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Pacific Rubiales increases stake in CGX Energy

29 May 2012

Canada-based Pacific Rubiales Energy has agreed to buy 85.71 million units of CGX Energy, for an aggregate investment of C$30m ($29.29m).

The company currently owns 58.7 million shares of CGX, which were acquired through a bought deal financing that closed in October 2011.

Upon issuance of the new units, Pacific will hold a 35% stake in CGX on a non-fully diluted basis.

At the same time, the company has entered into an agreement to provide technical assistance to CGX in respect to its operations.

"This investment is strategic to the company's objective of being the leading Latin American independent explorer and producer of hydrocarbons."

Pacific also has the option to participate in each of the next commitment wells to be drilled on the Corentyne and Annex offshore Petroleum Production Licences in Guyana, by funding 50% of the exploration well costs and certain seismic costs, in exchange for a 33% interest in the licences.

Ronald Pantin, Pacific CEO, said that this is a great opportunity for the company to expand its investment in the "highly prospective" offshore Guyana oil play.

"Through our ownership in CGX, the technical services agreement and a direct earning option, the company will be participating in an exploration campaign in an offshore basin with analogous geology to West Africa and Brazil," said Pantin.

"We are looking forward to working with the management of CGX on realising the potential of offshore Guyana. This investment is strategic to the company's objective of being the leading Latin American independent explorer and producer of hydrocarbons."