Harvest Natural Resources Announces Fourth Quarter and 2007 Results
- Conversion Completed
- Financial Results Reflect Venezuelan Operations
- Proved Reserves Disclosed
HOUSTON, March 18, 2008 /PRNewswire-FirstCall via
COMTEX News Network/ -- Harvest Natural Resources, Inc. (NYSE: HNR) today
announced 2007 fourth quarter and year-end results. Harvest posted fourth
quarter earnings of $65.3 million, or $1.78 per diluted share, compared with a
net loss of $8.6 million, or $0.23 per share, for the 2006 fourth quarter. Results
for the 2007 fourth quarter include equity earnings for Harvest's 32 percent
interest in its Venezuelan affiliate, Petrodelta, S.A.
(Petrodelta), for the twenty-one months ended
December 31, 2007 and gains on financing transactions.
Harvest's earnings for the twelve months ended December 31, 2007 were $57.2
million, or $1.51 per diluted share, compared with a loss of $62.5 million, or
$1.68 per share, for 2006. Results for 2006 included charges of $73.8 million,
or $59.0 million net to Harvest's 80 percent interest, for additional taxes and
related interest in Venezuela
for 2001 through 2006 and a net $3.9 million additional depletion and
amortization restatement to reflect the retrospective application of the
successful efforts method of accounting.
Harvest President and Chief Executive Officer, James A. Edmiston,
said: "We are pleased to have completed the legal and contractual
conversion to Petrodelta as well as executing the
Contract for the Sale
and Purchase of Hydrocarbons which paves the way for us to report our share of Petrodelta's operating and financial results. This will
enable Petrodelta to finalize its audited financial
statements and to ultimately declare a dividend to shareholders based on 2006
and 2007 financial results. Petrodelta has invoiced
for 2006 oil and gas deliveries and expects to invoice for 2007 oil and gas
deliveries shortly."
Production and Reserves
Petrodelta delivered 1.2 million barrels of oil, or
13,100 barrels of oil per day, and 3.3 billion cubic feet (Bcf)
of natural gas to PDVSA Petroleo, S.A. (PPSA) during
the fourth quarter 2007. The average price received for oil deliveries was
$74.91, which was approximately 83 percent of the average price for West Texas
Intermediate and 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 (Mcf).
During the twenty-one months beginning April 1, 2006, the economical effective
date for Petrodelta, and ended December 31, 2007, Petrodelta produced and sold
10.6 million barrels of oil and 25 Bcf of natural gas to PPSA. The average oil
price was $54.85 per barrel, or 78 percent of the average price for West Texas
Intermediate during that period.
Harvest engaged Ryder Scott Company, L.P. (Ryder Scott), an independent
engineering firm, to prepare an estimate of proved reserves and an estimate of
the future net cash flows associated with those reserves as of December 31,
2007. Ryder Scott used an oil price of $75.86 per barrel, which was
approximately 83 percent of the average December 2007 West Texas Intermediate
price, to estimate the value of Harvest's 32 percent interest in Petrodelta. Natural
gas prices were $1.54 per Mcf as fixed in the hydrocarbon sales contract. Based
on their evaluation, Harvest's share of Petrodelta's proved reserves, net of
royalty, and after tax cash flows discounted at 10 percent is listed below.
After-tax cash
flows discounted
Oil(MMBbls) Natural Gas (Bcf) Total (MMBoe) at 10 percent ($MM)
Proved 37.8 34.5 43.6 $523
Successful Efforts Adopted
During the 2007 fourth quarter, Harvest changed its accounting method for
recording the results of its oil and gas exploration and development activities
to the successful efforts method of accounting. Previously, Harvest used the
full cost method of accounting. Petrodelta's financial statements are prepared
in accordance with International Financial Reporting Standards which require
the successful efforts method of accounting. The change in accounting principle
resulted in a cumulative, non-cash increase to retained earnings of $52.4
million as of December 31, 2004.
Balance Sheet
On December 31, 2007, Harvest had $120.8 million of
cash, or $3.19 per diluted share, and $6.8 million of restricted cash offset by
$9.3 million equivalent of Bolivar denominated debt. During 2007, Harvest
reduced its Bolivar denominated debt by $96 million equivalent from $105
million at year-end 2006.
Share Buyback Program
In June 2007, the board of directors authorized Harvest to purchase up to $50
million of its common stock though open market purchases. During 2007, Harvest
purchased 3.0 million shares for $32.8 million, or $11.09 per share, including
commissions. Currently, $17.2 million of the $50 million share purchase
authorization remains available.
Conference Call
Harvest will hold an earnings conference call today at 10:00 a.m. Central Time
(11:00 Eastern Time) to discuss fourth quarter and 2007 results and provide an
operations update. To access the call, dial 785-424-1056, conference ID:
Harvest, five to ten minutes prior to the start time. A recording of the
conference call will also be available for replay through March 27, 2008 at
402-220-2656. To listen to the live webcast of the call, please visit our
website at http://www.harvestnr.com.
About Harvest Natural Resources
Harvest Natural Resources, Inc. headquartered in Houston,
Texas, is an independent energy company with
principal operations in Venezuela,
exploration assets in Indonesia
and West Africa and a business development office in the United Kingdom.
For more information visit the Company's website at http://www.harvestnr.com.
"This press release may contain projections and other forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. They include estimates and
timing of expected oil and gas production, oil and gas reserve projections of
future oil pricing, future expenses, planned capital expenditures, anticipated
cash flow and our business strategy. All statements other than statements of
historical facts may constitute forward-looking statements. Although Harvest
believes that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Actual results may differ materially from Harvest's expectations
as a result of factors discussed in Harvest's 2007 Annual Report on Form 10-K
and other public filings."
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
($ thousands, unaudited)
December 31, December 31,
2007 2006*
ASSETS:
CURRENT ASSETS:
Cash and equivalents $120,841 $148,079
Restricted cash 6,769 15,888
Accounts receivable, net 9,418 9,811
Advances to equity affiliate 16,352 19,146
Deferred income taxes - 5,608
Prepaid expenses and other 1,032 1,246
Total current assets 154,412 199,778
RESTRICTED CASH - 73,001
OTHER ASSETS 4,301 176
INVESTMENT IN EQUITY AFFILIATES 251,173 192,090
PROPERTY AND EQUIPMENT, net 3,583 3,320
TOTAL ASSETS $413,469 $468,365
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable, trade and other $5,949 $3,827
Accounts payable, related party 10,093 9,637
Accrued expenses 11,895 12,975
Accrued interest 5,136 6,850
Deferred revenue 11,217
Income taxes payable 503 34
Current portion of long-term debt 9,302 37,674
Total current liabilities 42,878 82,214
LONG TERM DEBT - 66,977
COMMITMENTS AND CONTINGENCIES - -
MINORITY INTEREST 56,825 37,765
STOCKHOLDERS' EQUITY:
Common stock and paid-in capital 202,323 194,556
Retained earnings 147,934 90,697
Treasury stock (36,491) (3,844)
Total stockholders' equity 313,766 281,409
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $413,469 $468,365
* 2006 has been restated to reflect retrospective application of
successful efforts method of accounting.
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts, unaudited)
December 31, December 31,
THREE MONTHS ENDED: 2007 2006
REVENUES:
Oil sales (a) $11,217
EXPENSES:
Depreciation 42 $72
Exploration expense 204 -
General and administrative 9,754 6,260
Contribution for Science and Technology
Fund - 3,887
Taxes other than on income (65) 195
9,935 10,414
INCOME (LOSS) FROM OPERATIONS 1,282 (10,414)
OTHER NON-OPERATING INCOME (EXPENSE)
Gain on financing transactions 34,581 -
Investment earnings and other 1,524 2,590
Interest expense (1,015) (2,232)
Net loss on exchange rates (31) (100)
35,059 258
INCOME (LOSS) BEFORE INCOME TAXES AND
MINORITY INTERESTS 36,341 (10,156)
Income tax expense 5,283 7
INCOME (LOSS) BEFORE MINORITY INTERESTS 31,058 (10,163)
Minority interest in consolidated
subsidiary companies 17,909 (1,613)
INCOME (LOSS) FROM CONSOLIDATED COMPANIES 13,149 (8,550)
Net Income from unconsolidated equity
affiliate 52,106 -
NET INCOME (LOSS) $65,255 ($8,550)
NET INCOME (LOSS) PER COMMON SHARE:
Basic $1.87 ($0.23)
Diluted $1.78 ($0.23)
Weighted average shares outstanding:
Basic 35.0 million 37.3 million
Diluted 36.7 million 37.3 million
(a) Recognition of deferred revenue
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per BOE and per share amounts, unaudited)
December 31, December 31,
TWELVE MONTHS ENDED: 2007 2006*
Barrels of oil sold 1,894
MMCF of gas sold 4,506
Total BOE 2,645
Average price/barrel $28.96
Average price/mcf $1.03
REVENUES:
Oil sales (a) $11,217 $54,858
Gas sales - 4,648
11,217 59,506
EXPENSES:
Operating expenses 9,241
Depletion and amortization 14,829
Depreciation $384 606
Exploration expense 204 -
General and administrative 29,742 26,421
Contribution for Science and Technology
Fund - 3,887
Taxes other than on income 423 3,948
30,753 58,932
INCOME (LOSS) FROM OPERATIONS (19,536) 574
OTHER NON-OPERATING INCOME (EXPENSE)
Gain on financing transactions 49,623 -
Investment earnings and other 9,065 9,406
Interest expense (8,224) (23,156)
Net gain (loss) on exchange rates (14) (121)
50,450 (13,871)
INCOME (LOSS) BEFORE INCOME TAXES AND
MINORITY INTERESTS 30,914 (13,297)
Income tax expense 6,312 60,917
INCOME (LOSS) BEFORE MINORITY INTERESTS 24,602 (74,214)
Minority interest in consolidated
subsidiary companies 19,060 (11,712)
INCOME (LOSS) FROM CONSOLIDATED COMPANIES 5,542 (62,502)
Net income from unconsolidated equity
affiliates 51,695 -
NET INCOME (LOSS) $57,237 ($62,502)
NET INCOME (LOSS) PER COMMON SHARE:
Basic $1.57 ($1.68)
Diluted $1.51 ($1.68)
Weighted average shares outstanding:
Basic 36.5 million 37.2 million
Diluted 37.9 million 37.2 million
(a) Recognition of deferred revenue
* 2006 has been restated to reflect retrospective application of
successful efforts method of accounting.
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
2007 2006 2007 2006*
Cash Flows From Operating Activities:
Net income (loss) $65,255 ($8,550) $57,237 ($62,502)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depletion, depreciation and
amortization 42 72 384 15,435
Exploration expense 204 - 204
Net income from unconsolidated
equity affiliates (52,106) - (51,695) -
Non-cash compensation related
charges 1,724 1,240 6,108 5,056
Gain on financing transactions (34,581) - (49,623) -
Minority interest in consolidated
subsidiary companies 17,909 (1,613) 19,060 (11,712)
Deferred income taxes 5,608 - 5,608 (2,556)
Changes in operating assets and
liabilities:
Accounts and notes receivable 299 3,622 393 61,839
Advances to equity affiliate (3,363) (1,912) 2,794 (19,146)
Prepaid expenses and other (14) (393) 214 903
Accounts payable 1,868 385 2,122 3,419
Accounts payable, related party 108 116 456 434
Accrued expenses 2,337 5,464 (1,251) (5,469)
Accrued interest 113 (16,384) (1,714) 4,213
Deferred revenue (11,217) - (11,217) 4,489
Asset retirement liability - - - 24
Income taxes payable (383) (22,203) 469 (18,875)
Net Cash Used In Operating
Activities (6,197) (40,156) (20,451) (24,448)
Cash Flows From Investing Activities:
Additions of property and equipment (511) (103) (851) (1,657)
Investment in affiliated companies (2,791) (437) (7,388) (513)
(Increase) decrease in restricted
cash 49,005 (43,329) 82,120 (88,889)
Investment costs (4,125) (30) (4,125) 503
Net Cash Provided By (Used In)
Investing Activities 41,578 (43,899) 69,756 (90,556)
Cash Flows From Financing Activities:
Net proceeds from issuances of
common stock 1,397 6 1,938 880
Purchase of treasury stock (666) - (32,755) -
Proceeds from issuance of notes
payable - 65,116 - 118,953
Payments of notes payable (23,093) (14,302) (45,726) (19,769)
Net Cash Provided By (Used In)
Financing Activities (22,362) 50,820 (76,543) 100,064
Net Increase (Decrease) in Cash 13,019 (33,235) (27,238) (14,940)
Cash and Cash Equivalents at
Beginning of Period 107,822 181,314 148,079 163,019
Cash and Cash Equivalents at End
of Period $120,841 $148,079 $120,841 $148,079
* 2006 has been restated to reflect retrospective application of
successful efforts method of accounting.
PETRODELTA, S.A.
STATEMENTS OF OPERATIONS
(in thousands except per BOE and per share amounts, unaudited)
YEAR ENDED: December 31, 2007 December 31, 2006
Barrels of oil sold 5,374 5,211
MCF of gas sold 13,456 11,519
Total BOE 7,616 7,131
Average price/barrel $58.61 $50.98
Average price/mcf $1.54 $1.54
$/BOE $/BOE
REVENUES:
Oil sales $314,928 $265,625
Gas sales 20,789 17,796
Royalty (114,847) (96,790)
220,870 186,631
EXPENSES:
Operating expenses 23,752 $3.12 22,729 $3.19
Depletion and amortization 17,956 2.36 16,616 2.33
Depreciation 593 0.08 460 0.06
General and administrative 19,880 2.61 11,093 1.56
Taxes other than on income 2,747 0.36 2,029 0.28
64,928 8.53 52,927 7.42
INCOME FROM OPERATIONS AND BEFORE
INCOME TAX 155,942 20.47 133,704 18.75
Current income tax expense 85,849 11.27 67,188 9.42
Deferred income tax expense (21,348) (2.80) (23,415) (3.28)
NET INCOME 91,441 12.00 89,931 12.61
Adjustments to reconcile to Reported
Net Income from Unconsolidated
Equity Affiliate:
Deferred income tax expense 21,348 2.80 23,415 3.28
NET INCOME $70,093 $9.20 $66,516 $9.33
Equity interest in unconsolidated
equity affiliate 40% 40%
Income before amortization of excess
basis in equity affiliate 28,037 $26,606
Amortization of excess basis in
equity basis (2,530) -
Net income from unconsolidated
equity affiliate $25,507 $26,606
SOURCE Harvest Natural Resources, Inc.
http://www.harvestnr.com
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