well was spud on April 15, 2013. The Company anticipated that, including these two wells, up to six additional appraisal/development wells and one water disposal well will be drilled in the current year.

Production facilities on the Los Ocarros field are currently under construction and are expected to be commissioned and operational towards the end of the second quarter of 2013. These facilities have been designed to handle up to 40,000 barrels of fluid per day - 15,000 barrels of oil and 25,000 barrels of water.

Testing of La-Casona-1 well completed and this well will be put on long term production test once suitable production facilities, including natural gas compression equipment, is secured. Production from this well is expected to begin sometime in the third quarter of 2013.

The Curiara-1 well on the El Porton block (25% Company working interest) is proceeding and has reached a depth of approximately 16,000 feet.

The capital budget for exploration, appraisal and development has been set at $70 million.

Outlook

Given the Company's working capital position at the end of 2012, strong oil prices projected for 2013 and the expected completion of the Las Maracas production facilities by the end of the second quarter of 2013, the Company expects to fully finance all of its current development and exploration activities from a combination of funds on hand and through current and future cash flows and does not anticipate needing outside funding for the current year. However, this does not preclude that, in the event of exploration success, the Company may be required to obtain additional financing to support appraisal and development activities.

With the La Casona-1 discovery on the El Eden block, the Company plans on drilling at least one appraisal well on the block, which is scheduled to occur sometime in the second quarter of 2013, as well as procuring equipment to put the current well on long term test. This equipment should be in place sometime early in the third quarter of 2013, and the testing program is expected to commence shortly thereafter.

When the production facilities at Las Maracas are complete, the joint venture is expected to be able to begin to produce the field at its optimum level. These facilities, which have been designed to handle up to 15,000 barrels of oil and 25,000 barrels of water per day are expected to be completed by the end of May, 2013. Further to this, with the proposed development drilling program for 2013, the overall production from this field is expected to increase, which would further enhance the revenues and cash flows that the Company will experience.

The Company is actively managing its exploration and development portfolio as well as reviewing current and future business opportunities within the oil and gas sector in Colombia with a view to ensuring that the Company is able to maintain and expand its asset base over the mid to long term. These opportunities could involve farm-ins, asset purchases or other forms of business combinations, and will be assessed on their merits as they arise.

Disclaimer: We own Petroamerica Oil Corp. shares and reserve the right to sell them at any time without notice. This is not investment advice. All facts to be verified by the reader. We seek safe harbour.

CEO Editor

tommy@pacwebco.com

CEO Editor

tommy@pacwebco.com

Disclaimer:

Readers are advised that the material contained herein is solely for information purposes. Readers are encouraged to conduct their own research and due diligence, and/or obtain professional advice. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities. The information contained herein is based on sources which the publisher believes to be reliable, but is not guaranteed to be accurate, and does not purport to be a complete statement or summary of the available data. Any opinions expressed are subject to change without notice. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. They may from time to time have a position in the securities of the companies mentioned herein, and may change their positions without notice. (Any significant positions will be disclosed explicitly. This article is not intended to meet your specific individual investment needs and it is not tailored to your personal financial situation. Nothing contained herein constitutes, is intended, or deemed to be — either implied or otherwise — investment advice. Thomas Humphreys, Pacific Website Company Inc., and other entities in which he has an interest, employees, officers, family, and associates may from time to time have positions in the securities or commodities covered in these publications or web site. We reserve the right to buy and sell such securities or commodities without notice to readers. While the information herein is believed to be accurate and reliable it is not guaranteed or implied to be so. The information herein may not be complete or correct; it is provided in good faith but without any legal responsibility or obligation to provide future updates. Neither Thomas Humphreys, nor anyone else, accepts any responsibility, or assumes any liability, whatsoever, for any direct, indirect or consequential loss arising from the use of the information in these publications or web site.

Forward-Looking Statements: This article may include certain "forward-looking information" within the meaning of Canadian securities legislation. Forward-looking statements include predictions, projections and forecasts and are often, but not always, identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "forecast", "expect", "potential", "project", "target", "schedule", budget" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions and includes the negatives thereof. All statements other than statements of historical fact included in this release, including, without limitation, statements regarding the potential of the Company's properties are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are based on a number of material factors and assumptions. Important factors that could cause actual results to differ materially from Company's expectations include actual exploration results, changes in project parameters as plans continue to be refined, future metal prices, availability of capital and financing on acceptable terms, general economic, market or business conditions, uninsured risks, regulatory changes, delays or inability to receive required approvals, and other exploration or other risks detailed herein and from time to time in the filings made by the Company with securities regulators. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ from those described in forward-looking statements, there may be other factors that cause such actions, events or results to differ materially from those anticipated. There can be no assurance that forward-looking statements will prove to be accurate and accordingly readers are cautioned not to place undue reliance on forward-looking statements which speak only as of the date of this article. The Company disclaims any intention or obligation, except to the extent required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Always do your own due diligence. We seek safe harbor.