Harvest Natural Resources Announces 2009 Fourth Quarter and Year-End Results
HOUSTON, March 16 /PRNewswire-FirstCall/ -- Harvest Natural Resources, Inc. (NYSE: HNR) today announced 2009 fourth quarter and year-end earnings.
Harvest posted fourth quarter net income of $5.1 million, or $0.15 per diluted share, compared to a net loss of $16.8 million, or $0.51 per share, for the 2008 fourth quarter. For the year ending December 31, 2009, Harvest's net loss was $3.1 million, or $0.09 per share, compared with a net loss of $21.5 million, or $0.63 per share, for 2008.
The fourth quarter results include exploration charges of $2.5 million, or $0.07 per diluted share. For the year, Harvest incurred exploration charges of $7.8 million, or $0.24 per share. Petrodelta, S.A. (Petrodelta), Harvest's Venezuelan affiliate, reported fourth quarter earnings of $48.8 million, $15.6 million net to Harvest's 32 percent equity interest, under International Financial Reporting Standards (IFRS). After adjustments to Petrodelta's IFRS earnings, primarily to conform to U.S. GAAP, Harvest's 32 percent share of Petrodelta's earnings was $13.0 million, a 56 percent increase over the prior quarter. For the year ending December 31, 2009, Petrodelta reported earnings of $143.3 million, or $45.9 million net to Harvest's 32 percent equity interest, under IFRS. After adjustments to Petrodelta's IFRS, primarily to conform to U.S. GAAP, Harvest's 32 percent share of Petrodelta's earnings was $32.6 million, a 14 percent increase over 2008.
Highlights for 2009 include:
- Petrodelta's self-funded drilling program drilled and completed 14 successful development wells and one new appraisal well, which increased oil production to 7.8 million barrels of oil, a 42 percent increase from the prior year and a 10 percent increase from mid-year. Petrodelta's average production rate during 2009 was 21,464 barrels of oil per day (BOPD);
- Drilled two new appraisal wells in the El Salto Field in Venezuela, of which one is producing and the other is waiting on permits for testing and production, proving-up new reserves and increasing recovery estimates, which increased total proved, probable and possible reserves to 224.3 MMBOE net to HNR, a 69 percent increase from the prior year;
- Drilled the Bar F exploration test well on the Antelope project in Utah and commenced an extensive testing program on the well. Currently, a potentially commercial oil discovery in the Lower Green River and Wasatch formations is being tested;
- In December, Harvest commenced production from the eight-well Monument Butte Extension appraisal and development drilling program in the Green River formation in the southern portion of Harvest's Antelope land position. Six wells are currently on production and produced at a combined average gross production rate of 1,959 BOPD and approximately 2 million cubic feet of gas per day (MMCFD) for the first thirteen days of March 2010. Cumulative gross oil production from the project from commencement through March 13, 2010 is approximately 101,000 barrels;
- Began site preparation for the two new exploratory wells at our Indonesian Budong-Budong oil prospect for a projected spud date that has been delayed to the second quarter of 2010;
- Progressed our technical evaluation of our Dussafu oil prospect in Gabon to identify a number of prospective targets in the sub-salt section for drilling later this year;
- In February 2010, raised net proceeds of $30 million from a Senior Convertible Notes offering; and
- Reduced general and administrative expenses to $23.5 million, a 16 percent reduction from the prior year and 19 percent lower than 2007.
Harvest President and Chief Executive Officer, James A. Edmiston, said, "Despite one of the most challenging business environments in recent memory, Harvest achieved several key milestones in the Company's growth strategy. The success of Petrodelta's development and appraisal drilling program demonstrates the robust economics and potential of our Venezuelan business and the El Salto and Temblador fields, in particular. We expect to continue growing production over the next several years with internally generated cash flow."
Edmiston continued, "Our Antelope land position in Utah is the source of several exciting opportunities. In late 2009 and early 2010, we completed drilling in our first joint venture to develop shallow oil wells in the Monument Butte Extension project. This eight-well project with Newfield Exploration as operator extended the known limits of the established Monument Butte oil field located adjacent to the southern end of our land position. The production results of this program have significantly exceeded our pre-drill expectations, and the wells in the program represent some of the best wells in the entire Monument Butte field. The oil and gas production and cash flow from this project improves our operating cash flow and we plan to pursue additional drilling opportunities in the area this year. We also completed drilling and commenced an extensive testing program on our Bar F exploration well in the Antelope project. Overall, drilling, logging and testing results to date have confirmed our technical view that the deep Mesaverde section contains significant natural gas resources and the Green River and Upper Wasatch sections may hold significant volumes of oil and gas correlative to the Greater Altamont and Bluebell fields immediately to the north."
Edmiston added, "Outside of the United States and Venezuela, we are poised to advance the development of two of our exploration projects this year. The operator in Indonesia, after numerous delays, is now preparing two drilling sites at our Budong-Budong oil prospect and plans to begin drilling our first well in the second quarter of this year. Further, we expect to drill our first exploratory well in our Dussafu block in Gabon late this year. In 2009, we grew reserves and production through the drill bit and as a result, emerged from a challenging year as a stronger company. Our successful capital raise in February gives us additional financial resources for executing our growth and diversification plan in 2010."
EXPLORATION AND PRODUCTION PROGRAMS
Venezuela
During 2009, Petrodelta drilled and completed 14 development wells and one appraisal well. The company drilled an additional appraisal well which is waiting on permits for testing and production. Petrodelta produced approximately 7.8 million barrels of oil, an increase of 42 percent over the previous year. Petrodelta also sold 4.4 billion cubic feet of natural gas, a decrease of 59 percent from 2008. The average sales price for Petrodelta's crude oil production was $57.62 per barrel, 31 percent lower than 2008, and the average sales price received for natural gas remains contractually fixed at $1.54 per thousand cubic feet. Petrodelta's average production rate during 2009 was 21,464 BOPD.
Petrodelta's shareholders have approved a $205 million capital budget for 2010, which is intended to be self-funding, to expand the company's drilling program and install infrastructure for increasing production. The drilling program has experienced a temporary delay.
Highlights of the Ryder Scott Reserve Report as of December 31, 2009 (Venezuela) include:
- Combined proved, probable and possible reserves net to Harvest increased by approximately 69 percent to 224.3 MMBOE at December 31, 2009 from 132.4 MMBOE at December 31, 2008. By category and net to Harvest, proved, probable and possible reserves increased by approximately 7 percent, 38 percent and 126 percent, respectively.
- Proved reserves volumes net to Harvest increased approximately 7 percent to 46.3 MMBOE at December 31, 2009 from 43.3 MMBOE at December 31, 2008. Proved reserves of the El Salto Field alone increased 43 percent. Approximately 82 percent of the proved reserves are oil and condensate with 25 percent being developed.
- The after tax present value of proved reserves net to Harvest and discounted at 10 percent increased by approximately 260 percent to $400 million at December 31, 2009.
For more information regarding our oil and gas reserves, see our 2009 Form 10K.
United States - Antelope
Operations activities in our Antelope prospect in Duchesne County, Utah are focused on two projects, the Monument Butte Extension shallow oil drilling and the Bar F exploration drilling project targeted at assessment of both deep Mesaverde gas and shallower Green River and Wasatch oil potential.
Monument Butte Extension Appraisal and Development Drilling Project
Our Monument Butte Extension project consisted of an eight-well appraisal and development drilling program targeting oil production from the Green River formation on the southern portion of our Antelope land position, adjacent to the established Monument Butte oil field. The Monument Butte Extension project is operated by Newfield Exploration with Harvest holding a 43 percent working interest. As of March 13, 2010, eight wells have been drilled. Six wells are currently on production. The remaining two wells have been completed and are expected to be placed on production in the very near future. The average combined gross production rate for the six wells for the first thirteen days of March 2010 is 1,959 BOPD and approximately 2 MMCFD. Results of the program to date have significantly exceeded our initial expectations for production rates and gross drilling and completion costs of approximately $800,000 to $900,000 per well are generally in line with pre-drilling estimates. We are working with our partner to assess the potential for expanding this project in 2010. Our 2010 budget for this project is $1.1 million and could be increased to $4.6 million contingent on the outcome of our evaluation of results and negotiations with our partners.
As of December 31, 2009, five wells had been drilled and two wells were producing. Proved reserves attributable to this development, net to Harvest are approximately 0.4 MMBOE at December 31, 2009. The after tax present value of proved reserves net to Harvest and discounted at 10 percent is approximately $4.7 million at December 31, 2009. Drilling and production performance of the project in the period after December 31, 2009 indicate the likelihood that the reported December 31, 2009 reserve numbers significantly understate the potential of the eight well project.
Bar F Exploration Drilling Project
During 2009 with Harvest as operator, the Bar F # 1-20-3-2 deep test well was drilled to a total depth of 17,566 feet and a production testing program is in progress. The well was targeted to explore for and develop oil and natural gas from multiple reservoir horizons in the Uintah Basin, Utah. Initial testing was focused on the evaluation of the productive potential of the Mesaverde tight gas reservoir over a prospective interval from 14,000 to 17,400 feet. Eight separate zones have been hydraulically fractured and multiple extended flow tests have been performed. We have tested flow rates of 1.5 to 2 MMCFD from selected intervals in the well. These tests have not conclusively determined the commercial potential of stand-alone Mesaverde development in the current gas price environment.
We have also initiated testing of multiple oil bearing intervals at depths from 8,200 feet to 9,500 feet in the Lower Green River and Upper Wasatch formations in the Bar F well. We have hydraulically fractured six zones, and flow testing is currently in progress. The objective of the oil testing program is to determine whether the oil bearing zones will demonstrate flow rates capable of commercial production in stand-alone vertical wells targeted to develop these reservoirs.
Results to date indicate a potential oil discovery in the Green River and Wasatch formations. We have tested 41 degree API crude oil from the uppermost horizon in the well at an average rate of 300 BOPD for an approximately 24 hour flow period with a flowing surface pressure in excess of 2200 psi. After drilling out plugs installed to isolate the remaining fractured zones, additional testing will be conducted over the entire oil bearing interval over the next few weeks.
We are currently evaluating our plans for follow-up drilling to the Bar F. We anticipate the likelihood of conducting an active appraisal and development drilling program in the second half of 2010. Our 2010 budget for the Antelope Bar F program is $5.7 million, although that budget could increase to $33.0 million contingent on the final test results and the magnitude of the 2010 appraisal and development drilling program.
Indonesia - Budong-Budong
In 2009, we completed interpretation of 2-D seismic data and began the process of preparing two locations for test wells. After numerous delays, the operator is close to mobilizing the drilling rig and associated equipment to the first location and plans to commence drilling operations in the second quarter of 2010. Harvest will fund 100 percent of the well expenditures up to a cap $10.7 million to earn our 47 percent working interest. Costs above that threshold will be shared proportionately with our partner. Our 2010 budget for the Budong-Budong project is $14.9 million, although that budget could increase to include appraisal drilling, depending on the well results.
Gabon - Dussafu Marin
The focus of operations in 2009 was reprocessing and interpretation of 2-D seismic data and pre-stack depth reprocessing of 3-D seismic data, which resulted in improved imaging and target identification. As a result of the improved imaging, we have matured the prospect inventory and identified several prospective targets in the sub-salt section in the Gamba and Syn-rift plays. These plays are commercially productive in the nearby Etame, Lucina and M'Bya fields. Subject to rig availability, we plan to drill an exploration well in the Dussafu prospect in the fourth quarter of 2010. The 2010 budget for the Dussafu PSC is $2.2 million, although this budget could be increased to $20.1 million contingent on rig availability and drilling results.
Oman – Block 64
We secured an Exploration, Production and Sharing Agreement (EPSA) with Oman for the Al Ghubar/Qarn Alam license (Block 64). The block covers 955,600 acres located in the gas and condensate rich Ghaba Salt Basin located near the established Barik, Saih Rawl and Saih Nihayda gas and condensate fields. We have a 100 percent working interest in the block during the exploration phase with an obligation to drill two wells over a three-year period with a funding commitment of $22.0 million. If natural gas is discovered, then our partner, Oman Oil Company, has the option to back-in to a 20 percent interest. We are currently compiling and analyzing existing data to identify drillable prospects. In 2010, we expect to complete well planning in preparation of drilling the first well in 2011. The 2010 budget for this project is $2.8 million with additional contingent funds of $1.9 million.
LIQUIDITY AND CAPITAL RESOURCES
We ended 2009 with a cash balance of approximately $32.3 million. As previously announced, we closed a Senior Convertible Notes offering on February 17, 2010, which raised $32.0 million with net proceeds to Harvest of approximately $30.0 million. The notes bear interest at 8.25 percent and are initially convertible into 175.2234 shares of common stock per $1,000 principal amount, equivalent to a conversion price of approximately $5.71 per share, subject to adjustment. The notes mature on March 1, 2013. This capital raise provides us with additional financial resources for executing our diversification and growth plan in 2010.
Non-GAAP Financial Measures
In this press release, Petrodelta's EBITDA disclosure is not presented in accordance with accounting principals generally accepted in the United States (GAAP) and Petrodelta's financials are not intended to be used in lieu of GAAP presentations of net income or cash flows from operating activities. EBITDA is presented because we believe it provides additional information with respect to both the performance of our fundamental business activities as well as our ability to meet our future capital expenditures and working capital requirements. We also believe that financial analysts commonly use EBITDA to analyze Petrodelta's performance. Although we present selected items that we consider in evaluating our performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in our operating results are also caused by changes in volumes, prices, exchange rates and numerous other factors. These types of variations are not separately identified in this release, but will be discussed, as applicable, in management's discussion and analysis of operating results in our 2009 Form 10-K.
A reconciliation of EBITDA to net income and cash flows from operating activities for the periods presented is included in the tables attached to this release.
Conference call
Harvest will hold a conference call at 10:00 a.m. Central Time on Tuesday, March 16, 2010, during which management will discuss Harvest's 2009 fourth quarter and year-end results. The conference leader will be James A. Edmiston, President and Chief Executive Officer. To access the conference call, dial 800-946-0712 or 719-325-2361, five to ten minutes prior to the start time. At that time you will be asked to provide the conference number, which is 6924463. A recording of the conference call will also be available for replay at 719-457-0820, passcode 6924463, until March 26, 2010.
The Company intends to file its 2009 Form 10-K with the Securities and Exchange Commission on Tuesday, March 16, 2010. A copy of the Form 10-K will be available on the Company's website at www.harvestnr.com.
The conference call will also be transmitted over the internet through the Company's website at www.harvestnr.com. To listen to the live webcast, enter the web site fifteen minutes before the call to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay of the webcast will be available beginning shortly after the call, and will remain on the web site for approximately 90 days.
About Harvest Natural Resources
Harvest Natural Resources, Inc., headquartered in Houston, Texas, is an independent energy company with principal operations in Venezuela, producing and exploration assets in the United States, exploration assets in Indonesia, West Africa and China and Oman and business development offices in Singapore and the United Kingdom. For more information visit the Company's website at 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 2009 Annual Report on Form 10-K and other public filings
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
December 31,
------------
2009 2008
---- ----
ASSETS:
-------
CURRENT ASSETS:
Cash and cash equivalents $32,317 $97,165
Accounts and notes receivable, net 11,478 11,570
Advances to equity affiliate 4,927 3,732
Prepaid expenses and other 2,214 3,964
----- -----
Total current assets 50,936 116,431
OTHER ASSETS 3,613 3,316
INVESTMENT IN EQUITY AFFILIATES 233,989 218,982
PROPERTY AND EQUIPMENT, net 60,241 23,537
------ ------
TOTAL ASSETS $348,779 $362,266
======== ========
LIABILITIES AND EQUITY:
-----------------------
CURRENT LIABILITIES:
Accounts payable, trade and other $696 $1,662
Accrued expenses 10,253 12,241
Advance from equity affiliate - 20,750
Accrued Interest 4,691 4,691
Income taxes payable 1,090 77
----- ---
Total current liabilities 16,730 39,421
ASSET RETIREMENT OBLIGATION 50 -
EQUITY:
STOCKHOLDERS' EQUITY:
Common stock and paid-in capital 213,732 209,259
Retained earnings 126,244 129,351
Treasury stock (65,383) (65,368)
------- -------
Total Harvest stockholders' equity 274,593 273,242
------- -------
Noncontrolling Interest 57,406 49,603
------ ------
Total Equity 331,999 322,845
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $348,779 $362,266
======== ========
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts, unaudited)
Three months Ended Twelve months Ended
December 31, December 31,
--------------- --------------
2009 2008 2009 2008
REVENUE:
Oil Sales $160 $- $160 $-
Gas Sales 21 21
--- --- --- ---
181 - 181 -
--- --- --- ---
EXPENSES:
Depletion, depreciation,
amortization and impairment 154 60 436 201
Dry hole costs - 10,828 - 10,828
Exploration expense 2,509 7,350 7,824 16,402
General and administrative 2,889 7,881 21,854 27,215
Taxes other than on income 260 301 1,026 (206)
--- --- ----- ----
5,812 26,420 31,140 54,440
----- ------ ------ ------
LOSS FROM OPERATIONS (5,631) (26,420) (30,959) (54,440)
------ ------- ------- -------
OTHER NON-OPERATING INCOME (EXPENSE)
Gain on financing transactions - - - 3,421
Investment earnings and other 234 659 1,085 3,663
Interest expense (5) 11 (5) (1,730)
-- -- -- ------
229 670 1,080 5,354
--- --- ----- -----
NET LOSS BEFORE INCOME TAXES (5,402) (25,750) (29,879) (49,086)
Income tax expense 37 (56) 1,182 25
--- --- ----- ---
NET LOSS FROM CONSOLIDATED COMPANIES (5,439) (25,694) (31,061) (49,111)
Net income from unconsolidated
equity affiliates 13,981 11,049 35,757 34,576
------ ------ ------ ------
NET INCOME (LOSS ) 8,542 (14,645) 4,696 (14,535)
Less: Net Income Noncontrolling
Interest 3,467 2,154 7,803 6,929
----- ----- ----- -----
NET INCOME (LOSS) ATTRIBUTABLE TO
HARVEST NATURAL RESOURCES, INC. $5,075 $(16,799) $(3,107) $(21,464)
====== ======== ======= ========
NET INCOME (LOSS) PER COMMON SHARE:
Basic $0.15 $(0.51) ($0.09) ($0.63)
Diluted $0.15 $(0.51) ($0.09) ($0.63)
----- ------ ------ ------
Weighted average shares outstanding:
Basic 33.2 32.9 33.1 34.1
Diluted 33.5 32.9 33.1 34.1
---- ---- ---- ----
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Three months Ended Twelve months Ended
December 31, December 31,
-------------- --------------
2009 2008 2009 2008
---- ---- ---- ----
Cash Flows From Operating
Activities:
Net Income (loss) $8,542 $(14,645) $4,696 $(14,535)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in) operating
activities:
Depletion, depreciation and
amortization 154 60 436 201
Dry hole costs - 10,828 - 10,828
Asset Retirement Obligation - - -
Gain on financing transactions - - - (3,421)
Net income from unconsolidated
equity affiliate (13,981) (11,049) (35,757) (34,576)
Non-cash compensation related
charges 982 2,000 4,087 6,061
Dividends received from
unconsolidated equity affiliate - - - 72,530
Changes in operating assets and
liabilities:
Accounts and notes receivable 96 (573) 92 548
Advances to equity affiliate (522) (496) (1,195) 12,620
Prepaid expenses and other 551 (2,653) (1,055) (5,632)
Commodity hedging contract - -
Accounts payable (213) 1,397 (966) (2,957)
Accounts payable, related
party - - - (10,093)
Advance from equity affiliate - 20,750 - 20,750
Accrued expenses (6,792) 291 (6,296) (1,073)
Accrued Interest - (25) - (445)
Income taxes payable 14 (100) 1,013 (426)
--- ---- ----- ----
Net Cash Provided By (Used
In) Operating Activities (11,169) 5,785 (34,945) 50,380
------- ----- ------- ------
Cash Flows From Investing
Activities:
Additions of property and
equipment (5,326) (9,078) (28,022) (26,317)
Investment in equity affiliate - (2,161) - (2,161)
Decrease in restricted cash - - - 6,769
Investment costs (209) (205) (581) (1,346)
---- ---- ---- ------
Net Cash Used In Investing
Activities (5,535) (11,444) (28,603) (23,055)
------ ------- ------- -------
Cash Flows From Financing
Activities:
Net proceeds from issuances of
common stock 164 220 386 1,565
Purchase of treasury stock - (1,023) - (29,416)
Payments on notes payable - - - (7,211)
Financing costs (132) (152) (1,686) (1,075)
Dividends paid to
noncontrolling interest - (14,506) - (14,864)
--- ------- --- -------
Net Cash Used In Financing
Activities 32 (15,461) (1,300) (51,001)
--- ------- ------ -------
Net Increase (Decrease) in
Cash (16,672) (21,120) (64,848) (23,676)
Cash and Cash Equivalents at
Beginning of Period 48,989 118,285 97,165 120,841
------ ------- ------ -------
Cash and Cash Equivalents at End
of Period $32,317 $97,165 $32,317 $97,165
======= ======= ======= =======
PETRODELTA, S. A.
STATEMENTS OF OPERATIONS
(in thousands except per BOE and per share amounts, unaudited)
Three months Ended December 31,
--------------------------------------
2009 2008
------------------ ------------------
Barrels of oil sold 2,165 1,562
MCF of gas sold 764 1,636
Total BOE 2,292 1,835
Total BOE - Net of 33.33%
Royalty 1,528 1,223
Average price/barrel $70.00 $46.57
Average price/mcf $1.54 $1.54
$/BOE - $/BOE -
$ net (1) $ net (1)
--- ------- --- -------
REVENUES:
Oil sales $151,559 $72,746
Gas sales 1,170 2,514
Royalties (54,377) (32,833)
98,352 64.37 42,427 34.69
------ ----- ------ -----
EXPENSES:
Operating expenses 6,732 4.41 13,469 11.01
Workovers - - 10,870 8.89
Depletion, depreciation,
amortization 9,951 6.51 8,034 6.57
General and administrative (1,812) (1.19) 11,952 9.77
Windfall profits tax 882 0.58 -
Taxes other than on income (2,789) (1.83) (10,629) (8.69)
------ ----- ------- -----
12,964 8.48 33,696 27.55
------ ---- ------ -----
INCOME FROM OPERATIONS 85,388 55.89 8,731 7.14
------ ----- ----- ----
Investment Earnings and Other (3,617) (2.37) (2,329) (1.91)
------ ----- ------ -----
Income before income tax 81,771 53.52 6,402 5.23
Current income tax expense 37,417 24.49 9,163 7.49
Deferred income tax (benefit) (4,402) (2.88) (27,089) (22.15)
------ ----- ------- ------
NET INCOME 48,756 31.91 24,328 19.89
Adjustment to reconcile to
reported Net Income from
Unconsolidated Equity Affiliate:
Deferred income tax benefit 6,418 9,839
----- -----
Net income equity affiliate 42,338 14,489
Equity interest in unconsolidated
equity affiliate 40% 40%
--- ---
Income before amortization of
excess basis in equity affiliate 16,935 5,796
Amortization of excess basis
in equity affiliate (363) (290)
Conform depletion
expense to GAAP (285) 4,307
Reserve for interest
receivable (net of tax) - 2,428
--- -----
Net income from unconsolidated
equity affiliate $16,287 $12,241
------- -------
Non-GAAP Financial
Measures:
Reconcile NET INCOME as
reported under IFRS to
adjusted EBITDA:
NET INCOME $48,756 31.91 $24,328 19.89
Add back non-cash:
Depletion, depreciation
and amortization 9,951 6.51 8,034 6.57
Pension Liability (8,346) (5.46) - -
Deferred income tax (benefit) (4,402) (2.88) (27,089) (22.15)
CASH FROM OPERATIONS 45,959 30.08 5,273 4.31
Investment earnings and other 3,617 2.37 2,329 1.91
Current income tax expense 37,417 24.49 9,163 7.49
Adjusted EBITDA (IFRS) $86,993 56.94 $16,765 13.71
======= ===== ======= =====
Twelve months Ended December 31,
-----------------------------------
2009 2008
--------------- ------------------
Barrels of oil sold 7,835 5,505
MCF of gas sold 4,397 10,700
Total BOE 8,568 7,288
Total BOE - Net of 33.33%
Royalty 5,712 4,859
Average price/barrel $57.62 $83.22
Average price/mcf $1.54 $1.54
$/BOE - $/BOE -
$ net (1) $ net (1)
--- ------- --- -------
REVENUES:
Oil sales $451,473 $458,113
Gas sales 6,778 16,506
Royalties (156,799) (168,790)
-------- --------
301,452 52.77 305,829 62.94
------- ----- ------- -----
EXPENSES:
Operating expenses 48,311 8.46 52,946 10.90
Workovers - - 24,663 5.08
Depletion, depreciation,
amortization 33,666 5.89 25,509 5.24
General and administrative 9,746 1.71 5,974 1.23
Windfall profits tax 882 0.15 56,377 11.60
Taxes other than on income - - - -
--- --- --- ---
92,605 16.21 165,469 34.05
------ ----- ------- -----
INCOME FROM OPERATIONS 208,847 36.56 140,360 28.89
------- ----- ------- -----
Investment Earnings and Other (3,617) (0.63) (2,329) (0.48)
------ ----- ------ -----
Income before income tax 205,230 35.93 138,031 28.41
Current income tax expense 105,868 18.53 69,374 14.28
Deferred income tax (benefit) (43,922) (7.68) (52,560) (10.82)
------- ----- ------- ------
NET INCOME 143,284 25.08 121,217 24.95
Adjustment to reconcile to
reported Net Income from
Unconsolidated Equity Affiliate:
Deferred income tax benefit 38,516 34,827
------ ------
Net income equity affiliate 104,768 86,390
Equity interest in unconsolidated
equity affiliate 40% 40%
--- ---
Income before amortization of
excess basis in equity affiliate 41,907 34,556
Amortization of excess basis
in equity affiliate (1,356) (1,155)
Conform depletion expense to
GAAP 183 2,533
Reserve for interest
receivable (net of tax) -
Net income from unconsolidated --- ---
equity affiliate $40,734 $35,934
------- -------
Non-GAAP Financial Measures:
Reconcile NET INCOME as reported
under IFRS to adjusted EBITDA:
NET INCOME $143,284 25.08 $121,217 24.95
Add back non-cash:
Depletion, depreciation
and amortization 33,666 5.89 25,509 5.24
Pension Liability 7,209 1.26 - -
Deferred income tax (benefit) (43,922) (7.68) (52,560) (10.82)
CASH FROM OPERATIONS 140,237 24.55 94,166 19.37
Investment earnings and other 3,617 0.63 2,329 0.48
Current income tax expense 105,868 18.53 69,374 14.28
------- ----- ------ -----
Adjusted EBITDA (IFRS) $249,722 43.71 $165,869 34.13
======== ===== ======== =====
(1) $/BOE costs are now calculated on a net 33.33% royalty basis.
SOURCE Harvest Natural Resources, Inc.
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