HOUSTON, Nov. 9, 2010 /PRNewswire-FirstCall/ -- Harvest Natural Resources, Inc. (NYSE: HNR) today announced 2010 third quarter earnings and provided an operational update.

Harvest reported a third quarter loss of $5.0 million, or $0.15 per diluted share, compared to net income of $0.8 million, or $0.02 per diluted share, for the same period last year. � The third quarter results include exploration charges of $2.6 million, or $0.08 per diluted share. � Excluding exploration charges, the third quarter net loss would have been $0.07 per diluted share. � Compensation related costs during the quarter increased by approximately $0.6 million due to the impact of rising Harvest stock price on stock based awards granted under the Company's stock plans. � Petrodelta reported a third quarter loss of $2.9 million, $0.9 million net to Harvest's 32 percent 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 $4.9 million. � 

Certain special charges of $1.2 million recorded as Exploration Expense incurred during the third quarter related to the one time election made by Harvest's partner in the Budong PSC to increase Harvest's carry obligation by $2.7 million. � The additional carry obligation election increased Harvest's ownership in the Budong PSC by 7.4 percent to a total of 54.4 percent.

Also, Petrodelta's earnings include a special charge of $13.7 million ($4.4 million net to Harvest's 32 percent interest) in the third quarter reflecting adjustments to the current tax expense.�  The special charge relates to foreign exchange losses on the revaluation of certain liabilities that are not deductible for tax purposes.

After adjusting for the special charges, Harvest would have recorded net income of $0.6 million, or $0.02 per diluted share.

Highlights for the third quarter of 2010 include:

VENEZUELA

• Oil production from Petrodelta averaged 24,120 barrels of oil per day (BOPD); an increase of 15 percent over the same period in 2009. � Petrodelta operated two drilling rigs most of the quarter and drilled four successful development wells;
• In August 2010, Petrodelta's board of directors declared a dividend of $30.5 million, $12.2 million net to HNR Finance ($9.8 million net to Harvest's 32 percent interest), which was received on October 22, 2010;
• New reserve report reflects a 10 percent increase net to Harvest's 32 percent interest in proved reserves to 50.4 million barrels of oil equivalent (MMBOE) and a 26 percent increase net to Harvest's 32 percent interest in proved and probable reserves to 103.0 MMBOE at September 30, 2010, as compared to year-end 2009;
• Petrodelta is now operating two drilling rigs in the Temblador field. � The second drilling rig started operations mid-July. � A workover rig began operations in mid-October in the Temblador field. � The current production rate from Petrodelta is approximately 29,000 BOPD, with El Salto producing in excess of 6,000 BOPD;

United States

• Harvest's net share of production from the Antelope projects in Utah totaled approximately 146,000 barrels of oil equivalent for the nine months ended September 30, 2010. � Current net production to Harvest during the month of October 2010 was 587 barrels of oil equivalent per day (BOEPD);
• Two wells of a five-well Lower Green River/Upper Wasatch delineation and development drilling program have been successfully drilled and are in varying stages of completion and testing;
• Four of the six wells related to the second phase of the Monument Butte Extension Appraisal and Development project have been drilled to total depth (TD) and are producing at a restricted combined rate of approximately 400 gross BOPD and 1.1 gross million cubic feet of gas per day (MMCFD);

Indonesia

• More than 95 percent of the drilling rig and other materials and equipment have been transported to the Lariang LG-1 drill site; the well is expected to spud in November 2010;

Financing

• Closed a $60.0 million term loan facility on October 28, 2010, providing the Company with sufficient liquidity to execute its current development and exploration program;

Harvest President and Chief Executive Officer, James A. Edmiston, said, "The third quarter was a very exciting one for the Company. � In Venezuela, both production and reserves are rising and we expect that trend to continue as we now have two rigs running. � Current oil production rates are at levels not seen since early 2005. � The key to further production increases will shift to infrastructure in the near term as productive capacity continues to build, and given the significant cash from operations being generated, Petrodelta should have more than enough financial resources to meet those requirements."

Edmiston continued, "Our projects in Utah advanced according to plan in the quarter. � In the Monument Buttes extension, four new wells are on production and in the north, our appraisal program of the Bar F Green River/Wasatch discovery has provided very encouraging results thus far. � Given our large, contiguous leasehold in the area as a result of our "first mover" advantage and the well results to date, we expect that the Uintah Basin will be a major focus of the Company's future growth. � Finally, as a result of our recently announced financing, Harvest is positioned to advance our opportunity-rich portfolio without interruption, including the highly anticipated drilling in our Indonesia, Budong-Budong block. � With further drilling and testing in Utah, continued growth in Venezuela and commencement of drilling in Indonesia, the fourth quarter is shaping up to be one of the more interesting in the Company's history."

EXPLORATION AND PRODUCTION PROGRAMS

Venezuela

During the third quarter 2010, Petrodelta drilled and completed four successful development wells, produced approximately 2.2 million barrels of oil and sold 0.5 billion cubic feet of natural gas. � Petrodelta produced an average of 24,120 BOPD during the third quarter 2010. � Cash from Operations for the quarter were $40.8 million, or $26.70 per barrel of oil equivalent, with average prices for the quarter of $65.31 per barrel.

On February 4, 2010, Petrodelta's board of directors endorsed a capital budget of $205 million for Petrodelta's 2010 business plan. � The budget assumed utilizing two rigs to drill both development and appraisal wells for both maintaining production capacity and appraising the substantial resource bases in the El Salto field and presently non-producing Isleno field. � Currently, Petrodelta is operating two drilling rigs in the Temblador field. � Also, Petrodelta has contracted a workover rig which was mobilized to the Temblador field on October 15, 2010. � Due to delays in rig availability and El Salto facilities project execution, Petrodelta has spent only $47 million of its 2010 budget through September 30, 2010. � It is unlikely that Petrodelta will spend its entire 2010 capital budget during the remaining three months of 2010.

The appraisal and development activity in the El Salto field continues to exceed expectations. � During the third quarter of 2010, the ELS-33 well was drilled and completed in the Lower Jobo sand and began producing on September� 1, 2010. � The ELS-33 has tested at rates of 1,800 BOPD. � The ELS-33 also drilled a pilot hole which encountered a full column of oil in a block that was previously unpenetrated and represents a significant expansion of Block 5 in the El Salto field not included in the 2009 reserve report. � The ELS-34 well was drilled and completed in the Lower Jobo sand of the newly identified Block 5 extension and began production on September� 26, 2010. � The ELS-34 has tested at rates of 1,634 BOPD with indicated potential of over 3,000 BOPD based on bottom-hole-pressures. � Current production of El Salto is 6,700 BOPD.

During the third quarter 2010, Harvest commissioned an interim reserve report for Petrodelta to assess and secure the growth potential of the El Salto field. � The reserve report reflects a 10 percent increase net to Harvest's 32 percent interest in proved reserves to 50.4 MMBOE and a 26 percent increase net to Harvest's 32 percent interest in proved and probable reserves to 103.0 MMBOE at September 30, 2010, as compared to year-end 2009. � The increase was driven primarily by the drilling of the ELS-33 and ELS-34 wells in Block 5 of Petrodelta's mostly undeveloped El Salto field. � The interim reserve report only included the El Salto field. � In the Company's opinion, there has been no material change to the reserves at the other five fields in 2010 except for 2010 production.

In August 2010, Petrodelta declared a dividend of $30.5 million, $12.2 million net to HNR Finance ($9.8 million net to Harvest's 32 percent interest), which was received October 22, 2010. � The dividend represents 50 percent of Petrodelta's net income as reported under IFRS for the year ended December� 31, 2009. �  � 

EXPLORATION AND OTHER DEVELOPMENT DRILLING ACTIVITIES

Lower Green River/Upper Wasatch Oil Delineation and Development Project

Harvest commenced drilling operations in July 2010 on its previously announced Harvest-operated five-well delineation and development drilling program.�  This program represents a follow up to Harvest's first quarter 2010 Lower Green River/Upper Wasatch oil discovery in the Bar F #1-20-3-2 well. The five wells will be drilled back to back and have planned TDs of between 10,000 and 12,000 feet each. � As of November 7, 2010, the program was nearing 55 percent overall completion as detailed below. � Harvest has a 70 percent working interest in the program.

The first well in the program, the Kettle #1-10-3-1, was drilled to 12,000 feet and was hydraulically fractured with nine stages. � The well flowed naturally up casing a total of 4,440 barrels of oil and 17.6 million cubic feet (MMCF) of gas during a nine-day flowback during clean-up. � Tubing was then run in the well, which flowed naturally up tubing at a restricted rate in excess of 500 BOPD and 1.5 MMCFD on a 30 hour test. � The well is now shut in pending tank battery installation which is in progress.

The second well, the O.N. Moon #1-27-3-2, was drilled to a TD of 10,169 feet and was hydraulically fractured with nine stages in early November. � As of November 7, 2010, the well is flowing back up casing at a restricted rate in excess of 600 BOPD and 0.6 MMCFD with flowing surface pressure of 1,700 psi.

The third well in the program, the Dart #1-12-3-2, has been drilled to an intermediate casing depth of 9,700 feet and logged approximately 140 feet of apparent pay. � The well has a planned TD of 11,000 feet. � 

On November 4, 2010, the Company was notified that as a result of two refinery turnarounds in Salt Lake City, the capacity to market our production of yellow wax from the Bar F, the Kettle and the O.N. Moon wells would be temporarily restricted. � While we anticipate that this restriction will be relatively short term in nature, production from the three wells will be restricted to approximately 700 BOPD until the situation is resolved.

Monument Butte Extension Appraisal and Development Project

The six-well Monument Butte Extension Appraisal and Development project is a follow up on the successful eight-well program which commenced in 2009. � The program is operated by Newfield Exploration, targets the Green River formation, and is located immediately adjacent to the block containing the initial eight wells. � The wells are being drilled to TDs ranging from 6,800 to 7,100 feet.�  Harvest has a 37 percent working interest in the six-well program.

During the third quarter of 2010, four of the six planned wells were drilled, completed, and placed on production.�  As of October 25, 2010, the four wells had produced a combined 24,000 gross barrels of crude and 47 gross MMCF of gas.�  The gross current restricted production rate from the combined four wells on October 25, 2010 was approximately 400 BOPD and 1.1 MMCFD of gas.�  The remaining two wells are expected to be drilled prior to the end of 2010.

Indonesia

Transportation of the drilling rig and support equipment and materials to the drilling location is virtually complete. � The first of two planned exploration wells is expected in November 2010 at the Lariang LG-1 site. � Site preparations are underway for the second exploration well, the Karama KD-1, which is scheduled to spud during the first quarter of 2011. � 

On September 15, 2010, the Company's partner in the Budong PSC exercised their option to increase Harvest's carry obligation by $2.7 million to a total of $19.9 million ($7.9 million for acquisition of seismic and $12.0 million for drilling). � The additional carry increases Harvest's ownership by 7.4 percent to 54.4 percent. � The change in ownership interest is subject to regulatory approval.

During the initial exploration period, the Budong PSC covered 1.35 million acres. � The Budong PSC includes a ten-year exploration period and a 20-year development phase. � Pursuant to the terms of the Budong PSC, at end of the first three-year exploration phase, 35 percent of the original area was relinquished to BP Migas. � The second three-year exploration phase began in January 2010 covering 0.88 million acres. � 

Dussafu Project - Gabon ("Dussafu PSC")

The Dussafu PSC partners and the Republic of Gabon, represented by the Ministry of Mines, Energy, Petroleum and Hydraulic Resources, entered into the second exploration phase of the Dussafu PSC with an effective date of May� 28, 2007. � It has been agreed that the second three-year exploration phase will be extended until May� 27, 2011, at which time the partners can elect to enter a third exploration phase. � Operational activities during the nine months ended September� 30, 2010 focused on maturation of prospect inventory and well planning. � Currently, the Company is in the process of procuring long lead items required for drilling. � Subject to drilling rig availability, Harvest expects to drill an exploratory well in the second quarter of 2011. � 

Oman ("Block 64 EPSA")

Operational activities on the Al Ghubar / Qarn Alam license ("Block 64 EPSA") during the nine months ended September� 30, 2010 include the geological studies, baseline environmental and social study and 3-D pre-stack depth migration reprocessing of approximately 1,000 square kilometers of existing 3-D seismic data. � Harvest expects to drill the first of the two exploratory wells in the second half of 2011. � 

Reserves Disclosure

In December 2008, the SEC issued its final rule, Modernization of Oil and Gas Reporting, which is effective for reporting 2009 and forward reserve information. � The SEC's Modernization of Oil and Gas Reporting allows the disclosure of probable and possible reserves.

Proved reserves are those quantities of oil and gas which through analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward from known reservoirs and under existing economic conditions, operating methods, government regulations, etc., i. e., at prices as described above and costs as of the date the estimates are made. � Prices include consideration of changes in existing prices provided only by contractual arrangements and do not include adjustments based upon expected future conditions. � Probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered. � Possible reserves are those additional reserves which are less certain to be recovered than probable reserves and thus the probability of achieving or exceeding the proved plus probable plus possible reserves is low.

Reserves may be estimated using probabilistic methods in which there is at least a 90 percent probability of recovery of proved reserves, at least a 50 percent probability of recovery of probable reserves, and at least a 10 percent probability of recovery of possible reserves. Harvest's probable reserves were calculated using probabilistic methods and represent the 50 percent probability that the actual quantities recovered will be equal to or greater than the proved plus probable estimate. The larger quantity of proved reserves plus probable reserves, as compared to proved reserves only, is attributable largely to using a less conservative interpretation of reservoir size and recovery factor in estimating probable reserves.

The estimate of reserves is made using available geological and reservoir data as well as production performance data. These estimates are prepared by an independent third party petroleum engineering consulting firm and revised, either upward or downward, as warranted by additional data. Revisions are necessary due to changes in, among other things, reservoir performance, prices, economic conditions and governmental restrictions, as well as changes in the expected recovery associated with infill drilling. Decreases in prices, for example, may cause a reduction in some proved reserves due to reaching economic limits earlier. A material adverse change in the estimated volumes of proved reserves could have a negative impact on DD&A expense and could result in the recognition of impairment.

In calculating the reserves in this press release, initial production rates are based on the current producing rates for those wells now on production. Test data and other related information were used to estimate the anticipated initial production rates for those wells or locations that are not currently producing. If no production decline trend has been established, future production rates were held constant, or adjusted for the effects of curtailment where appropriate, until a decline in ability to produce was anticipated. An estimated rate of decline was then applied to depletion of the reserves. If a decline trend has been established, this trend was used as the basis for estimating future production rates. For reserves not yet on production, sales were estimated to commence at an anticipated date furnished by Harvest to Ryder Scott.

Ryder Scott performed a reserve evaluation on the El Salto field with an effective date of September 30, 2010. The El Salto field represents approximately 55 percent of proved oil reserves, 87 percent of probable oil reserves and 75 percent of possible oil reserves of Harvest Natural Resources in Venezuela. Harvest believes that no material changes in remaining reserves have occurred in the other five fields of Petrodelta (Uracoa, Bombal, Tucupita, Isleno and Temblador) since December 31, 2009. Reserves on these other five fields have been estimated effective September 30, 2010 by subtracting the actual volumes produced and sold during 2010 through September 30, 2010 from the reserves as of December 31, 2009.

Non-GAAP Financial Measures

In this press release, Petrodelta's EBITDA disclosure is not presented in accordance with accounting principles 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2010.

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 Standard Time on Tuesday, November 9, 2010, during which management will discuss Harvest's 2010 third quarter results. � The conference leader will be James A. Edmiston, President and Chief Executive Officer. � To access the conference call, dial 719-457-2629 or 888-503-8163, five to ten minutes prior to the start time. � At that time you will be asked to provide the conference number, which is 1444133. � A recording of the conference call will also be available for replay at 719-457-0820, passcode 1444133, through November 16, 2010.

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 website 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 website 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, 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.

SOURCE Harvest Natural Resources, Inc.