Harvest Natural Resources Announces 2011 Second
Quarter Results
Harvest
Natural Resources, Inc. (NYSE: HNR) today announced 2011 second quarter
earnings and provided an operational update.
Harvest
reported second quarter earnings of approximately $90.1 million,
or $2.24
per diluted share, compared to a loss of $296,000, or $0.01
per diluted share, for the same period last year. � The second quarter
results include exploration charges of $4.7 million,
or $0.12
per diluted share, and a loss on the extinguishment of debt of $9.7
million, or $0.24 per
diluted share. Also during the second quarter, the Company reported income
from discontinued operations of $99.2 million,
or $2.47
per diluted share, for revenue, expenses and gain recognized related to the
sale of the Utah
assets. � Adjusted for exploration charges, loss on extinguishment of
debt, gain from the sale of the Utah assets
and the income related to the discontinued operations, second quarter 2011
earnings would have been $5.3 million, or $0.13
per diluted share. �
Petrodelta reported earnings during the second quarter of $47.3
million, $15.1 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 $14.2 million.
�
Highlights for the
second quarter of 2011 include:
Venezuela
- Oil
production from Petrodelta averaged 30,680
barrels of oil per day (BOPD), an increase of 42 percent over the same
period in 2010. � The current production rate from Petrodelta is approximately 35,000 BOPD;
- During
the three months ended June 30, 2011,
Petrodelta drilled and completed four
development wells and one water injection well;
- Initial
production (IP) rates for the Temblador
(TT-80) and El Salto (ELS-36) wells were approximately 3,200 BOPD each;
the highest IP rates recorded since the beginning of the drilling
campaign in 2008;
- Currently,
Petrodelta is operating two drilling rigs and
one workover rig. � Petrodelta
expects to take possession of a third drilling rig in late August
2011;
United
States
- Completed
sale of Utah
assets on May
17, 2011 and received $217.8 million,
$205
million net of transaction related costs and
estimated taxes; achieving a return on investment of 138% with a project
cycle time of 3 years;
Indonesia
- The
Karama-1 (KD-1) well spud on June 20, 2011,
and is the second of two planned exploration wells located in the Budong-Budong Block, onshore West Sulawesi;
- The
KD-1 well will be drilled to test a thrusted
surface anticline with stacked Miocene and Eocene targets to a planned
total measured depth of approximately 10,800 feet;
- After
setting 13 3/8" casing at 3,227 feet on July 21, 2011,
the rig substructure and derrick were temporarily moved to remediate
settling on the drilling pad. � Drilling is expected to recommence on August 11, 2011;
- Geological
and geophysical studies continue on the Lariang
basin to mature an LG appraisal well and further exploration prospects;
Gabon
- Harvest
announced that it has encountered oil in the Dussafu
Ruche Marin-1 (DRM-1) exploration well drilled in the Dussafu Marin PSC, in the offshore waters of Gabon,
West Africa;
- DRM-1
well reached a vertical depth of 9,953 feet within the Upper Dentale Formation. � Log evaluation, pressure
data and samples indicate that Harvest has discovered approximately 60
feet of pay in a 90 foot oil column within its primary objective, the Gamba Formation;
- Subsequently
the DRM-1 well has been deepened to reach a true vertical depth subsea
(TVDSS) of 11,355 feet to test the prospectivity
of the Middle and Lower Dentale Formations.
� Log evaluation, pressure data and a fluid sample indicate that
Harvest has discovered a second oil accumulation with approximately 35
feet of oil pay within the secondary objective of the Middle Dentale Formation;
- The Gamba discovery has been appraised by drilling two
sidetracks to test the lateral extent and structural elevation of the Gamba reservoir under a salt ridge;
- The
first sidetrack (DRM-1ST1) 0.75 miles to the southwest was drilled to a
total depth (TD) in the Upper Dentale of
11,562 feet (9,428 feet TVDSS) and found 19 feet of oil pay in the Gamba reservoir;
- The
second sidetrack (DRM-1 ST2) 0.5 miles to the northwest of the original
DRM-1 was drilled to a TD in the Upper Dentale
of 10,615 feet (9,429 feet TVDSS) and found 40 feet of oil pay in the Gamba reservoir;
- The
well will be suspended pending further exploration and development
activities;
Oman
- Exploration
drilling is scheduled to commence late in the fourth quarter of 2011
with two wells planned on two large structures with combined mean
prospective resources of 2.45 trillion cubic feet (TCF) of gas with 100
million barrels (MMBBLS) condensate. � In the upside case this
could rise to 4.4 TCF of gas with 185 MMBBLS of condensate;
- Tendering
process initiated to contract a drilling rig and oil field services and
materials;
- Thirteen
prospects and leads have been evaluated for the Barik
Miqrat and Amin reservoirs with total mean
prospective resources of 8.9 TCF of gas with 350 MMBBLS of condensate
and upside (P10) of 17.7 TCF of gas with 730 MMBBLS of condensate;
Corporate
- Paid
off $60.0
million bridge loan on May 17, 2011.
� Reduced outstanding debt to $32.0 million.
Harvest
President and Chief Executive Officer, James A. Edmiston,
said: � "In the second quarter, the company saw significant
progress across all its assets. � Petrodelta
set production records with production up 40 percent year on year and 7
percent above the previous quarter. � Further, cash from operations at Petrodelta was up 18 percent over the prior quarter in
spite of the effects of the new Windfall Profits Tax. � With the arrival
of the third drilling rig in late August, we expect this impressive
production growth to continue."
"In
Gabon, we announced the Gamba oil discovery in our
Ruche Marin 1 well and subsequently drilled two sidetracks to delineate the
structure, both of which found oil as well. � The significance of this
discovery and the appraisal sidetracks is that it sets the company on a
course toward a future development of the Ruche discovery, the two
pre-existing discoveries, Moubenga and Walt
Whitman, and further nearby structures which have been substantially
de-risked as a result of the information gained in drilling the Ruche
well." �
"In
Indonesia, we are progressing, after remedial work to the drilling pad,
toward the primary targets in the KD-1 well on the Budong-Budong
block. � And finally, in Oman, we
have begun procurement activities for the end of year drilling of two wells
to test two large gas-condensate structures on our Qarn
Alam block."
Venezuela
During
the three months ended June 30, 2011, Petrodelta produced approximately 2.8 MMBBLS of oil and
sold 0.4 billion cubic feet (BCF) of natural gas; the average daily oil
production was 30,680 barrels of oil per day (BOPD), an increase of 42
percent over the same period in 2010 and an increase of 7 percent over the
previous quarter. � Cash from Operations for the quarter was $58.0
million, or $30.48 per
barrel of oil equivalent, with average prices for the quarter of $101.72
per barrel.
During
the second quarter of 2011, Petrodelta drilled and
completed five wells, four of which were development wells drilled in the Uracoa, El Salto and Temblador
Fields and one water injection well drilled in the Uracoa
Field. � Currently, Petrodelta is operating
two drilling rigs and one workover rig. � Petrodelta expects to take possession of a third drilling
rig in late August
2011.
Petrodelta completed facilities at PDVSA's EPM transfer point
for the El Salto field. � Completion of the facilities has enabled Petrodelta to increase production from the El Salto field
and deliver oil production via pipeline. � Petrodelta
is continuing additional infrastructure enhancement projects in El Salto and Temblador. �
On April
18, 2011, the Venezuelan government published in the Official
Gazette, the Law Creating a Special Contribution on Extraordinary
Prices and Exorbitant Prices in the International Hydrocarbons Market
(amended Windfall Profits Tax). � The amended Windfall Profits Tax
establishes a special contribution for extraordinary prices to the Venezuelan
government of 20 percent to be applied to the difference between the price
fixed by the Venezuela
budget for the relevant fiscal year (set at $40 per barrel
for 2011) and $70
per barrel. � The amended Windfall Profits Tax also establishes a
special contribution for exorbitant prices to the Venezuelan government of
(1) 80 percent when the average price of the Venezuelan Export Basket (VEB)
exceeds $70
per barrel but is less than $90 per
barrel; (2) 90 percent when the average price of the VEB exceeds $90
per barrel but is less that $100 per
barrel; and (3) 95 percent when the average price of the VEB exceeds $100
per barrel. � The amended Windfall Profits Tax caps the royalty paid on
production at $70
per barrel. � It is not clear from the drafting of the amended Windfall
Profits Tax how the $70 cap on royalty barrels will
be applied to royalties paid in-kind. � Petrodelta
pays royalties in-kind and has not applied the $70 cap to its
royalty barrels as doing so may overstate earnings. � Until further
guidance is issued, Petrodelta
will continue applying the current sales price to its royalty barrels.
� Also, the amended Windfall Profits Tax considers that an exemption of
this tax could be granted by MENPET for the incremental production of projects
and grass root developments until the specific investments are recovered.
� This exemption has to be considered and approved in a case by case
basis by MENPET. � We believe several of the fields operated by Petrodelta may qualify for the exemption from the amended
Windfall Profits Tax. � We are waiting for clarification from MENPET on
the definitions of incremental production and grass roots developments, as
well as guidance on the process for applying for the exemption. � There
is still a lack of clarity on several issues.
UNITED STATES - Antelope Project - Utah
On May 17,
2011, the Company completed the sale of its oil and gas
assets in Utah's Uinta
Basin to an affiliate of Newfield Exploration Company (Newfield).
� We received cash proceeds of approximately $217.8 million
which reflects increases to the purchase price for customary adjustments and
deductions for transaction related costs. � The sale has an effective
date of March
1, 2011. � The net proceeds from the sale are
estimated to be $205.0
million after deductions for transaction related costs
and estimated taxes.
Bank of
America Merrill Lynch served as the Company's financial advisor in
connection with the transaction. � This transaction is part of the
Company's ongoing process of exploring strategic alternatives announced in
September of 2010.
EXPLORATION
DRILLING ACTIVITIES
Indonesia
Budong-Budong PSC - Indonesia
The
Lariang-1 (LG-1) well spud on January 6, 2011,
and was the first of two planned exploration wells located in the Budong-Budong Block, onshore West Sulawesi. � The
well was drilled to a depth of 5,311 feet and encountered multiple oil and
gas shows within the secondary Miocene objective. � Wireline
logs and samples of reservoir fluids confirmed the presence of hydrocarbons,
trap and seal thus greatly de-risking the exploration potential of the
license. � The high formation pressures and control difficulties
required the use of more casing strings at shallower depths than were
originally planned. � At a depth of 5,300 feet, losses of heavy drilling
mud into the formation were encountered which, when coupled with the very
high formation pressures, led to the decision to discontinue operations and plug
and abandon the well for safety reasons on April 8, 2011.
� The primary Eocene targets had not yet been reached, as the well was
planned for a total measured depth of approximately 7,200 feet.
The
KD-1 well spud on June
20, 2011 and is the second of two planned exploration
wells located in the Budong-Budong Block, onshore
West Sulawesi. � The KD-1 well will be drilled to test a thrusted surface anticline with stacked Miocene and
Eocene targets to a planned total measured depth of approximately 10,800
feet. �
After
setting 13 3/8" casing at 3,227 feet on July 21, 2011,
the rig substructure and derrick were temporarily moved to remediate settling
on the drilling pad. � Drilling is expected to recommence on August
11, 2011. �
Harvest
owns a 64.4 percent non-operated working interest in the Budong-Budong
Block PSC.
Gabon West Africa
Dussafu Project - Gabon (Dussafu PSC)
On June 13,
2011, the Company announced that it has encountered oil
in the wildcat well DRM-1 drilled in the Dussafu
Marin PSC, in the offshore waters of Gabon, West Africa.
� The well spud on April 28, 2011 and was drilled to
test the potential of the pre-salt Gamba and Dentale Formations.
Drilled
with the Transocean Sedneth 701 semi-submersible
drilling unit in 380 feet of water, the DRM-1 well reached a vertical depth
of 9,953 feet within the Upper Dentale Formation.
� Log evaluation, pressure data and samples indicate that Harvest has
discovered approximately 60 feet of pay in a 90 foot oil column within its
primary objective, the Gamba Formation.
Subsequently
the DRM-1 well was deepened to reach a TVDSS of 11,355 feet to test the prospectivity of the Middle and Lower Dentale
Formations. � Log evaluation, pressure data and a fluid sample indicate
that Harvest discovered a second oil accumulation with approximately 35 feet
of oil pay within the secondary objective of the Middle Dentale
Formation.
The Gamba discovery has been appraised by drilling two
appraisal sidetracks to test the lateral extent and structural elevation of
the Gamba reservoir underneath the thick salt
ridge. � The first sidetrack (DRM-1ST1) 0.75 miles to the southwest was
drilled to a TD in the Upper Dentale of 11,562
feet, (9,428 feet TVDSS) and found 19 feet of oil pay in the Gamba reservoir.
The
second sidetrack (DRM-1ST2) 0.5 miles to the northwest of the original DRM-1
wellbore was drilled to a TD in the Upper Dentale
of 11,562 feet, (9,428 feet TVDSS) and found 40 feet of oil pay in the Gamba reservoir. � Following completion of the
drilling operations in the second sidetrack, the well will be suspended for
possible future use and the rig demobilized.
Initial
oil in place volume for the Gamba reservoir is
estimated to be in the order of 30 - 40 MMBBLS.
The
well will be suspended pending further exploration and development activities.
� The Ruche well information will be used to refine the 3-D seismic
depth model and improve our understanding for predicting Gamba
structure under the salt and defining potential resources in the nearby
satellite structures for future drilling targets. � Reservoir and
concept engineering studies will now start with the aim of evaluating the
commerciality of the discovered oil at Ruche, as well as the two previous oil
discoveries in the Walt Whitman and Moubenga wells.
Harvest
operates the Dussafu PSC, holding a 66.667 percent
interest.
Oman
Block
64 EPSA
A
comprehensive work program aimed at evaluating the prospectivity
and maturing drillable prospects has been completed and included 1,185 square
kilometers of PSDM 3D seismic reprocessing and technical studies. � The
resulting PreSDM seismic data has improved the
understanding of highly prospective salt-supported structures. � The
culmination of this work has been the recognition of considerable prospectivity, and high-grading of prospects with stacked
Paleozoic reservoirs in large tilted fault blocks. � Thirteen prospects
and leads have been identified in the license with combined mean prospective
resources of 8.9 TCF of gas and 350 MMBBLS of condensate.
The
first two prospects to be drilled are Mafraq South,
with mean prospective resources of 255 million barrels of oil equivalent
(MMBOE), and the Al Ghubar North with mean
prospective resources of 254 MMBOE.
Mafraq South (MFS-A): The Mafraq
structure is a large salt-supported high with stacked reservoir targets in
the Barik, Miqrat and
Amin reservoirs in both the footwall and hanging wall fault blocks comprising
four segments (north, west, south and east). � Mean prospective
resources of the entire Greater Mafraq fault blocks
is approximately 2.5 TCF of gas and 93 MMBBLS of condensate with an upside of
4.3 TCF of gas and 169 MMBBLS of condensate. � Mean prospective
resources in the South segment total 1.25 TCF of gas with 46 MMBBLS of
condensate. � The MFS-A well will be drilled to 3,300 meters TVDSS to
test coincident fault bounded dip closure at all three reservoir levels.
� The geological chance of success for a discovery in the Barik is estimated to be 28 percent. � The dry hole
cost for the well is estimated to be $8.45 million.
Al Ghubar North (AGN-A): This structure is a
northeast-southwest trending fault block with stacked reservoir targets in
the Barik, Miqrat and
Amin Formations. � Mean prospective resources of 960 BCF of gas and 54
MMBBLS of condensate in the Barik and 241 BCF of
gas in the Miqrat have been calculated for the Al Ghubar North segment. � In the (P10) upside case,
the prospect could contain prospective resources of 2.23 TCF of gas and 102
MMBBLS of condensate. � The well will be drilled to 3,140 meters TVDSS
to test coincident fault bounded dip closure at the three reservoir levels.
� The geological chance of success for a discovery in the Barik is estimated to be 23 percent. � The dry hole
cost for the well is estimated to be $8.11 million.
Well
planning and procurement of long lead items began in April 2011 in
anticipation of spudding the first of the two
exploratory wells in late 2011. � The tendering process has been
initiated to contract a drilling rig and other drilling services and
materials.
Stellar
Energy Advisors Limited have been retained to
market and seek a partner to fund the drilling of these wells in exchange for
equity in the license, via a farmout.
Harvest
operates the Block 64 EPSA, holding an 80 percent interest.
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 Quarterly
Report on Form 10-Q for the quarter ended June 30, 2011.
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 Daylight Time on
Tuesday, August� 9,
2011, during which management will discuss Harvest's 2011 second quarter
results. � The conference leader will be James A. Edmiston,
President and Chief Executive Officer. � To access the conference call,
dial 800-723-6575 or 785-830-1997, five to ten minutes prior to the start
time. � At that time you will be asked to provide the conference number,
which is 9236641. � A recording of the
conference call will also be available for replay at 719-457-0820, passcode
9236641, through August
13, 2011.
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,
exploration assets in the United States,
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.
CONTACT:
Stephen
C. Haynes
Vice President, Chief Financial Officer
(281) 899-5716
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 2010 Annual Report
on Form 10-K and other public filings.
|
|
HARVEST NATURAL RESOURCES,
INC.
|
|
|
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
(in thousands,
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
December 31,
|
|
|
|
|
|
|
|
2011
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
Cash and cash equivalents�
|
$ 136,032
|
$ � � � � 58,703
|
|
|
|
|
Restricted cash�
|
7,323
|
-
|
|
|
|
|
Accounts and
notes receivable, net�
|
|
|
|
|
|
|
|
Oil and gas
revenue receivable�
|
-
|
1,907
|
|
|
|
|
|
Dividend receivable
- equity affiliate�
|
12,200
|
-
|
|
|
|
|
|
Joint interest and other�
|
7,203
|
2,325
|
|
|
|
|
|
Notes receivable�
|
3,335
|
3,420
|
|
|
|
|
Advances to equity
affiliate�
|
2,002
|
1,706
|
|
|
|
|
Assets held
for sale�
|
-
|
88,774
|
|
|
|
|
Prepaid expenses
and other�
|
1,732
|
4,793
|
|
|
|
|
|
Total current assets�
|
169,827
|
161,628
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS�
|
2,499
|
2,477
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTMENT IN EQUITY AFFILIATES�
|
310,351
|
287,933
|
|
|
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT, net�
|
61,094
|
36,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
$ 543,771
|
$ � � � 488,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY:�
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:�
|
|
|
|
|
|
|
Accounts
payable, trade and other�
|
$ � 11,373
|
$ � � � � � 3,205
|
|
|
|
|
Accounts payable
- � carry obligation�
|
3,617
|
8,395
|
|
|
|
|
Accrued expenses�
|
14,622
|
15,087
|
|
|
|
|
Liabilities held
for sale
|
-
|
663
|
|
|
|
|
Accrued Interest
|
880
|
896
|
|
|
|
|
Income taxes payable
|
5,585
|
72
|
|
|
|
|
|
Total current liabilities�
|
36,077
|
28,318
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER LONG-TERM LIABILITIES�
|
1,133
|
1,834
|
|
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM DEBT�
|
32,000
|
81,237
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES�
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY:�
|
|
|
|
|
|
STOCKHOLDERS' EQUITY:�
|
|
|
|
|
|
|
Common stock and
paid-in capital�
|
231,120
|
230,763
|
|
|
|
|
Retained earnings�
|
232,404
|
141,584
|
|
|
|
|
Treasury stock�
|
(65,925)
|
(65,543)
|
|
|
|
|
|
Total Harvest stockholders' equity�
|
397,599
|
306,804
|
|
|
|
Noncontrolling Interest�
|
76,962
|
70,051
|
|
|
|
|
Total Equity�
|
474,561
|
376,855
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY�
|
$ 543,771
|
$ � � � 488,244
|
|
|
|
|
|
|
|
|
|
|
|
|
HARVEST NATURAL RESOURCES,
INC.
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
|
|
|
|
(in thousands except per share amounts, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
Ended June 30,
|
|
|
|
|
|
2011
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
� Depreciation and amortization
|
$ � � � 119
|
$ � � 142
|
|
|
|
|
|
� Exploration expense
|
4,650
|
1,491
|
|
|
|
|
|
� General and administrative
|
6,742
|
5,829
|
|
|
|
|
|
� Taxes
other than on income
|
307
|
198
|
|
|
|
|
|
|
11,818
|
7,660
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
(11,818)
|
(7,660)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
NON-OPERATING INCOME (EXPENSE)
|
|
|
|
|
|
|
|
� Investment
earnings and other
|
240
|
140
|
|
|
|
|
|
� Interest expense
|
(1,704)
|
(688)
|
|
|
|
|
|
� Loss on
extinguishment of debt
|
(9,682)
|
-
|
|
|
|
|
|
� Other
non-operating expenses
|
(244)
|
-
|
|
|
|
|
|
� Loss on
exchange rates
|
(32)
|
(24)
|
|
|
|
|
|
|
(11,422)
|
(572)
|
|
|
|
|
|
LOSS FROM
CONSOLIDATED COMPANIES CONTINUING OPERATIONS
|
|
|
|
|
|
|
|
� � � � BEFORE INCOME TAXES
|
(23,240)
|
(8,232)
|
|
|
|
|
|
Income tax
expense (benefit)
|
260
|
152
|
|
|
|
|
|
LOSS FROM
CONSOLIDATED COMPANIES CONTINUING OPERATIONS
|
(23,500)
|
(8,384)
|
|
|
|
|
|
Net income from
unconsolidated equity affiliates
|
17,899
|
8,915
|
|
|
|
|
|
NET INCOME
(LOSS) FROM CONTINUING OPERATIONS
|
(5,601)
|
531
|
|
|
|
|
|
DISCONTINUE OPERATIONS
|
|
|
|
|
|
|
|
� Income
from discontinued operations
|
480
|
803
|
|
|
|
|
|
� Gain on
sale of assets
|
103,933
|
-
|
|
|
|
|
|
� Income
tax expense on gain
|
(5,200)
|
-
|
|
|
|
|
|
� � � Income from
discontinued operations
|
99,213
|
803
|
|
|
|
|
|
NET INCOME
|
93,612
|
1,334
|
|
|
|
|
|
Less: � Net
Income Attributable to Noncontrolling Interest
|
3,562
|
1,630
|
|
|
|
|
|
NET INCOME
(LOSS) ATTRIBUTABLE TO HARVEST
|
$ 90,050
|
$ � (296)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three� months� Ended
|
|
|
|
|
June� 30,� 2011
|
June� 30,� 2010
|
|
|
|
NET INCOME
(LOSS) ATTRIBUTABLE TO HARVEST PER COMMON SHARE:
|
Basic
|
Dilutive
|
Basic
|
Dilutive
|
|
|
|
� Income
from continuing operations
|
(9,163)
|
(9,163)
|
(1,099)
|
(1,099)
|
|
|
|
� Discontinued operations
|
99,213
|
99,213
|
803
|
803
|
|
|
|
� � � � Net income attributable to Harvest
|
90,050
|
90,050
|
(296)
|
(296)
|
|
|
|
� Weighted
average common shares outstanding
|
34,039
|
34,039
|
33,399
|
33,399
|
|
|
|
� Effect
of dilutive shares
|
|
6,162
|
-
|
-
|
|
|
|
� � � � Weighted average common shares including
dilutive effect
|
34,039
|
40,201
|
33,399
|
33,399
|
|
|
|
|
|
|
|
|
|
|
|
Per Share:
|
|
|
|
|
|
|
|
� Loss
from continuing operations
|
$ � (0.27)
|
$ � (0.23)
|
$ � � � � � (0.03)
|
$ � (0.03)
|
|
|
|
� Discontinued operations
|
$ � � 2.92
|
$ � 2.47
|
$ � � � � � � 0.02
|
$ � 0.02
|
|
|
|
� � � � Net income (loss) attributable to Harvest
|
$ � � 2.65
|
$ � 2.24
|
$ � � � � � (0.01)
|
$ � (0.01)
|
|
|
|
|
|
|
|
|
|
|
|
HARVEST NATURAL RESOURCES,
INC.
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
|
|
|
|
|
|
(in thousands except per share amounts, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months
Ended June 30,
|
|
|
|
|
|
|
2011
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
� Depreciation and amortization
|
$ � � � 243
|
$ � � � 243
|
|
|
|
|
|
� Exploration expense
|
5,839
|
2,737
|
|
|
|
|
|
� General and administrative
|
13,068
|
10,846
|
|
|
|
|
|
� Taxes
other than on income
|
656
|
498
|
|
|
|
|
|
|
19,806
|
14,324
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
(19,806)
|
(14,324)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
NON-OPERATING INCOME (EXPENSE)
|
|
|
|
|
|
|
|
� Investment
earnings and other
|
385
|
271
|
|
|
|
|
|
� Interest expense
|
(3,916)
|
(1,104)
|
|
|
|
|
|
� Loss on
extinguishment of debt
|
(9,682)
|
-
|
|
|
|
|
|
� Other
non-operating expenses
|
(675)
|
-
|
|
|
|
|
|
� Loss on
exchange rates
|
(43)
|
(1,551)
|
|
|
|
|
|
|
(13,931)
|
(2,384)
|
|
|
|
|
|
LOSS FROM
CONSOLIDATED COMPANIES CONTINUING OPERATIONS
|
|
|
|
|
|
|
|
� � � � BEFORE INCOME TAXES
|
(33,737)
|
(16,708)
|
|
|
|
|
|
Income tax
expense (benefit)
|
482
|
133
|
|
|
|
|
|
LOSS FROM
CONSOLIDATED COMPANIES CONTINUING OPERATIONS
|
(34,219)
|
(16,841)
|
|
|
|
|
|
Net income from
unconsolidated equity affiliates
|
36,003
|
47,282
|
|
|
|
|
|
NET INCOME FROM
CONTINUING OPERATIONS
|
1,784
|
30,441
|
|
|
|
|
|
DISCONTINUED OPERATIONS
|
|
|
|
|
|
|
|
� Income
(loss) from discontinued operations
|
(2,786)
|
2,818
|
|
|
|
|
|
� Gain on
sale of assets
|
103,933
|
-
|
|
|
|
|
|
� Income
tax expense on gain
|
(5,200)
|
-
|
|
|
|
|
|
� � � Income from
discontinued operations
|
95,947
|
2,818
|
|
|
|
|
|
NET INCOME
|
97,731
|
33,259
|
|
|
|
|
|
Less: � Net
Income Attributable to Noncontrolling Interest
|
6,911
|
8,965
|
|
|
|
|
|
NET INCOME
ATTRIBUTABLE TO HARVEST
|
$ 90,820
|
$ 24,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
June 30, 2011
|
June 30, 2010
|
|
|
|
NET INCOME
ATTRIBUTABLE TO HARVEST PER COMMON SHARE:
|
Basic
|
Dilutive
|
Basic
|
Dilutive
|
|
|
|
� Income
(loss) from continuing operations
|
(5,127)
|
(5,127)
|
21,476
|
21,476
|
|
|
|
� Discontinued operations
|
95,947
|
95,947
|
2,818
|
2,818
|
|
|
|
� � � � Net income attributable to Harvest
|
90,820
|
90,820
|
24,294
|
24,294
|
|
|
|
� Weighted
average common shares outstanding
|
33,992
|
33,992
|
33,337
|
33,337
|
|
|
|
� Effect
of dilutive shares
|
-
|
5,841
|
-
|
4,038
|
|
|
|
� � � � Weighted average common shares including
dilutive effect
|
33,992
|
39,833
|
33,337
|
37,375
|
|
|
|
|
|
|
|
|
|
|
|
Per Share:
|
|
|
|
|
|
|
|
� Income
(loss) from continuing operations
|
$ � (0.15)
|
$ � (0.13)
|
$ � 0.64
|
$ � 0.57
|
|
|
|
� Discontinued operations
|
$ � � 2.82
|
$ � � 2.41
|
$ � 0.09
|
$ � 0.08
|
|
|
|
� � � � Net income attributable to Harvest
|
$ � � 2.67
|
$ � � 2.28
|
$ � 0.73
|
$ � 0.65
|
|
|
|
|
|
|
|
|
|
|
HARVEST NATURAL RESOURCES,
INC.
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
(in thousands,
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six� months� Ended� June� 30,
|
|
|
|
|
|
|
2011
|
2010
|
|
|
Cash Flows From
Operating Activities:
|
|
|
|
|
|
|
Net income
|
|
$ � 97,731
|
$ 33,259
|
|
|
|
Adjustments to
reconcile net income (loss) to net cash
|
|
|
|
|
|
|
� used in
operating activities:
|
|
|
|
|
|
|
|
Depletion, depreciation
and amortization
|
|
1,053
|
1,825
|
|
|
|
|
Impairment of
long-lived assets
|
|
4,707
|
-
|
|
|
|
|
Amortization of
debt financing costs
|
|
530
|
329
|
|
|
|
|
Amortization of
discount on debt
|
|
816
|
-
|
|
|
|
|
Gain on sale of
property and equipment
|
|
(103,933)
|
|
|
|
|
|
Loss on early
extinguishment of debt
|
|
7,533
|
|
|
|
|
|
Net income from
unconsolidated equity affiliate
|
|
(36,003)
|
(47,282)
|
|
|
|
|
Share-based
compensation-related charges
|
|
2,673
|
1,844
|
|
|
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
|
|
Accounts and notes receivable
|
|
(2,887)
|
3,115
|
|
|
|
|
Advances to equity
affiliate
|
|
(296)
|
2,730
|
|
|
|
|
Prepaid expenses
and other
|
|
3,061
|
263
|
|
|
|
|
Accounts payable
|
|
8,168
|
2,474
|
|
|
|
|
Accrued expenses
|
|
(2,469)
|
(7)
|
|
|
|
|
Accrued Interest
|
|
(418)
|
(3,723)
|
|
|
|
|
Other liabilities
|
|
(701)
|
370
|
|
|
|
|
Income taxes payable
|
|
5,513
|
(353)
|
|
|
|
|
Net Cash Used In
Operating Activities
|
|
(14,922)
|
(5,156)
|
|
|
Cash Flows From
Investing Activities:
|
|
|
|
|
|
|
Proceeds from
sale of property and equipment
|
|
217,833
|
-
|
|
|
|
Additions of
property and equipment
|
|
(28,067)
|
(23,913)
|
|
|
|
Additions to
assets held for sale
|
|
(31,742)
|
-
|
|
|
|
Proceeds from
sale of equity affiliate
|
|
1,385
|
-
|
|
|
|
Increase in restricted
cash
|
|
(7,323)
|
(1,000)
|
|
|
|
Investment costs
|
|
(62)
|
(36)
|
|
|
|
|
Net Cash
Provided by (Used In) Investing Activities
|
|
152,024
|
(24,949)
|
|
|
Cash Flows From
Financing Activities:
|
|
|
|
|
|
|
Net proceeds
from issuances of common stock
|
|
416
|
115
|
|
|
|
Proceeds from
issuance of long-term debt
|
|
-
|
32,000
|
|
|
|
Payments of
long-term debt
|
|
(60,000)
|
-
|
|
|
|
Financing costs
|
|
(189)
|
(2,818)
|
|
|
|
|
Net Cash
Provided by (Used In) Financing Activities
|
|
(59,773)
|
29,297
|
|
|
|
|
Net Increase
(Decrease) in Cash
|
|
77,329
|
(808)
|
|
|
Cash and Cash
Equivalents at Beginning of Period
|
|
58,703
|
32,317
|
|
|
Cash and Cash
Equivalents at End of Period
|
|
$ 136,032
|
$ 31,509
|
|
|
|
|
|
|
|
|
|
|
PETRODELTA, S. A.
|
|
|
STATEMENTS OF OPERATIONS
|
|
|
(in thousands except per BOE and per share amounts, unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three months
Ended
June 30, 2011
|
Three months
Ended
June 30, 2010
|
|
|
|
|
|
|
|
|
|
Barrels of oil sold
|
2,782
|
|
1,955
|
|
|
|
MCF of gas sold
|
440
|
|
663
|
|
|
|
� � � Total BOE
|
2,855
|
|
2,066
|
|
|
|
� � � Total BOE -
Net of 33% Royalty
|
1,904
|
|
1,377
|
|
|
|
|
|
|
|
|
|
|
Average price/barrel
|
$ � 101.72
|
|
$69.55
|
|
|
|
Average price/mcf
|
$1.54
|
|
$1.54
|
|
|
|
|
|
|
|
|
|
|
|
$
|
$/BOE - net
|
$
|
$/BOE - net
|
|
|
REVENUES:
|
|
|
|
|
|
|
� Oil sales
|
$ 282,975
|
|
135,964
|
|
|
|
� Gas sales
|
679
|
|
1,022
|
|
|
|
� Royalties
|
(96,214)
|
|
(46,391)
|
|
|
|
|
187,440
|
98.45
|
90,595
|
65.79
|
|
|
EXPENSES:
|
|
|
|
|
|
|
� Operating expenses
|
18,684
|
9.81
|
10,632
|
7.72
|
|
|
� Workovers
|
7,021
|
3.69
|
-
|
-
|
|
|
� Depletion, depreciation, amortization
|
13,231
|
6.95
|
9,770
|
7.09
|
|
|
� General and administrative
|
3,782
|
1.99
|
2,641
|
1.92
|
|
|
� Windfall profits tax
|
65,345
|
34.32
|
1,664
|
1.21
|
|
|
|
108,063
|
56.76
|
24,707
|
17.94
|
|
|
INCOME FROM OPERATIONS
|
79,377
|
41.69
|
65,888
|
47.85
|
|
|
|
|
|
|
|
|
|
Gain on exchange rate
|
-
|
-
|
1,938
|
1.40
|
|
|
Interest earnings
and other
|
185
|
0.09
|
(13)
|
-
|
|
|
Interest expense
|
(3,146)
|
(1.65)
|
(1,328)
|
(0.97)
|
|
|
|
|
|
|
|
|
|
Income before
income tax
|
76,416
|
40.13
|
66,485
|
48.28
|
|
|
|
|
|
|
|
|
|
� Current
income tax expense (benefit)
|
31,618
|
16.60
|
52,656
|
38.24
|
|
|
� Deferred
income tax expense (benefit)
|
(2,513)
|
(1.32)
|
5,118
|
3.71
|
|
|
NET INCOME
|
47,311
|
24.85
|
8,711
|
6.33
|
|
|
Adjustment to
reconcile to reported Net Income from
|
-
|
|
|
|
|
|
� � Unconsolidated Equity Affiliate:
|
|
|
|
|
|
|
� � � � � Deferred
income tax expense (benefit)
|
1,176
|
|
(14,499)
|
|
|
|
� � � � � Net income
equity affiliate
|
46,135
|
|
23,210
|
|
|
|
Equity interest
in unconsolidated equity affiliate
|
40%
|
|
40%
|
|
|
|
Income before
amortization of excess basis in equity affiliate
|
18,454
|
|
9,284
|
|
|
|
� � Amortization of excess basis in equity affiliate
�
|
(452)
|
|
(322)
|
|
|
|
� � Conform depletion expense to GAAP
|
(216)
|
|
(47)
|
|
|
|
Net income from
unconsolidated equity affiliate
|
$ � 17,786
|
|
$ � 8,915
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconcile NET
INCOME as reported under IFRS to adjusted EBITDA:
|
|
|
|
|
|
|
� NET INCOME
|
$ � 47,311
|
24.85
|
$ � 8,711
|
6.33
|
|
|
� Add back
non-cash items:
|
|
|
|
|
|
|
� � � Depletion,
depreciation and amortization
|
13,231
|
6.95
|
9,770
|
7.09
|
|
|
� � � Pension
liability, net of tax
|
-
|
-
|
-
|
-
|
|
|
� � � Deferred
income tax expense (benefit)
|
(2,513)
|
(1.32)
|
41,118
|
29.86
|
|
|
Special Charges,
net of tax
|
-
|
-
|
(969)
|
(0.70)
|
|
|
|
|
|
|
|
|
|
CASH FROM OPERATIONS
|
58,029
|
30.48
|
58,630
|
42.58
|
|
|
|
|
|
|
|
|
|
�
Investment earnings and other
|
(185)
|
(0.09)
|
13
|
-
|
|
|
� Interest expense
|
3,146
|
1.65
|
1,328
|
0.97
|
|
|
� Current
income tax expense
|
31,618
|
16.60
|
16,656
|
12.10
|
|
|
� Adjusted EBITDA
(IFRS)
|
|
|
|
|
|
|
|
$ � 92,608
|
48.64
|
$ 76,627
|
55.65
|
|
|
|
|
|
|
|
|
|
PETRODELTA, S. A.
|
|
|
STATEMENTS OF OPERATIONS
|
|
|
(in thousands except per BOE and per share amounts, unaudited)
|
|
|
|
|
|
|
|
|
|
|
Six months
Ended
June 30, 2011
|
Six months
Ended
June 30, 2010
|
|
|
|
|
|
|
|
|
|
Barrels of oil sold
|
5,365
|
|
3,923
|
|
|
|
MCF of gas sold
|
910
|
|
1,323
|
|
|
|
� � � Total BOE
|
5,517
|
|
4,144
|
|
|
|
� � � Total BOE -
Net of 33% Royalty
|
3,678
|
|
2,762
|
|
|
|
|
|
|
|
|
|
|
Average price/barrel
|
$94.98
|
|
$70.73
|
|
|
|
Average price/mcf
|
$1.54
|
|
$1.54
|
|
|
|
|
|
|
|
|
|
|
|
$
|
$/BOE - net
|
$
|
$/BOE - net
|
|
|
REVENUES:
|
|
|
|
|
|
|
� Oil sales
|
$ 509,588
|
|
$ 277,466
|
|
|
|
� Gas sales
|
1,405
|
|
2,040
|
|
|
|
� Royalty
|
(173,529)
|
|
(94,377)
|
|
|
|
|
337,464
|
91.75
|
185,129
|
67.03
|
|
|
EXPENSES:
|
|
|
|
|
|
|
� Operating expenses
|
32,966
|
8.96
|
20,675
|
7.49
|
|
|
� Workovers
|
13,496
|
3.67
|
-
|
-
|
|
|
� Depletion,
depreciation and amortization
|
25,718
|
6.99
|
18,377
|
6.65
|
|
|
� General and administrative
|
2,852
|
0.78
|
6,058
|
2.19
|
|
|
� Windfall profits tax
|
92,471
|
25.14
|
2,915
|
1.06
|
|
|
|
167,503
|
45.54
|
48,025
|
17.39
|
|
|
INCOME FROM OPERATIONS
|
169,961
|
46.21
|
137,104
|
49.64
|
|
|
|
|
|
|
|
|
|
Gain on exchange rate
|
-
|
-
|
120,654
|
43.68
|
|
|
Investment earnings
and other
|
352
|
0.09
|
2,881
|
1.04
|
|
|
Interest expense
|
(4,418)
|
(1.20)
|
(2,223)
|
(0.80)
|
|
|
|
|
|
|
|
|
|
Income before
income tax
|
165,895
|
45.10
|
258,416
|
93.56
|
|
|
|
|
|
|
|
|
|
� Current
income tax expense
|
84,961
|
23.10
|
138,076
|
49.99
|
|
|
� Deferred
income tax expense (benefit)
|
(28,275)
|
(7.69)
|
47,582
|
17.23
|
|
|
NET INCOME
|
109,209
|
29.69
|
72,758
|
26.34
|
|
|
Adjustment to
reconcile to reported Net Income from
|
|
|
|
|
|
|
� � Unconsolidated Equity Affiliate:
|
|
|
|
|
|
|
� � � � � Deferred
income tax expense (benefit)
|
19,739
|
|
(47,488)
|
|
|
|
� � � � � Net income
equity affiliate
|
89,470
|
|
120,246
|
|
|
|
Equity interest
in unconsolidated equity affiliate
|
40%
|
|
40%
|
|
|
|
Income before
amortization of excess basis in equity affiliate
|
35,788
|
|
48,098
|
|
|
|
� � Amortization of excess basis in equity affiliate
�
|
(873)
|
|
(656)
|
|
|
|
� � Conform depletion expense to GAAP
|
(297)
|
|
(160)
|
|
|
|
Net income from
unconsolidated equity affiliate
|
$ � 34,618
|
|
$ � 47,282
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconcile NET
INCOME as reported under IFRS to adjusted EBITDA:
|
|
|
|
|
|
|
� NET INCOME
|
$ 109,209
|
29.69
|
$ � 72,758
|
26.34
|
|
|
� Add back
non-cash items:
|
|
|
|
|
|
|
� � � Depletion,
depreciation and amortization
|
25,718
|
6.99
|
18,377
|
6.65
|
|
|
� � � Deferred
income tax expense (benefit)
|
(28,275)
|
(7.69)
|
83,582
|
30.26
|
|
|
Special Charges,
net of tax
|
-
|
-
|
(66,243)
|
(23.98)
|
|
|
|
|
|
|
|
|
|
CASH FROM OPERATIONS
|
106,652
|
28.99
|
108,474
|
39.27
|
|
|
|
|
|
|
|
|
|
�
Investment earnings and other
|
(352)
|
(0.09)
|
(2,881)
|
(1.04)
|
|
|
� Interest expense
|
4,418
|
1.20
|
2,223
|
0.80
|
|
|
� Current
income tax expense
|
84,961
|
23.10
|
48,634
|
17.61
|
|
|
|
|
|
|
|
|
|
� Adjusted
EBITDA (IFRS)
|
$ 195,679
|
53.20
|
$ 156,450
|
56.64
|
|
|
|
|
|
|
|
|
SOURCE Harvest
Natural Resources, Inc.
|