Harvest Natural Resources Inc. Announces 2012 Second Quarter Results by 24hgold

Harvest Natural Resources Announces 2012 Second Quarter Results

Harvest Natural Resources, Inc. (NYSE: HNR) today announced 2012 second quarter net income and provided an operational update.

Harvest reported second quarter net income of approximately $8.2 million, or $0.20 per diluted share, compared to earnings of $89.8 million, or $2.23 per diluted share, for the same period last year.� The second quarter 2012 results included exploration charges of $1.3 million, or $0.03 per diluted share, and $1.5 million, or $0.04 per diluted share, for transaction costs incurred related to the pending sale of our 32 percent interest in Petrodelta.� Additionally during the second quarter, Harvest incurred $1.6 million, or $0.04 per diluted share, in discontinued operations related to the settlement of all outstanding claims with a private third-party related to the Antelope project.� Excluding the exploration charges, transaction costs and settlement charges in discontinued operations, and net of the related tax benefits of $0.8 million, or $0.02 per diluted share, second quarter 2012 earnings would have been $11.8 million, or $0.29 per diluted share.�

The second quarter 2011 results included the sale of our Utah properties for a net gain of $98.7 million.�

Petrodelta reported net income during the second quarter of $72.0 million, as reported under International Financial Report Standards (IFRS), compared to $47.3 million for the same period in 2011.� Harvest's 32 percent share of Petrodelta's net income for the second quarter as reported under U.S. GAAP was $18.1 million, compared to $14.6 million, for the same period one year ago.

Highlights for the second quarter of 2012 include:

Venezuela

During the second quarter of 2012, Petrodelta drilled and completed two wells and sold approximately 3.31 million barrels of oil (MMBO) for a daily average of approximately 36,418 barrels of oil per day (BOPD), an increase of 19 percent over the same period in 2011;
The two new wells were successfully drilled in the El Salto field with current total production from this field of approximately 16,000 BOPD;
The ELS-45 was completed in the Lower Morichal formation producing 3,500 BOPD of 9.5 API oil, representing the highest well producing rate to date in El Salto;
Petrodelta's current production rate is approximately 39,000 BOPD;
Facility expansion work at the El Salto and Temblador fields is underway;
A third drilling rig, the new modular rig PDV-48, was assigned by PDVSA to Petrodelta and is on location in the Isleno field with the start of operations expected in September 2012;
2012 projected average production rate of 40,300 BOPD with capital expenditures projected at $300 million;
On June 21, 2012, signed a Share Purchase Agreement (SPA) with PT Pertamina (Persero), the national oil company of Indonesia, to sell all of Harvest's interests in Venezuela for $725.0 million in an all-cash transaction.

Gabon

The Gabon government has agreed to extend the third exploration phase to four years until May� 27, 2016;
Preparing for October 2012 spud of the Tortue prospect targeting stacked pre-salt reservoirs with the Scarabeo 3 semi-submersible drilling unit;
The Central 3-D Pre-Stack Time Migration (PSTM) was completed in July 2012.

Indonesia

License commitments fulfilled through January 16, 2013, and planning to request a four year extension;
Prospects and leads being matured in the Lariang and Karama Basins.

Oman

Work commitment fulfilled through March 2013;
Prospects and leads being matured for possible 2013 exploration well.

VENEZUELA

During the three months ended June 30, 2012, Petrodelta sold approximately 3.31 MMBO for a daily average of 36,418 BOPD, an increase of 19 percent over the same period in 2011 and 11 percent higher than the previous quarter.� Petrodelta sold 0.49 billion cubic feet (BCF) of natural gas for a daily average of 5.4 million cubic feet per day (MMCFD), an increase of 12 percent over the same period in 2011, and a decrease of 22 percent from the previous quarter.� Petrodelta's current production rate is approximately 39,000 BOPD.

During the second quarter of 2012, Petrodelta drilled and completed two development wells in the El Salto field.� The ELS-45 is a horizontal producer in the Lower Morichal formation, which contains the bulk of the oil in place in the El Salto field.� It is currently producing 3,500 BOPD of 9.5 API oil and no water, representing the highest producing well rate to date in El Salto.� Currently, Petrodelta is operating three drilling rigs and one workover rig and is continuing with infrastructure enhancement projects in the El Salto and Temblador fields.

A third drilling rig, the new modular rig PDV-48 is rigging up in the Isleno field and is expected to begin drilling operations in September 2012.� The current production from the Isleno field is approximately 1,900 BOPD and is being trucked to the Uracoa field.� Plans are underway to build a pipeline connection between the Isleno field and the main production facility at the Uracoa field.

Petrodelta's production for 2012 is projected to average approximately 40,300 BOPD.� The 2012 Petrodelta capital budget is expected to be approximately $300 million with a significant portion of that total related to infrastructure costs to support the further development of the Temblador and El Salto fields.� Petrodelta expects to drill 22 oil wells and two water injector wells, and is anticipating finishing this year with five rigs operating with three more new rigs arriving at the end of the third quarter.� The current plan is to retire one of the older rigs upon the arrival of the three new rigs so that four of the anticipated five drilling rigs will be new modular rigs that are fit-for-purpose for Petrodelta's operations.

The average sales price for crude oil produced during the quarter was approximately $96.10 per barrel compared to $101.72 per barrel during the second quarter of 2011.

On June 21, 2012, Harvest announced that its wholly-owned subsidiary, HNR Energia B.V., had signed a definitive SPA with PT Pertamina (Persero), the national oil company of Indonesia, to sell all of Harvest's interests in Venezuela for $725.0 million in an all-cash transaction.� Net proceeds from the sale are estimated to be approximately $525.0 million after deductions for transaction related costs and taxes.�

The Buyer will purchase Harvest's 32 percent interest in Petrodelta, S.A. by purchasing HNR Energia B.V.'s 80 percent interest in Harvest-Vinccler Dutch Holding B.V.� The effective date of the transaction is January 1, 2012.

The closing of the transaction is subject to, among other things, approval by the Government of the Bolivarian Republic of Venezuela, the Government of Indonesia in its capacity as the Buyer's sole shareholder and a majority of Harvest's stockholders.� If all of the conditions to closing are not satisfied or not waived on or before March 21, 2013, either the Buyer or Harvest may terminate the SPA.� The Boards of Directors of Harvest and Pertamina have each approved the transaction.

EXPLORATION AND OTHER ACTIVITIES

Dussafu Project - Gabon ("Dussafu PSC")

On April 27, 2012, Harvest submitted notification to the Direction Generale Des Hydrocarbures (DGH) of our intent to enter the third exploration phase of the Dussafu PSC with an effective date of May� 28, 2012.� As stated in the Dussafu PSC, the third exploration phase of the Dussafu PSC has a $7.0 million ($4.7 million net to our 66.667 percent interest) work commitment over a two year period.� The DGH has agreed to extend the third exploration phase to four years until May 27, 2016.� Harvest paid a $1.0 million bonus ($0.7 million net to Harvest's 66.667 percent interest) to enter the third exploration phase.

Operational activities during the six months ended June 30, 2012, included processing of the 545 square kilometers of seismic which was acquired in the fourth quarter of 2011.� The 3-D Pre-Stack Time Migration (PSTM) was completed in July 2012. � Depth processing and reprocessing of the inboard 3D commenced and is scheduled to be completed in the second quarter of 2013. � Well planning is in progress to drill an exploration well in the fourth quarter of 2012 on the Tortue prospect to target stacked pre-salt Gamba and Dentale reservoirs as well as a secondary post-salt Madiela clastic reservoir.� The prospect has mean unrisked prospective resources of 62 MMBO.

Harvest Dussafu B.V. has secured the use of a semi-submersible drilling unit to drill the Tortue exploration well offshore Gabon.� The drilling unit, the Scarabeo 3, is owned and operated by Saipem S.p.A. and will be mobilized on location to spud the well in mid-October 2012.

Budong-Budong PSC � Indonesia

The license commitments have been fulfilled and the partners are planning to request a four year extension at the end of the initial six year term which expires on January 16, 2013.� Prospects and leads are being matured for both the Lariang and Karama Basins.� An exploration well is being planned for 2013.

Tately Budong-Budong N.V. is the operator of the Budong-Budong Block.� Harvest owns a 64.4 percent working interest in the Budong-Budong PSC.

Oman Block 64 EPSA

All work commitments have been completed and post well studies are being conducted.� A one year extension for the license has been granted until May 2013, at which time Harvest must decide whether to commit to the second phase of the license, which has a three year term and a one well commitment.

The remaining prospects and leads are being reviewed in light of the recent drilling results to mature possible drilling options in 2013.

Harvest has an 80 percent interest in Block 64 onshore Oman.� Block 64 has an area of 3,874 square kilometers and was extracted from a pre-existing block (PDO's Block 6) to accelerate exploration for gas and gas condensate by the Omani Ministry of Oil and Gas.� Harvest is evaluating other opportunities in the region.

Non-GAAP Financial Measures

These measures are included due to the significant nature of Petrodelta's earnings to Harvest.� In this press release, Petrodelta's adjusted 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.� Adjusted 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 internally fund our future capital expenditures and working capital requirements.� We also believe that financial analysts commonly use adjusted EBITDA to analyze Petrodelta's performance.�

The Company defines Adjusted EBITDA as net income (loss) before interest expense, investment earnings, current income taxes, and certain non-cash items in the Company's statements of operations, including depreciation, depletion and amortization, accretion of asset retirement obligations, deferred income taxes, certain employee compensation charges and gains or losses from foreign exchange.� 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, 2012.

A reconciliation of adjusted 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 Thursday, August� 9, 2012, during which management will discuss Harvest's 2012 second quarter results.� The conference leader will be James A. Edmiston, President and Chief Executive Officer.� To access the conference call, dial 888-256-9128 or 913-312-1472, five to ten minutes prior to the start time.� The conference identification number is 4576497.� A recording of the conference call will also be available for replay at 719-457-0820, passcode 4576497, through August 13, 2012.

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.

The Company intends to file its second quarter 2012 Form 10-Q with the Securities and Exchange Commission on Thursday, August 9, 2012.� A copy of the Form 10-Q will be available on the Company's website at www.harvestnr.com.

About Harvest Natural Resources:

Harvest Natural Resources, Inc., headquartered in Houston, Texas, is an independent energy company with principal operations in Venezuela, exploration assets in 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, timing and certainty of future transactions 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 2011 Annual Report on Form 10-K and other public filings.

Harvest may use certain terms such as resource base, contingent resources, prospective resources, probable reserves, possible reserves, non-proved reserves or other descriptions of volumes of reserves.� These estimates are by their nature more speculative than estimates of proved reserves and accordingly, are subject to substantially greater risk of being actually realized by the Company.

�


HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)


				June 30,	December 31,
				2012	2011

ASSETS:

CURRENT ASSETS:
	Cash and cash equivalents			$ � 28,746	$ � � � � 58,946
	Restricted cash			-	1,200
	Accounts and notes receivable, net
		Dividend receivable - equity affiliate		12,200	12,200
		Joint interest and other		6,315	14,342
		Notes receivable		-	3,335
	Advances to equity affiliate			2,538	2,388
	Deferred income taxes			2,628	2,628
	Prepaid expenses and other			1,692	728
		Total current assets		54,119	95,767

OTHER ASSETS				5,555	5,427

INVESTMENT IN EQUITY AFFILIATES				384,473	345,054

PROPERTY AND EQUIPMENT, net				71,226	66,799

			TOTAL ASSETS	$ 515,373	$ � � � 513,047


LIABILITIES AND EQUITY:

CURRENT LIABILITIES:
	Accounts payable, trade and other			$ � � 1,044	$ � � � � � 7,381
	Accounts payable -� carry obligation			-	3,596
	Accrued expenses			8,896	15,247
	Accrued Interest			1,008	1,372
	Deferred tax liability			4,835	4,835
	Income taxes payable			1,251	718
	Current portion - long term debt			15,551	-
		Total current liabilities		32,585	33,149

OTHER LONG-TERM LIABILITIES				956	908

LONG-TERM DEBT				-	31,535

COMMITMENTS AND CONTINGENCIES				-	-

EQUITY:
STOCKHOLDERS' EQUITY:
	Common stock and paid-in capital			256,447	236,598
	Retained earnings			200,051	193,283
	Treasury stock			(66,145)	(66,104)
		Total Harvest stockholders' equity�		390,353	363,777
Noncontrolling Interest				91,479	83,678
	Total Equity			481,832	447,455
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY�				$ 515,373	$ � � � 513,047

�

HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts, unaudited)

	Three months Ended June 30,
	2012	2011

EXPENSES:
� Depreciation and amortization�	$ � � 105	$ � � � 119
� Exploration expense	1,282	4,650
� Dry hole costs	71	-
� General and administrative	6,524	7,049
	7,982	11,818
LOSS FROM OPERATIONS	(7,982)	(11,818)

OTHER NON-OPERATING INCOME (EXPENSE)
� Investment earnings and other	80	240
� Interest expense	(34)	(1,704)
� Debt conversion expense	20	-
� Loss on extinguishment of debt	-	(9,682)
� Other non-operating expenses	(1,467)	(244)
� Loss on exchange rates	(48)	(32)
	(1,449)	(11,422)
LOSS FROM CONSOLIDATED COMPANIES CONTINUING OPERATIONS BEFORE INCOME TAXES�	� (9,431)	� (23,240)
� Income tax expense (benefit)	(426)	260
LOSS FROM CONSOLIDATED COMPANIES CONTINUING OPERATIONS	(9,005)	(23,500)
Net income from unconsolidated equity affiliates	22,661	18,246
NET INCOME (LOSS) FROM CONTINUING OPERATIONS	13,656	(5,254)
DISCONTINUED OPERATIONS
� Income (loss) from discontinued operations	(1,584)	65
� Gain on sale of assets	-	104,348
� Income tax (expense) benefit	595	(5,748)
� � � � � Income (loss) from discontinued operations	(989)	98,665
NET INCOME� �	12,667	93,411
Less:� Net Income Attributable to Noncontrolling Interest	4,507	3,631
NET INCOME ATTRIBUTABLE TO HARVEST	$ 8,160	$ 89,780

	� Three months Ended�
	June 30, 2012		June 30, 2011
NET INCOME (LOSS) ATTRIBUTABLE TO HARVEST PER COMMON SHARE:	� Basic�	� Dilutive�	� Basic�	� Dilutive�
� � Income (loss) from continuing operations�	9,149	9,149	(8,885)	(8,885)
� � Discontinued operations	(989)	(989)	98,665	98,665
� � � � � � � Net income attributable to Harvest	8,160	8,160	89,780	89,780
� � Weighted average common shares outstanding	37,375	37,375	34,039	34,039
� � Effect of dilutive shares		3,424	-	6,221
� � � � � � � Weighted average common shares including dilutive effect	37,375	40,799	34,039	40,260

Per Share:
� � Income (loss) from continuing operations	$ � 0.25	$ � � 0.22	$ (0.26)	$ � (0.22)
� � Discontinued operations	$ (0.03)	$ � (0.02)	$ � 2.90	$ � 2.45
� � � � � � � Net income attributable to Harvest	$ � 0.22	$ � � 0.20	$ � 2.64	$ � 2.23

�

HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts, unaudited)

	Six months Ended June 30,
	2012	2011

EXPENSES:
� Depreciation and amortization�	$ � � 210	$ � � � 243
� Exploration expense	2,725	5,839
� Dry hole costs	5,617	-
� General and administrative	12,366	13,724
	20,918	19,806
LOSS FROM OPERATIONS	(20,918)	(19,806)

OTHER NON-OPERATING INCOME (EXPENSE)
� Investment earnings and other	149	385
� Interest expense	(428)	(3,916)
� Debt conversion expense	(2,402)	-
� Loss on extinguishment of debt	-	(9,682)
� Other non-operating expenses	(1,723)	(675)
� Loss on exchange rates	(70)	(43)
	(4,474)	(13,931)
LOSS FROM CONSOLIDATED COMPANIES CONTINUING OPERATIONS BEFORE INCOME TAXES�	� (25,392)	� (33,737)
� Income tax� expense (benefit)	(1,646)	482
LOSS FROM CONSOLIDATED COMPANIES CONTINUING OPERATIONS	(23,746)	(34,219)
Net income from unconsolidated equity affiliates	39,419	36,740
NET INCOME� FROM CONTINUING OPERATIONS	15,673	2,521
DISCONTINUED OPERATIONS
� Loss from discontinued operations	(1,699)	(3,201)
� Gain (Loss) on sale of assets	-	104,348
� Income tax (expense) benefit	595	(5,748)
� � � � � Income (loss) from discontinued operations	(1,104)	95,399
NET INCOME	14,569	97,920
Less:� Net Income Attributable to Noncontrolling Interest	7,801	7,058
NET INCOME� ATTRIBUTABLE TO HARVEST	$ 6,768	$ 90,862

	Six Months Ended�
	June 30, 2012		June 30, 2011
NET INCOME ATTRIBUTABLE TO HARVEST PER COMMON SHARE:	� Basic�	� Dilutive�	� Basic�	� Dilutive�
� � Income (loss) from continuing operations�	7,872	7,872	(4,537)	(4,537)
� � Discontinued operations	(1,104)	(1,104)	95,399	95,399
� � � � � � � Net income� attributable to Harvest	6,768	6,768	90,862	90,862
� � Weighted average common shares outstanding	36,130	36,130	33,992	33,992
� � Effect of dilutive shares	-	1,469	-	6,035
� � � � � � � Weighted average common shares including dilutive effect	36,130	37,599	33,992	40,027

Per Share:
� � Income (loss) from continuing operations	$ � 0.22	$ � � 0.21	$ (0.13)	$ � (0.11)
� � Discontinued operations	$ (0.03)	$ � (0.03)	$ � 2.80	$ � 2.38
� � � � � � � Net income attributable to Harvest	$ � 0.19	$ � � 0.18	$ � 2.67	$ � 2.27

�

HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)

			Six months Ended June 30,
			2012	2011
Cash Flows From Operating Activities:
	Net income		$ 14,569	$ � 97,920
	Adjustments to reconcile net income� to net cash
	� used in operating activities:
		Depletion, depreciation and amortization	210	1,053
		Dry hole costs	5,617	-
		Impairment of long-lived assets	-	4,707
		Amortization of debt financing costs	726	530
		Amortization of discount on debt	-	816
		Gain on sale of assets	-	(103,933)
		Debt conversion expense	1,939	-
		Allowance for account and note receivable	5,180	-
		Writeoff of accounts payable, carry obligation	(3,596)	-
		Loss on early extinguishment of debt	-	7,533
		Net income from unconsolidated equity affiliate	(39,419)	(36,740)
		Share-based compensation-related charges	2,124	2,673
	Changes in operating assets and liabilities:
		Accounts and notes receivable	6,182	(2,887)
		Advances to equity affiliate	(150)	(296)
		Prepaid expenses and other	(950)	3,061
		Accounts payable	(6,337)	8,168
		Accrued expenses	(2,177)	(2,469)
		Accrued Interest	(971)	(418)
		Other liabilities	48	(701)
		Income taxes payable	533	6,061
		Net Cash Used In Operating Activities	(16,472)	(14,922)
Cash Flows From Investing Activities:
	Proceeds from sale of assets		-	217,833
	Additions of property and equipment		(14,205)	(28,067)
	Additions to assets held for sale		-	(31,742)
	Proceeds from sale of equity affiliate		-	1,385
	Restricted cash		1,200	(7,323)
	Investment costs		(829)	(62)
		Net Cash Provided by (Used In) Investing Activities	(13,834)	152,024
Cash Flows From Financing Activities:
	Net proceeds from issuances of common stock		273	416
	Payments on long term debt		-	(60,000)
	Financing costs		(167)	(189)
		Net Cash Provided by (Used In) Financing Activities	106	(59,773)
		Net Increase (Decrease) in Cash�	(30,200)	77,329
Cash and Cash Equivalents at Beginning of Period			58,946	58,703
Cash and Cash Equivalents at End of Period			$ 28,746	$ 136,032

�

PETRODELTA, S. A.
STATEMENTS OF OPERATIONS
(in thousands except per BOE and per share amounts, unaudited)

	Three months Ended June 30, 2012		Three months Ended June 30, 2011

Barrels of oil sold�	3,314		2,782
MCF of gas sold	494		440
� � � � � Total BOE�	3,396		2,855
� � � � � Total BOE - Net of 33% Royalty	2,264		1,904

Average price/barrel	$ � � 96.10		$101.72
Average price/mcf	$1.54		$1.54

	$	$/BOE - net	$	$/BOE - net
REVENUES:
� Oil sales	$ 318,474		282,975
� Gas sales	762		679
� Royalties	(106,097)		(96,214)
	213,139	94.14	187,440	98.45
EXPENSES:
� Operating expenses	20,063	8.86	18,684	9.81
� Workovers	3,149	1.39	7,021	3.69
� Depletion, depreciation, amortization	21,718	9.59	13,231	6.95
� General and administrative	4,944	2.19	3,782	1.99
� Windfall profits tax	74,687	32.99	65,345	34.32
	124,561	55.02	108,063	56.76
INCOME FROM OPERATIONS	88,578	39.12	79,377	41.69

Gain on exchange rate	-	-	-
Interest earnings and other	1	-	185	0.09
Interest expense	(2,690)	(1.18)	(3,146)	(1.65)

Income before income tax	85,889	37.94	76,416	40.13

� Current income tax expense	31,268	13.81	31,618	16.60
� Deferred income tax expense (benefit)	(17,394)	(7.68)	(2,513)	(1.32)
NET INCOME	72,015	31.81	47,311	24.85
Adjustment to reconcile to reported Net Income (loss) from	-
� � � Unconsolidated Equity Affiliate:
� � � � � � � � � Deferred income tax (benefit) expense	16,258		26
� � � � � � � � � Net income equity affiliate	55,757		47,285
Equity interest in unconsolidated equity affiliate	40%		40%
Income before amortization of excess basis in equity affiliate	22,303		18,914
� � � Conform depletion expense to GAAP�	896		(216)
� � � Amortization of excess basis in equity affiliate� �	(538)		(452)
Net income from unconsolidated equity affiliate	$ � 22,661		$ 18,246

Non-GAAP Financial Measures:

Reconcile NET INCOME as reported under IFRS to adjusted EBITDA:
� � NET INCOME	$ � 72,015	31.81	$ 47,311	24.85
� � Add back non-cash items:
� � � � � Depletion, depreciation and amortization	21,718	9.59	13,231	6.95
� � � � � Deferred income tax expense (benefit)	(17,394)	(7.68)	(2,513)	(1.32)

� CASH FROM OPERATIONS	76,339	33.72	58,029	30.48

� � � � � Investment earnings and other	(1)	-	(185)	(0.09)
� � � � � Interest expense	2,690	1.18	3,146	1.65
� � � � � Current income tax expense	31,268	13.81	31,618	16.60

� � Adjusted EBITDA	$ 110,296	48.71	$ 92,608	48.64

� � Harvest 32% of Adjusted EBITDA	$ � 35,295	15.59	$ 29,635	15.56

�

PETRODELTA, S. A.
STATEMENTS OF OPERATIONS
(in thousands except per BOE and per share amounts, unaudited)

	Six months Ended June 30, 2012		Six months Ended June 30, 2011

Barrels of oil sold�	6,298		5,365
MCF of gas sold	1,124		910
� � � � � Total BOE�	6,485		5,517
� � � � � Total BOE - Net of 33% Royalty	4,324		3,678

Average price/barrel	$102.09		$94.98
Average price/mcf	$1.54		$1.54

	$	$/BOE - net	$	$/BOE - net
REVENUES:
� Oil sales	$ 642,971		$ 509,588
� Gas sales	1,734		1,405
� Royalty	(213,436)		(173,529)
	431,269	99.74	337,464	91.75
EXPENSES:
� Operating expenses	41,644	9.63	32,966	8.96
� Workovers	9,057	2.09	13,496	3.67
� Depletion, depreciation and amortization	39,640	9.17	25,718	6.99
� General and administrative	9,927	2.30	2,852	0.78
� Windfall profits tax	159,425	36.87	92,471	25.14
	259,693	60.06	167,503	45.54
INCOME FROM OPERATIONS	171,576	39.68	169,961	46.21

Investment earnings and other	2	-	352	0.09
Interest expense	(4,603)	(1.06)	(4,418)	(1.20)

Income before income tax	166,975	38.62	165,895	45.10

� Current income tax expense	73,338	16.96	84,961	23.10
� Deferred income tax benefit	(30,884)	(7.14)	(28,275)	(7.69)
NET INCOME�	124,521	28.80	109,209	29.69
Adjustment to reconcile to reported Net Income from
� � � Unconsolidated Equity Affiliate:
� � � � � � � � � Deferred income tax expense	28,299		17,897
� � � � � � � � � Net income equity affiliate	96,222		91,312
Equity interest in unconsolidated equity affiliate	40%		40%
Income before amortization of excess basis in equity affiliate	38,489		36,525
� � � Conform depletion expense to GAAP�	1,957		(297)
� � � Amortization of excess basis in equity affiliate� �	(1,027)		(873)
Net income from unconsolidated equity affiliate	$ � 39,419		$ � 35,355

Non-GAAP Financial Measures:

Reconcile NET INCOME as reported under IFRS to adjusted EBITDA:
� � NET INCOME	$ 124,521	28.80	$ 109,209	29.69
� � Add back non-cash items:
� � � � � Depletion, depreciation and amortization	39,640	9.17	25,718	6.99
� � � � � Deferred income tax expense (benefit)	(30,884)	(7.14)	(28,275)	(7.69)

� CASH FROM OPERATIONS	133,277	30.83	106,652	28.99

� � � � � Investment earnings and other	(2)	-	(352)	(0.09)
� � � � � Interest expense	4,603	1.06	4,418	1.20
� � � � Current income tax expense	73,338	16.96	84,961	23.10

� � Adjusted EBITDA�	$ 211,216	48.85	$ 195,679	53.20

� � Harvest 32% of Adjusted EBITDA	$ � 67,589	15.63	$ � 62,617	17.02

�

SOURCE Harvest Natural Resources

Legends
	Production
	Mine development
	Discovery
	Exploration
	Past producer
On Google Earth, click on the button, to show property information, and access to project page or company page.