Harvest Natural Resources Announces 2008 Fourth Quarter and Year-End Results
HOUSTON, March 5, 2009 /PRNewswire-FirstCall via COMTEX News Network/ --
Harvest Natural Resources, Inc. (NYSE: HNR) today announced 2008 fourth quarter
and year-end earnings.
Harvest posted a fourth quarter loss of $19.7 million, or $0.60 per share,
compared to net income of $68.1 million, or $1.86 per share, for the 2007
fourth quarter. For the year ending December 31, 2008, Harvest's net loss
was $24.3 million, or $0.71 per share, compared to net income of $60.1 million,
or $1.59 per share for 2007.
Included in the fourth quarter and year-end results is $10.8 million, or $0.32
per share, in dry hole costs related to the Harvest Hunter #1 well, which is
Harvest's exploratory well in its Gulf Coast AMI that was plugged and abandoned
on January 9, 2009. Also included in the fourth quarter and year-end
results is $16.4 million, or $0.48 per share, in exploration expense related to
seismic in Indonesia, Gabon and the United States. For the year 2008,
dry-hole costs and exploration expense totaled $27.2 million, or $0.80 per
share.
Highlights for 2008 include:
-- Petrodelta's self-funding drilling program
increased oil production
from a low of 12,200 barrels of oil per
day (BOPD) in April 2008 to a
current rate in excess of 20,000
BOPD;
-- To date, Petrodelta has drilled and completed ten
new wells since
re-commencing drilling operations in
April 2008, eight of which were
drilled in 2008;
-- Seismic data acquisition to support oil exploration
projects in
Indonesia and Gabon has been
completed and processing and interpretation
are underway;
-- Preliminary engineering is completed and Harvest
has submitted a permit
application to the US Army Corps of
Engineers for drilling the
Company's second Gulf Coast AMI
prospect in Texas State waters;
-- Harvest acquired leases in the Company's Antelope
project area in
the Uintah Basin, Utah, resulting in
a land position for Harvest and its
partner of approximately 44,000 net
acres as of the end of February 2009
(Harvest's net acreage position is
22,000 acres); and
-- Harvest's balance sheet at year end remains
debt-free.
Harvest President and Chief Executive Officer, James A. Edmiston, said,
"Harvest took several major steps in 2008 towards realizing the value in
its portfolio through production growth in Venezuela and further
diversification of its portfolio through our exploration programs in the US,
Indonesia and Gabon. We have demonstrated through our drilling program in
Venezuela that significant production growth can be attained with internally
generated cash flow, preserving Harvest's ability to execute our exploration
and diversification program. Petrodelta was able to grow daily production
64% from 12,200 BOPD to in excess of 20,000 BOPD in less than a year from
initiation of drilling. Notably, Petrodelta's first two wells drilled in
the Temblador Field, which is one of the three fields awarded to Petrodelta in
the conversion process, have met with outstanding results with each of the two
wells producing in excess of 2,000 BOPD with very low water cut."
Edmiston continued, "Outside of Venezuela, we continue to make progress
towards maturing our high impact exploration portfolio. In 2008, we
completed seismic data acquisition projects in Indonesia and Gabon.
Processing and interpretation of this data and of existing onshore and offshore
3D seismic from the US Gulf Coast, is currently underway. With our land
acquisition program nearly complete, we look forward to drilling our first well
in Utah on our Antelope project late in the second quarter."
EXPLORATION AND PRODUCTION PROGRAMS
Venezuela
During 2008, Petrodelta drilled and completed eight development wells and
produced approximately 5.5 million barrels of oil, an increase of two percent
over the previous year. Petrodelta also sold 10.7 billion cubic feet of natural
gas, a decrease of 20 percent from 2007. The average sales price for
Petrodelta's crude oil production was $83.22 per barrel and the average sales
price received for natural gas was $1.54 per thousand cubic feet.
Petrodelta has been advised by the Venezuelan Government that production output
will remain at approximately 16,000 BOPD effective January 1, 2009, consistent
with OPEC production quotas. However, Petrodelta receives ongoing
instructions from the Venezuelan authorities and has thus far been permitted to
produce in excess of 20,000 BOPD. For the foreseeable future, Petrodelta
will continue to receive and comply with such instructions from the authorities
as they seek to balance supply to meets its OPEC quota.
United States- Gulf Coast
Harvest drilled the Harvest Hunter #1 exploratory well in Calcasieu Parish,
Louisiana in the fourth quarter of 2008 and undertook a testing program to
evaluate three prospective reservoir horizons. On January 9, 2009, the
well was determined not to be commercial and was plugged and abandoned.
The cost of drilling and testing the well was $10.8 million and was written off
to dry hole costs at December 31, 2008.
During 2008, 3-D seismic re-processing, site surveying and preparation of
preliminary engineering documents were undertaken on the West Bay Prospect, the
second exploratory prospect in the Gulf Coast AMI. In December 2008,
Harvest filed an Application to Install Structures to Drill and Produce Oil and
Gas with the US Army Corps of Engineers - Galveston District. At year-end
2008, the permit application was under review by the Corps of Engineers, and
drilling is expected to commence in late 2009 or early 2010, upon receipt of
the requisite permit from the Corps of Engineers. Harvest is continuing
to re-process and refine the interpretation of its existing proprietary 3-D
seismic data over the prospect in preparation for drilling of the initial test
well.
United States- Antelope
The Antelope project is targeted to explore for and develop oil and natural gas
from multiple reservoir horizons in the Uintah Basin, Utah. Harvest will
drill a deep gas exploration test well in 2009 and expects to spud the well
during the second quarter. To date, Harvest and its partner have acquired
approximately 44,000 acres (Harvest's net acreage position is 22,000 acres) in
the Antelope project area and continue to build their land position.
Harvest is the operator and has a 50% working interest in the project.
Harvest will fund 100% of the cost of the first test well.
Indonesia- Budong-Budong
Harvest opened a field office in Jakarta, Indonesia and completed a 2-D seismic
data acquisition program in the fourth quarter of 2008 in the Budong PSC.
Data processing and interpretation is currently underway. It is expected
that the first of two planned onshore exploration wells will be spud in the
second half of 2009.
Gabon- Dussafu Marin
In the fourth quarter of 2008, the acquisition of 650 kilometers of 2-D seismic
was completed. The data is presently being processed to determine the
hydrocarbon potential of the syn-rift play on the license. The play
produces in the adjacent Lucina and M'Bya fields. Also during 2008,
Harvest began reprocessing 1,076 square kilometers of existing 3-D seismic to
depth image the sub-salt structure and determine the potential of the prolific
Gamba play that is producing to the north of the Dussafu license in the Etame
fields. Based on the results of the seismic processing, Harvest expects
to make a decision later this year regarding the drilling of an exploration
well in 2010.
2009 PLANNED EXPENDITURES
Planned exploration expenditures for 2009 are $38.8 million to evaluate the
Company's US and international prospect portfolio. Operations in
Venezuela will be funded by internal cash flow. Harvest has sufficient
financial resources to fund planned expenditures and maintain a cash reserve
without having to raise additional capital.
Edmiston continued, "In spite of the current environment within our
industry, Harvest will continue to invest in and add to our growth portfolio in
2009. Further, we expect that Petrodelta will continue to build on its
string of success as it continues to develop and appraise its substantial
portfolio of opportunities. The strength of Harvest's balance sheet
coupled with the underlying robust economics of Petrodelta allows us to continue
to move forward in this difficult, low-price environment."
Conference call
Harvest will hold a conference call at 10:00 a.m. Central Standard Time on
Thursday, March 5, 2009, during which management will discuss Harvest's 2008
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 719-325-4760 or 877-723-9517, five to ten minutes prior
to the start time. At that time you will be asked to provide the
conference number, which is 5004366. A recording of the conference call
will also be available for replay at 719-457-0820, passcode 5004366, until
March 14, 2009.
The Company intends to file its 2008 Form 10-K with the Securities and Exchange
Commission on Thursday, March 5, 2009. 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, exploration
assets in the United States, Indonesia, West Africa and China 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 2008 Annual
Report on Form 10-K and other public filings.
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
December 31, December 31,
2008 2007
Restated
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents
$97,165 $120,841
Restricted
cash
- 6,769
Accounts and notes receivable,
net
11,570 9,418
Advances to equity
affiliate
3,732 16,352
Prepaid expenses and
other
3,964 1,032
Total current
assets
116,431 154,412
OTHER
ASSETS
3,316 4,301
INVESTMENT IN EQUITY
AFFILIATES
215,380 254,775
PROPERTY AND EQUIPMENT,
net
23,537 3,583
TOTAL
ASSETS
$358,664 $417,071
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable, trade and
other
$1,662 $5,949
Accounts payable, related
party
- 10,093
Accrued
expenses
12,241 11,895
Advance from equity
affiliate
20,750
-
Accrued
Interest
4,691 5,136
Income taxes
payable
77 503
Short-term
debt
- 9,302
Total current
liabilities
39,421 42,878
MINORITY
INTEREST
48,882 57,546
STOCKHOLDERS' EQUITY:
Common stock and paid-in
capital
209,259 202,323
Retained
earnings
126,470 150,815
Treasury
stock
(65,368) (36,491)
Total stockholders'
equity
270,361 316,647
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$358,664 $417,071
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts, unaudited)
Three months Twelve months
Ended December 31, Ended December 31,
2008 2007
2008 2007
Restated
Restated
REVENUE:
Oil
Sales
$- $11,217
$- $11,217
-
11,217 -
11,217
EXPENSES:
Depreciation
60 42
201 384
Dry hole
costs
10,828
- 10,828
-
Exploration expense
7,350 314
16,402 850
General and
administrative
7,881 9,644
27,215 29,096
Taxes other than on
income
301 (65)
(206) 423
26,420 9,935
54,440 30,753
LOSS FROM
OPERATIONS
(26,420) 1,282 (54,440)
(19,536)
OTHER NON-OPERATING
INCOME (EXPENSE)
Gain on financing
transactions
- 34,581 3,421
49,623
Investment earnings and
other 659
1,493 3,663 9,051
Interest
expense
11 (1,015) (1,730)
(8,224)
670 35,059
5,354 50,450
NET INCOME (LOSS) BEFORE
INCOME TAXES AND
MINORITY
INTERESTS
(25,750) 36,341 (49,086) 30,914
Income tax expense
(benefit) (56)
5,283
25 6,312
NET INCOME (LOSS) BEFORE
MINORITY
INTERESTS
(25,694) 31,058 (49,111) 24,602
Minority interest in
consolidated
subsidiary
companies
1,433 18,630
6,208 19,781
NET INCOME (LOSS) FROM
CONSOLIDATED
COMPANIES
(27,127) 12,428 (55,319)
4,821
Net income (loss) from
unconsolidated equity
affiliates
7,447 55,708 30,974
55,297
NET INCOME
(LOSS)
$(19,680) $68,136 $(24,345) $60,118
NET INCOME (LOSS) PER
COMMON SHARE:
Basic
($0.60) $1.95 ($0.71)
$1.65
Diluted
($0.60) $1.86 ($0.71)
$1.59
Weighted average shares
outstanding:
Basic
32.9 35.0
34.1 36.5
Diluted
32.9 36.7
34.1 37.9
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Three months Ended Twelve months Ended
December 31,
December 31,
2008
2007
2008 2007
Restated
Restated
Cash Flows From Operating
Activities:
Net
loss
$(19,680) $68,136 $(24,345) $60,118
Adjustments to reconcile
net loss to net cash
provided by (used in)
operating activities:
Depletion, depreciation
and
amortization
60
42
201 384
Dry hole
costs
10,828
- 10,828
-
Gain on financing
transactions
- (34,581) (3,421) (49,623)
Net (income) loss from
unconsolidated equity
affiliate
(7,447) (55,708) (30,974) (55,297)
Non-cash compensation
related
charges
2,000 1,724
6,061 6,108
Minority interest in
consolidated subsidiary
companies
1,433 18,630 6,208
19,781
Deferred
taxes
5,608
5,608
Dividends received from
unconsolidated equity
affiliate
-
72,530 -
Changes in operating assets
and liabilities:
Accounts and notes
receivable
(573) 299
548 393
Advances to equity
affiliate
(496) (3,363) 12,620
2,794
Prepaid expenses and
other (2,653)
(14) (5,632) 214
Accounts
payable
1,397 1,868
(2,957) 2,122
Accounts payable, related
party
- 108
(10,093) 456
Accrued
expenses
291 2,337
(1,073) (1,251)
Advance from equity
affiliate
20,750
-
20,750 -
Accrued
Interest
(25)
113 (445) (1,714)
Deferred
taxes
(11,217) -
(11,217)
Income taxes
payable
(100) (383)
(426) 469
Net Cash Provided By
(Used In) Operating
Activities
5,785 (6,401)
50,380 (20,655)
Cash Flows From Investing
Activities:
Additions of property and
equipment
(9,078) (307) (26,317)
(647)
Investment in equity
affiliate
(2,161) (2,791) (2,161) (7,388)
Decrease in restricted
cash
- 49,005
6,769 82,120
Investment
costs
(205) (4,125) (1,346)
(4,125)
Net Cash Provided By
(Used In) Investing
Activities
(11,444) 41,782 (23,055)
69,960
Cash Flows From Financing
Activities:
Net proceeds from issuances
of common
stock
220 1,397
1,565 1,938
Purchase of treasury
stock (1,023) (666)
(29,416) (32,755)
Payments on notes
payable
- (23,093) (7,211) (45,726)
Financing
costs
(152) -
(1,075) -
Dividends paid to minority
interest
(14,506) -
(14,864) -
Net Cash Used In
Financing
Activities (15,461)
(22,362) (51,001) (76,543)
Net Decrease in
Cash (21,120)
13,019 (23,676) (27,238)
Cash and Cash Equivalents at
Beginning of
Period
118,285 107,822 120,841
148,079
Cash and Cash Equivalents at
End of
Period
$97,165 $120,841 $97,165 $120,841
PETRODELTA, S. A.
STATEMENTS OF OPERATIONS
(in thousands except per BOE and per share amounts, unaudited)
Three months Ended Twelve months Ended
December 31, 2008 December 31, 2008
Barrels of oil
sold
1,562
5,505
MCF of gas
sold
1,636
10,700
Total
BOE
1,835
7,288
Total BOE - Net of 30%
Royalty
1,366
5,637
Average
price/barrel
$46.57
$83.22
Average
price/mcf
$1.54
$1.54
$ $/BOE - net $
$/BOE - net
REVENUES:
Oil
sales
$72,746
$458,113
Gas
sales
2,514
16,506
Royalties
(32,833)
(168,790)
42,427 31.06
305,829 54.25
EXPENSES:
Operating
expenses
13,469 9.86
52,946 9.39
Workovers
10,870 7.96
24,663 4.38
Depletion
7,822 5.73
24,778 4.40
Depreciation
212
0.15
731 0.12
General and administrative
11,952
8.75 5,974
1.06
Windfall profits
tax
56,377 10.00
Taxes other than on income
(10,629)
(7.78)
- -
33,696 24.67
165,469 29.35
INCOME FROM
OPERATIONS
8,731 6.39
140,360 24.90
Interest
Expense
2,329
1.70 2,329
0.41
Income before income
tax
6,402 4.69
138,031 24.49
Current income tax
expense
9,163 6.71
69,374 12.31
Deferred income tax
(benefit)
(27,089) (19.83)
(52,560) (9.32)
NET
INCOME
24,328 17.81
121,217 21.50
Adjustment to reconcile to
reported Net Income from
Unconsolidated Equity
Affiliate:
Deferred income
tax benefit
18,844
43,835
Net income (loss)
equity affiliate
5,484
77,382
Equity interest in
unconsolidated equity
affiliate
40%
40%
Income (loss) before
amortization of excess
basis in equity
affiliate
2,194
30,953
Amortization of excess
basis in equity
affiliate
(290)
(1,155)
Conform depletion
expense to
GAAP
4,307
2,533
Reserve for interest
receivable
2,428
-
Net income from
unconsolidated equity
affiliate
$8,639
$32,331
As discussed in Note 1 of our 2008 Annual Report on Form 10K, we are restating
our historical financial statements for the year ended December 31, 2007, and
revising quarterly information for the quarters ended December 31, 2007, March
31, 2008, June 30, 2008 and September 30, 2008. The restatement and
resulting revisions relate to the deferred tax adjustment to reconcile our
share of Petrodelta's net income reported under International Financial
Reporting Standards ("IFRS") to that required under accounting
principles generally accepted in the United States of America
("GAAP") and recorded within Net income from unconsolidated equity
affiliates. We are presenting this restatement in our 2008 Annual Report
on Form 10-K.
The adjustment to record our share of Petrodelta's net income under GAAP should
only include deferred tax related to non-monetary temporary differences
impacted by inflationary adjustments under Venezuela law. In 2008, we
determined that since October 1, 2007, all deferred tax recorded in
Petrodelta's IFRS financial statements had been adjusted in error.
Accordingly, we had misstated our Net income from unconsolidated equity
affiliates with a resulting direct impact on our Net Income.
The following tables set forth the effect of the adjustments described above on
Net Income for the year ended December 31, 2007.
Consolidated Statement of Income
Year ended December 31, 2007
As Previously
(Dollars in thousands, except
per
Reported Restated
share information)
Net income
(loss)
$ 57,237 $ 60,118
Net Income (Loss) Per Common
Share:
Basic
$ 1.57
$ 1.65
Diluted
$ 1.51
$ 1.59
SOURCE Harvest Natural Resources, Inc.
http://www.harvestnr.com
--------------------------------------------------------------------------------------------------
Harvest Natural Resources
1177 Enclave Parkway Suite 300
Houston, TX 77077
.
<