Harvest Natural Resources Announces First Quarter 2008 Results
HOUSTON, May 1, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Harvest
Natural Resources, Inc. (NYSE: HNR) today announced 2008 first quarter earnings
and an operations update. Highlights for the quarter include:
-- Reported earnings of $0.2 million, compared to a loss of $6.5 million
for the same period in 2007.
-- Commenced development drilling operations in Venezuela.
-- Secured final governmental approvals for acquiring interests in two
significant exploratory plays in active, proven hydrocarbon systems
located in Gabon and Indonesia.
-- Established a significant presence in two exploratory plays located in
the United States.
EARNINGS
Harvest reported earnings of $0.2 million, or $0.01 per diluted share, compared
with a loss of $6.5 million, or $0.17 per share, for the 2007 first quarter. The
first quarter results include exploration charges of $1.3 million. Petrodelta
reported first quarter earnings of $27.9 million, or $8.9 million net to
Harvest's 32 percent interest, which are reported using International Financial
Accounting Standards (IFRS). After adjustments to Petrodelta's IFRS earnings,
primarily to conform to U.S. Generally Accepted Accounting Principles, Harvest's
32 percent share of Petrodelta's earnings were $6.0 million.
MANAGEMENT COMMENT
James A. Edmiston, Harvest President and Chief Executive Officer said, "I
am pleased to report that we have commenced development drilling in Venezuela
and I look forward to recording increases in both production and reserves. Our
long-term objective is to build a multi-year inventory of exploration and
exploitation drilling prospects with geographic and geologic diversity to
complement our Venezuelan foundation. We expect to continue to add assets to
our exploration portfolio throughout 2008 and beyond."
VENEZUELA - PRODUCTION AND DEVELOPMENT DRILLING
Production
Petrodelta delivered 1.2 million barrels of oil or 13,300 barrels of oil per
day, and 3.2 billion cubic feet of natural gas during the 2008 first quarter. This
compares with Petrodelta oil deliveries in the 2007 first quarter of 1.5
million barrels, or 16,700 barrels per day, and 2007 fourth quarter deliveries
of 1.2 million barrels, or 13,100 barrels of oil per day. Production decreased
from last year as the result of normal well production declines combined with
suspended investment in development drilling during the process of converting
Harvest's Venezuelan assets into the current mixed company structure.
The average price received for oil deliveries was $79.02, or approximately 81
percent of West Texas Intermediate crude, which approximates world market
prices for the quality of oil produced by Petrodelta. The natural gas price is
contractually fixed at $1.54 per thousand cubic feet.
Petrodelta Drilling Update
In April, Petrodelta spud its first well in the Uracoa Field. Petrodelta
expects each horizontal well will require an average of 23 days to drill and
complete with an investment of approximately $2.2 million to $2.5 million
resulting in reserves between 500,000 barrels of oil to 1,250,000 barrels of
oil. Petrodelta plans to drill up to 15 wells with this rig in 2008.
Petrodelta has contracted a second drilling rig which is being mobilized and
expected to begin drilling in the last half of 2008. Drilling activity will be
focused on the Uracoa Field initially with a substantial inventory of drilling
locations identified and permitted.
Windfall Profits Tax
On April 15, 2008 the Venezuelan government published in the Official Gazette
the Law of Special Contribution to Extraordinary Prices at the Hydrocarbons
International Market ("Windfall Profits Tax"). The Windfall Profits
Tax establishes a special 50 percent tax payable to the Venezuelan government
when the average monthly price of Brent crude ("Brent") exceeds
$70.00 per barrel. In a similar manner, the percentage of tax is increased from
50 to 60 percent when the average monthly price of Brent exceeds $100.00 per
barrel. At this time, regulations regarding the application of the Windfall
Profits Tax have not yet been issued. As a result, Harvest is unable at this
time to estimate the impact of the Windfall Profits Tax on Petrodelta's
financial position, results of operations or cash flows.
EXPLORATION PROGRAM
Dussafu Marin, Gabon
In April, Harvest received final government approvals and closed the purchase
of the 50-percent operated interest in the offshore production sharing contract
(PSC) for $4.5 million. Seismic data acquisition and processing of 500
kilometers of 2-D seismic for high-grading drilling leads will commence in the
second half of 2008 and an exploratory well will be drilled pending the seismic
results. Harvest's estimated net cost for the firm work program is
approximately $2.0 million.
Budong-Budong, Indonesia
In April, the Indonesian government approved the company's farm-in to earn a 47
percent interest in the Budong-Budong Exploration Production Sharing Contract.
The work program includes the acquisition and processing of 550 kilometers of
2-D seismic data as well as drilling two exploration wells. Harvest will fund
100 percent of the first $17.2 million of expenditures to earn its interest.
The 2-D seismic acquisition program commenced in February and is ongoing.
United States
Over the last several months, Harvest initiated domestic exploration programs
in two different basins. Harvest will operate both exploration programs and has
recently added personnel to the organization accordingly. Each domestic exploration
program is located in highly competitive lease acquisition areas. In order to
maximize our lease position, Harvest elected to complete the lease acquisition
phase prior to disclosure of specific locations or the announcement of our
drilling objectives.
One of the exploration programs is located in an area of mutual interest with a
private company covering the Upper Gulf Coast including state waters from
Nueces County, Texas to Cameron Parish, Louisiana. The partners expect to begin
drilling the first exploratory well early in the 2008 third quarter with
Harvest holding a 55 percent interest.
Conference call
Harvest will hold an earnings conference call today at 10:00 a.m. CDT (11:00
a.m. EDT) to discuss 2008 first quarter results. To access the call, dial
785-424-1055, conference ID: Harvest, five to ten minutes prior to the start
time. A recording of the conference call will also be available for replay at
402-220-0871 until May 9, 2008. The conference call will also be transmitted
over the internet through the Harvest website at http://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 the United States, Indonesia, Gabon and China and business
development offices in Singapore and the United Kingdom. For more information
visit the Company's website at http://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 2007 Annual Report
on Form 10-K and other public filings."
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
($ thousands, unaudited)
March 31, December 31,
2008 2007
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $117,412 $120,841
Restricted cash 6,841 6,769
Accounts receivable, net 9,450 9,418
Advances to equity affiliate 3,719 16,352
Prepaid expenses and other 1,084 1,032
Total current assets 138,506 154,412
OTHER ASSETS 850 4,301
INVESTMENT IN EQUITY
AFFILIATES 258,731 251,173
PROPERTY AND EQUIPMENT, net 10,636 3,583
TOTAL ASSETS $408,723 $413,469
LIABILITIES AND STOCKHOLDERS'
EQUITY:
CURRENT LIABILITIES:
Accounts payable, trade and other $2,014 $5,949
Accounts payable, related party 10,218 10,093
Accrued expenses 8,244 11,895
Accrued Interest 5,595 5,136
Income taxes payable 228 503
Short-term debt 9,302 9,302
Total current liabilities 35,601 42,878
MINORITY INTEREST 57,882 56,825
STOCKHOLDERS' EQUITY:
Common stock and paid-in capital 203,652 202,323
Retained earnings 148,138 147,934
Treasury stock (36,550) (36,491)
Total stockholders' equity 315,240 313,766
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $408,723 $413,469
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts, unaudited)
THREE MONTHS ENDED: March 31, 2008 March 31, 2007
EXPENSES:
Depreciation 45 281
Exploration expense 1,349 -
General and administrative 6,212 6,433
Taxes other than on income 263 237
7,869 6,951
LOSS FROM OPERATIONS (7,869) (6,951)
OTHER NON-OPERATING INCOME
(EXPENSE)
Gain on financing transactions 1,330 -
Investment earnings and other 1,131 2,443
Interest expense (459) (2,481)
2,002 (38)
LOSS BEFORE INCOME TAXES AND
MINORITY INTERESTS (5,867) (6,989)
Income tax expense 64 114
LOSS BEFORE MINORITY INTERESTS (5,931) (7,103)
Minority interest in
consolidated subsidiary companies 1,423 (637)
LOSS FROM CONSOLIDATED COMPANIES (7,354) (6,466)
Net income (loss) from
unconsolidated equity affiliates 7,558 (39)
NET INCOME (LOSS) $204 ($6,505)
NET INCOME (LOSS) PER COMMON
SHARE:
Basic $0.01 ($0.17)
Diluted $0.01 ($0.17)
Weighted average shares outstanding:
Basic 35.0 37.4
Diluted 36.6 37.4
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Three Months Ended March 31,
2008 2007
Cash Flows From Operating
Activities:
Net Income (Loss) $204 ($6,505)
Adjustments to reconcile
net income (loss) to net cash
provided by (used in) operating
activities:
Depletion, depreciation
and amortization 45 281
Gain on financing
transactions (1,330) -
Net income (loss) from
unconsolidated equity
affiliates (7,558) 39
Non-cash compensation
related charges 998 1,462
Minority interest in
consolidated subsidiary
companies 1,423 (637)
Changes in Operating Assets
and Liabilities:
Accounts and notes receivable (32) 2
Advances to equity affiliate 12,633 1,923
Prepaid expenses and other (52) 194
Accounts payable (2,605) (1,707)
Accounts payable, related party 125 114
Accrued expenses (3,714) (4,927)
Accrued Interest 459 (915)
Income taxes payable (275) 26
Net Cash Provided (Used In)
Operating Activities 321 (10,650)
Cash Flows From Investing Activities:
Additions of property and equipment (3,284) (271)
Investment in affiliated companies - (4,591)
(Increase) decrease in restricted cash (72) 13,142
Investment costs (363) (26)
Net Cash Provided By (Used In)
Investing Activities (3,719) 8,254
Cash Flows From Financing Activities:
Net proceeds from issuances
of common stock 335 -
Purchase of treasury stock (8) -
Payments of notes payable - (6,977)
Dividends paid to minority interest (358) -
Net Cash Provided by Used In
Financing Activities (31) (6,977)
Net Decrease in Cash (3,429) (9,373)
Cash and Cash Equivalents at
Beginning of Period 120,841 148,079
Cash and Cash Equivalents at
End of Period $117,412 $138,706
PETRODELTA, S. A.
STATEMENTS OF OPERATIONS
(in thousands except per BOE and per share amounts, unaudited)
THREE MONTHS ENDED: March 31, 2008
Barrels of oil sold 1,209
MCF of gas sold 3,172
Total BOE 1,738
Total BOE, Net of 30% royalty 1,216
Average price/barrel $79.02
Average price/mcf $1.54
$ $/Net BOE
REVENUES:
Oil sales 95,535
Gas sales 4,885
Royalty (33,959)
66,461
EXPENSES:
Operating expenses 14,343 11.79
Depletion and amortization 4,298 3.53
General and administrative 1,678 1.38
Taxes other than on income 3,486 2.87
23,805 19.57
INCOME FROM OPERATIONS 42,656 35.07
Investment earnings and other 53 0.04
Income before income tax 42,709 35.11
Current income tax expense 21,496 17.67
Deferred income tax benefit (6,683) (5.49)
NET INCOME 27,896 22.93
Adjustment to reconcile to reported
Net Income from unconsolidated Equity
Affiliate:
Deferred income tax benefit 6,683 5.49
Net Income Equity Affiliate 21,213 17.44
Equity interest in unconsolidated equity
affiliate 40%
Income before amortization of
excess basis in equity affiliate 8,485
Amortization of excess basis in
equity affiliate (275)
Conform depletion expense to US GAAP (666)
Net income from unconsolidated
equity affiliate $7,544
SOURCE Harvest Natural Resources
http://www.harvestnr.com
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