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Harvest Natural Resources Announces First Quarter 2008 Results
HOUSTON, May 1 /PRNewswire-FirstCall/ -- Harvest Natural Resources,
Inc. (NYSE: HNR) today announced 2008 first quarter earnings and an
operations update. Highlights for the quarter include:
-- Reported earnings of $0.2 million, compared to a loss of $6.5 million
for the same period in 2007.
-- Commenced development drilling operations in Venezuela.
-- Secured final governmental approvals for acquiring interests in two
significant exploratory plays in active, proven hydrocarbon systems
located in Gabon and Indonesia.
-- Established a significant presence in two exploratory plays located in
the United States.
EARNINGS
Harvest reported earnings of $0.2 million, or $0.01 per diluted share,
compared with a loss of $6.5 million, or $0.17 per share, for the 2007
first quarter. The first quarter results include exploration charges of
$1.3 million. Petrodelta reported first quarter earnings of $27.9 million,
or $8.9 million net to Harvest's 32 percent interest, which are reported
using International Financial Accounting Standards (IFRS). After
adjustments to Petrodelta's IFRS earnings, primarily to conform to U.S.
Generally Accepted Accounting Principles, Harvest's 32 percent share of
Petrodelta's earnings were $6.0 million.
MANAGEMENT COMMENT
James A. Edmiston, Harvest President and Chief Executive Officer said,
"I am pleased to report that we have commenced development drilling in
Venezuela and I look forward to recording increases in both production and
reserves. Our long-term objective is to build a multi-year inventory of
exploration and exploitation drilling prospects with geographic and
geologic diversity to complement our Venezuelan foundation. We expect to
continue to add assets to our exploration portfolio throughout 2008 and
beyond."
VENEZUELA - PRODUCTION AND DEVELOPMENT DRILLING
Production
Petrodelta delivered 1.2 million barrels of oil or 13,300 barrels of
oil per day, and 3.2 billion cubic feet of natural gas during the 2008
first quarter. This compares with Petrodelta oil deliveries in the 2007
first quarter of 1.5 million barrels, or 16,700 barrels per day, and 2007
fourth quarter deliveries of 1.2 million barrels, or 13,100 barrels of oil
per day. Production decreased from last year as the result of normal well
production declines combined with suspended investment in development
drilling during the process of converting Harvest's Venezuelan assets into
the current mixed company structure.
The average price received for oil deliveries was $79.02, or
approximately 81 percent of West Texas Intermediate crude, which
approximates world market prices for the quality of oil produced by
Petrodelta. The natural gas price is contractually fixed at $1.54 per
thousand cubic feet.
Petrodelta Drilling Update
In April, Petrodelta spud its first well in the Uracoa Field.
Petrodelta expects each horizontal well will require an average of 23 days
to drill and complete with an investment of approximately $2.2 million to
$2.5 million resulting in reserves between 500,000 barrels of oil to
1,250,000 barrels of oil. Petrodelta plans to drill up to 15 wells with
this rig in 2008.
Petrodelta has contracted a second drilling rig which is being
mobilized and expected to begin drilling in the last half of 2008. Drilling
activity will be focused on the Uracoa Field initially with a substantial
inventory of drilling locations identified and permitted.
Windfall Profits Tax
On April 15, 2008 the Venezuelan government published in the Official
Gazette the Law of Special Contribution to Extraordinary Prices at the
Hydrocarbons International Market ("Windfall Profits Tax"). The Windfall
Profits Tax establishes a special 50 percent tax payable to the Venezuelan
government when the average monthly price of Brent crude ("Brent") exceeds
$70.00 per barrel. In a similar manner, the percentage of tax is increased
from 50 to 60 percent when the average monthly price of Brent exceeds
$100.00 per barrel. At this time, regulations regarding the application of
the Windfall Profits Tax have not yet been issued. As a result, Harvest is
unable at this time to estimate the impact of the Windfall Profits Tax on
Petrodelta's financial position, results of operations or cash flows.
EXPLORATION PROGRAM
Dussafu Marin, Gabon
In April, Harvest received final government approvals and closed the
purchase of the 50-percent operated interest in the offshore production
sharing contract (PSC) for $4.5 million. Seismic data acquisition and
processing of 500 kilometers of 2-D seismic for high-grading drilling leads
will commence in the second half of 2008 and an exploratory well will be
drilled pending the seismic results. Harvest's estimated net cost for the
firm work program is approximately $2.0 million.
Budong-Budong, Indonesia
In April, the Indonesian government approved the company's farm-in to
earn a 47 percent interest in the Budong-Budong Exploration Production
Sharing Contract. The work program includes the acquisition and processing
of 550 kilometers of 2-D seismic data as well as drilling two exploration
wells. Harvest will fund 100 percent of the first $17.2 million of
expenditures to earn its interest. The 2-D seismic acquisition program
commenced in February and is ongoing.
United States
Over the last several months, Harvest initiated domestic exploration
programs in two different basins. Harvest will operate both exploration
programs and has recently added personnel to the organization accordingly.
Each domestic exploration program is located in highly competitive lease
acquisition areas. In order to maximize our lease position, Harvest elected
to complete the lease acquisition phase prior to disclosure of specific
locations or the announcement of our drilling objectives.
One of the exploration programs is located in an area of mutual
interest with a private company covering the Upper Gulf Coast including
state waters from Nueces County, Texas to Cameron Parish, Louisiana. The
partners expect to begin drilling the first exploratory well early in the
2008 third quarter with Harvest holding a 55 percent interest.
Conference call
Harvest will hold an earnings conference call today at 10:00 a.m. CDT
(11:00 a.m. EDT) to discuss 2008 first quarter results. To access the call,
dial 785-424-1055, conference ID: Harvest, five to ten minutes prior to the
start time. A recording of the conference call will also be available for
replay at 402-220-0871 until May 9, 2008. The conference call will also be
transmitted over the internet through the Harvest website at
http://www.harvestnr.com.
About Harvest Natural Resources
Harvest Natural Resources, Inc. headquartered in Houston, Texas, is an
independent energy company with principal operations in Venezuela,
exploration assets in the United States, Indonesia, Gabon and China and
business development offices in Singapore and the United Kingdom. For more
information visit the Company's website at http://www.harvestnr.com.
"This press release may contain projections and other forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934. They include
estimates and timing of expected oil and gas production, oil and gas
reserve projections of future oil pricing, future expenses, planned capital
expenditures, anticipated cash flow and our business strategy. All
statements other than statements of historical facts may constitute
forward-looking statements. Although Harvest believes that the expectations
reflected in such forward- looking statements are reasonable, it can give
no assurance that such expectations will prove to have been correct. Actual
results may differ materially from Harvest's expectations as a result of
factors discussed in Harvest's 2007 Annual Report on Form 10-K and other
public filings."
HARVEST NATURAL RE
SOURCES, INC.
CONSOLIDATED BALANCE SHEETS
($ thousands, unaudited)
March 31, December 31,
2008 2007
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $117,412 $120,841
Restricted cash 6,841 6,769
Accounts receivable, net 9,450 9,418
Advances to equity affiliate 3,719 16,352
Prepaid expenses and other 1,084 1,032
Total current assets 138,506 154,412
OTHER ASSETS 850 4,301
INVESTMENT IN EQUITY
AFFILIATES 258,731 251,173
PROPERTY AND EQUIPMENT, net 10,636 3,583
TOTAL ASSETS $408,723 $413,469
LIABILITIES AND STOCKHOLDERS'
EQUITY:
CURRENT LIABILITIES:
Accounts payable, trade and other $2,014 $5,949
Accounts payable, related party 10,218 10,093
Accrued expenses 8,244 11,895
Accrued Interest 5,595 5,136
Income taxes payable 228 503
Short-term debt 9,302 9,302
Total current liabilities 35,601 42,878
MINORITY INTEREST 57,882 56,825
STOCKHOLDERS' EQUITY:
Common stock and paid-in capital 203,652 202,323
Retained earnings 148,138 147,934
Treasury stock (36,550) (36,491)
Total stockholders' equity 315,240 313,766
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $408,723 $413,469
HARVEST NATURAL RE
SOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts, unaudited)
THREE MONTHS ENDED: March 31, 2008 March 31, 2007
EXPENSES:
Depreciation 45 281
Exploration expense 1,349 -
General and administrative 6,212 6,433
Taxes other than on income 263 237
7,869 6,951
LOSS FROM OPERATIONS (7,869) (6,951)
OTHER NON-OPERATING INCOME
(EXPENSE)
Gain on financing transactions 1,330 -
Investment earnings and other 1,131 2,443
Interest expense (459) (2,481)
2,002 (38)
LOSS BEFORE INCOME TAXES AND
MINORITY INTERESTS (5,867) (6,989)
Income tax expense 64 114
LOSS BEFORE MINORITY INTERESTS (5,931) (7,103)
Minority interest in
consolidated subsidiary companies 1,423 (637)
LOSS FROM CONSOLIDATED COMPANIES (7,354) (6,466)
Net income (loss) from
unconsolidated equity affiliates 7,558 (39)
NET INCOME (LOSS) $204 ($6,505)
NET INCOME (LOSS) PER COMMON
SHARE:
Basic $0.01 ($0.17)
Diluted $0.01 ($0.17)
Weighted average shares outstanding:
Basic 35.0 37.4
Diluted 36.6 37.4
HARVEST NATURAL RE
SOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Three Months Ended March 31,
2008 2007
Cash Flows From Operating
Activities:
Net Income (Loss) $204 ($6,505)
Adjustments to reconcile
net income (loss) to net cash
provided by (used in) operating
activities:
Depletion, depreciation
and amortization 45 281
Gain on financing
transactions (1,330) -
Net income (loss) from
unconsolidated equity
affiliates (7,558) 39
Non-cash compensation
related charges 998 1,462
Minority interest in
consolidated subsidiary
companies 1,423 (637)
Changes in Operating Assets
and Liabilities:
Accounts and notes receivable (32) 2
Advances to equity affiliate 12,633 1,923
Prepaid expenses and other (52) 194
Accounts payable (2,605) (1,707)
Accounts payable, related party 125 114
Accrued expenses (3,714) (4,927)
Accrued Interest 459 (915)
Income taxes payable (275) 26
Net Cash Provided (Used In)
Operating Activities 321 (10,650)
Cash Flows From Investing Activities:
Additions of property and equipment (3,284) (271)
Investment in affiliated companies - (4,591)
(Increase) decrease in restricted cash (72) 13,142
Investment costs (363) (26)
Net Cash Provided By (Used In)
Investing Activities (3,719) 8,254
Cash Flows From Financing Activities:
Net proceeds from issuances
of common stock 335 -
Purchase of treasury stock (8) -
Payments of notes payable - (6,977)
Dividends paid to minority interest (358) -
Net Cash Provided by Used In
Financing Activities (31) (6,977)
Net Decrease in Cash (3,429) (9,373)
Cash and Cash Equivalents at
Beginning of Period 120,841 148,079
Cash and Cash Equivalents at
End of Period $117,412 $138,706
PETRODELTA, S. A.
STATEMENTS OF OPERATIONS
(in thousands except per BOE and per share amounts, unaudited)
THREE MONTHS ENDED: March 31, 2008
Barrels of oil sold 1,209
MCF of gas sold 3,172
Total BOE 1,738
Total BOE, Net of 30% royalty 1,216
Average price/barrel $79.02
Average price/mcf $1.54
$ $/Net BOE
REVENUES:
Oil sales 95,535
Gas sales 4,885
Royalty (33,959)
66,461
EXPENSES:
Operating expenses 14,343 11.79
Depletion and amortization 4,298 3.53
General and administrative 1,678 1.38
Taxes other than on income 3,486 2.87
23,805 19.57
INCOME FROM OPERATIONS 42,656 35.07
Investment earnings and other 53 0.04
Income before income tax 42,709 35.11
Current income tax expense 21,496 17.67
Deferred income tax benefit (6,683) (5.49)
NET INCOME 27,896 22.93
Adjustment to reconcile to reported
Net Income from unconsolidated Equity
Affiliate:
Deferred income tax benefit 6,683 5.49
Net Income Equity Affiliate 21,213 17.44
Equity interest in unconsolidated equity
affiliate 40%
Income before amortization of
excess basis in equity affiliate 8,485
Amortization of excess basis in
equity affiliate (275)
Conform depletion expense to US GAAP (666)
Net income from unconsolidated
equity affiliate $7,544
SOURCE Harvest Natural Resources
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