Description

Pacific Rubiales Energy Corp (Pacific) agreed to acquire PetroMagdalena Energy Corp (PME) for a purchase consideration of approximately CAD253m ($244m) or CAD1.6 ($1.54) per share. Pacific intends to fund the acquisition cost using existing cash on hand.

Under the terms of acquisition, shareholders of PME will receive CAD1.6 ($1.54) in cash for each outstanding share, representing a premium of approximately 38% on the 20-day volume weighted average price of PME's common shares on the TSX Venture Exchange (TSX-V) as of June 4, 2012. In addition, the warrant holders will receive CAD0.25 ($0.24) in cash for each unexercised warrant held at closing. If the arrangement is not completed as a result of a superior proposal or for other certain specified circumstances, a termination fee equal to CAD10m ($9.62m) will be paid by PME to Pacific.

RBC Capital Markets, LLC is acting as financial advisor and Norton Rose Canada LLP is acting as legal advisor to Pacific. GMP Securities L.P. is acting as financial advisor while Blake, Cassels & Graydon LLP is acting as legal advisor to PME in the transaction.

The transaction will be subject to, among other things, the approval of at least 66 2/3% of the votes cast at a special meeting of PME shareholders and warrant holders, and certain conditions. The transaction will close in the third quarter of 2012.

Scope

• - Rationale behind the acquisition of PetroMagdalena Energy by Pacific Rubiales Energy
• - Stratigic benefits for the companies involved in the transaction
• - Geography covered - Colombia