HOUSTON, Nov. 12, 2013 /PRNewswire/ -- Harvest Natural Resources, Inc. (NYSE: HNR) today announced 2013 third quarter earnings and provided an operational update.

Harvest reported third quarter net income of $2.0 million, or $0.05 per diluted share, compared to net income of $5.8 million, or $0.15 per diluted share, for the same period last year.�  The third quarter results included exploration expenses of $1.5 million, or $0.04 per diluted share, an impairment charge on our Colombia asset of $2.3 million, or $0.06 per diluted share, and an unrealized loss on derivatives of $6.6 million, or $0.17 per share.�  After adding back the charges for exploration expense, impairment and unrealized losses on derivatives, net income would have been $12.4 million, or $0.32 per diluted share.

Petrodelta had net income during the third quarter of $96.6 million, $30.9 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 accounting principles generally accepted in the United States (GAAP), Harvest's 32 percent share of Petrodelta's earnings was $20.6 million, compared to $16.2 million for the same period last year.

Highlights for the third quarter of 2013 include:

Venezuela

• Negotiations continue with Pluspetrol Venezuela S.A. to acquire the outstanding shares of Harvest through a transaction in which Pluspetrol would retain Harvest's net 32 percent interest in Petrodelta while Harvest's non-Venezuelan assets would be contributed to a new company that would be spun off to our stockholders
• During the third quarter of 2013, Petrodelta drilled and completed four wells and sold approximately 3.8 million barrels of oil (MMBO) for a daily average of approximately 41,726 barrels of oil per day (BOPD), an increase of 9 percent over the same period in 2012
• Petrodelta's current production rate is approximately 44,000 BOPD and the 2013 expected average production rate is 40,400 BOPD with capital expenditures projected at $210.0 million
• Four development wells were drilled during the period, two in the El Salto field, one in the Isleno field and one in the Temblador field

Gabon

• Negotiation of definitive agreements continue with Vitol S.A. to acquire Harvest's 66.67% interest in the Dussafu PSC for $137.0 million in cash
• Acquisition of a 1,260 square kilometer 3D seismic survey commenced in October 2013 and the first high quality seismic products are expected to be available during the second quarter of 2014
• Geoscience, reservoir engineering and economic studies have been progressed, and a field development plan is progressing

Indonesia

• Land access and acquisition, environmental studies, and tender prequalification and procurement are on-going
• Continued work on an exploration program targeting the Pliocene and Miocene targets

James A. Edmiston, President and Chief Executive Officer of Harvest Natural Resources stated, "The two previously announced potential transactions, taken together, accurately reflect the strategic direction of the Company.�  In the near term, the Board and Management will remain primarily focused on a sale of the asset base of the Company in whole or in parts and a return of the proceeds to its shareholders."� 

Mr. Edmiston continued, "While we cannot assure the shareholders that either of these potential transactions will reach closure, we believe the quality of the asset base continues to attract interest from the industry."

VENEZUELA

During the three months ended September 30, 2013, Petrodelta sold approximately 3.8 MMBO for a daily average of 41,726 BOPD, an increase of nine percent over the same period in 2012 and nine percent over the previous quarter.�  Petrodelta also sold 0.6 billion cubic feet of natural gas for a daily average of 6.5 million cubic feet per day.�  Petrodelta's current production rate is approximately 44,000 BOPD.

During the third quarter of 2013, Petrodelta drilled and completed four development wells, two in the El Salto field, one in the Isleno field and one in the Temblador field.�  Currently, Petrodelta is operating five drilling rigs and one workover rig. � A sixth drilling rig is rigging up. � Infrastructure enhancement projects in the El Salto and Temblador fields continue.

The average sale price for crude oil produced during the quarter was approximately $93.43 per barrel.

In September 2013, we announced that we had entered into exclusive negotiations with Pluspetrol Venezuela S.A. (Pluspetrol) to sell the outstanding shares of Harvest through a transaction in which Pluspetrol would retain Harvest's net 32 percent interest in Petrodelta while Harvest's non-Venezuelan assets would be contributed to a new company that would be spun off to our stockholders.�  The total consideration would be approximately $373 million, before taking into account repayment of our long-term debt, payment of costs and other obligations, and customary working capital adjustments.�  The assets to be spun off would primarily include our interests in Gabon and Indonesia.�  While our obligation to negotiate exclusively with Pluspetrol has expired, we are continuing to discuss with Pluspetrol on a non-exclusive basis entering into a definitive agreement that would entail this transaction or one similarly structured.

EXPLORATION AND OTHER ACTIVITIES

Dussafu Project - Gabon (Dussafu PSC)

Operational activities during the three months ended September 30, 2013 included continuation of planning for a cluster field development.�  Geoscience, reservoir engineering and economic studies have been progressed, and a field development plan is progressing� �  Acquisition of a 1,260 square kilometer 3D seismic survey commenced in October 2013, and the first high quality seismic products are expected to be available during the second quarter of 2014.�  The survey will provide the first 3D coverage over the outboard, where significant pre-salt prospectivity has been recognized on 2D data.�  The pre-salt is currently the focus of deep water exploration activity offshore Gabon.�  The new 3D seismic data will also enhance the placement of future development wells in the Ruche and Tortue development program.

On September 27, 2013, HNR Global Holding B.V., an indirect wholly-owned subsidiary of the Company, entered into exclusive negotiations with Vitol S.A. to sell Harvest Dussafu B.V., which holds the Company's 66.67% interest in the Dussafu PSC, for $137.0 million in cash.�  Net proceeds from the sale are estimated to be approximately $121.8 million after deductions for $3.5 million in transaction related costs and $11.7 million in taxes.� 

Budong-Budong PSC - Indonesia

Operational activities during the three months ended September 30, 2013 included continued work on an exploration program targeting the Pliocene and Miocene targets encountered in the previous two wells.�  Land access and acquisition; environmental studies; construction and upgrades to access roads, bridges, and well site; permitting; and tender prequalification and procurement are on-going.� 

Colombia

Harvest received notices of default from our partners for failing to comply with certain terms of the farmout agreements for Block VSM 14 and Block VSM 15.�  Also approvals from the government of the Republic of Colombia in connection with our interest remain pending.�  The Company is discussing this situation with our partners to see how we may be able to cure these defaults and reform the agreements.�  Unless the Company is successful at doing so, our partners may terminate the farmout agreements, and Harvest would relinquish our interests in the Blocks.�  After evaluating these circumstances, the Company determined that it was appropriate to fully impair the costs associated with these interests, and we recorded an impairment charge of $2.3 million during the three months ended September 30, 2013.

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 are discussed, as applicable, in management's discussion and analysis of operating results in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 and our Annual Report on Form 10-K for the year ended December 31, 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

The Company will hold a conference call at 10:00 a.m. CT on Tuesday, November� 12, 2013, during which management will discuss Harvest's 2013 third quarter results. � To access the conference call, dial 800-533-7954 or 785-830-1924, five to ten minutes prior to the start time.�  At that time you will be asked to provide the passcode, which is 8070567.�  A recording of the conference call will also be available for replay at 719-457-0820, passcode 8070567, through 5:00 p.m. Friday, November 15, 2013.

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 Indonesia, West Africa, and China, and business development offices in Singapore and the United Kingdom.�  For more information visit the Company's website at www.harvestnr.com.

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 September 30, 2013 Quarterly Report on Form 10-Q, 2012 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.

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SOURCE Harvest Natural Resources, Inc.