UPDATE: Pacific Rubiales Finds Natural Gas In Colombia

Pacific Rubiales Energy Corp. (PRE.T, PREC, PREB11.BR) said Wednesday it discovered natural gas at an exploration well in Colombia but said it plugged and abandoned another well due to negative results.

"This is an important exploration discovery for Pacific Rubiales," Ronald Pantin, the Toronto-based firm's chief executive, said in a statement, regarding the discovery at the Cotorra-1X well on the Guama Block of Colombia's Lower Magdalena Basin.

Pantin said the find could allow the company to "increase its gas reserves to support its initiative to develop an LNG [Liquefied Natural Gas] export market in the future."

The company, however, also said in the statement that after completely drilling the Apamate-2X exploration well on its La Creciente Block, it found that the well "failed to test hydrocarbon flow at economic rates and was plugged and abandoned."

Colombia's biggest brokerage InterBolsa, which has a buy recommendation on Rubiales, said the failure at Apamate-2X "could risk some of the probable reserves that were reported on February 28, 2011 (9.38 million barrels of oil equivalent)."

As such, the brokerage said: "In our view, the failure at Apamate-2X is more material than the success of Cotorra-1X, as we consider that the first had a higher potential for production and reserves."

Rubiales, whose shares trade on stock markets in Canada, Colombia and Brazil, said late last year it aimed to create within two years an LNG export project in Colombia with a capacity of 70 million cubic feet per day.

Rubiales is the largest private oil producer in Colombia, Latin America's fourth-largest producer. Its shares in Bogota are 32% higher this year and are 1.1% higher Wednesday to 47,400 pesos.

--By Dan Molinski, Dow Jones Newswires; 57-310-867-6542; [e-mail]