Pacific Rubiales Energy Corp. provided an update on the previously disclosed and ongoing arbitration process associated with its operated heavy oil production interests in the Quifa block, south Llanos basin, onshore Colombia.

The Company's share of production before royalties from the Quifa block is 60%; however, this participation decreases once the high-prices clause (PAP), which is stipulated in the Quifa Association Contract, is triggered. Ecopetrol S.A., the Colombian National Oil Company, holds the remaining 40% interest in the Quifa block.

On September 27, 2011, Ecopetrol and the Company agreed to commence an arbitration process to settle certain differences in the interpretation of the PAP clause in the Quifa Association Contract and its effect on the production split as between the companies. While the arbitration process runs its course, both companies agreed to apply the formula of the Agencia Nacional de Hidrocarburos (ANH). Pacific Rubiales has been recognizing the ANH formula in its financial statements since the third quarter 2011.

Tags: Pacific Rubiales Energy Corp.