2014

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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