Harvest
Natural Resources, Inc. (NYSE: HNR) today provided an operational
update of its first quarter domestic and international exploration and
production activity.
Venezuela
- During
the first three months of 2011, Petrodelta
drilled and completed four wells and produced approximately 2.6 million
barrels of oil (MMBO) for a daily average of approximately 28,700
barrels of oil per day (BOPD), an increase of 32 percent over the same
period in 2010;
- Petrodelta's
current production rate is approximately 29,800 BOPD;
- Petrodelta's
first well in the untested Isleno field,
ILM-8, was drilled and completed in March 2011
and was tested at 1,800 BOPD. � Based on this successful test, Petrodelta will likely drill several additional
wells in the Isleno field this year.
United
States
- On March
22, 2011, Harvest announced it entered into a
definitive agreement with an affiliate of Newfield Exploration
Company to sell all of the Company's oil and gas assets in Utah's
Uinta Basin for $215 million
in cash. The sale has an effective date of March� 1,
2011, and closing is expected to occur in May 2011.
Indonesia
- On January
5, 2011, Harvest exercised its right of first
refusal to acquire an additional 10 percent equity in the Budong Budong Block PSC
bringing its working interest in the block to 64.4 percent.
- The Lariang LG-1 well was spud on January 6, 2011
in the Budong Budong
Block.
- The
well was drilled to a total depth of 5,311 feet and encountered multiple
hydrocarbon shows and overpressure in Miocene formations requiring up to
16.5 pound per gallon mud. After encountering difficulty in controlling
the well due to high pressures, the well was plugged and abandoned on April
6, 2011.
- The
test confirmed the presence of hydrocarbons as well as the existence of
an effective trap and seal in the Lariang
sub-basin.
- The
rig is preparing to move to the KD-1 location in the adjacent Karama sub-basin.
Gabon
- The
Company plans to spud the first exploration well, the Ruche Marin-A, in
late April
2011. Harvest is the operator and will drill the
exploration well using Transocean's Sedneth
701 semi-submersible drilling unit.
Oman
- Well
planning and procurement of long lead items is planned for the second
quarter of 2011 in anticipation of spudding
the first of the two exploratory wells in late 2011.
Harvest
President and Chief Executive Officer, James A. Edmiston,
said, "As expected, 2011 is shaping up to be an exciting year with
multiple catalysts for growth to be tested in the coming months.
� Already, we have seen Petrodelta initiate
first production from the Isleno field giving our
Venezuelan business another field development opportunity in addition to the Temblador and El Salto field developments."
Edmiston continued, "We remain encouraged by our
initial drilling on the Budong Budong
Block in Indonesia.
� Although we were not able to test the primary Eocene target due to
high formation pressure and safety reasons, the well confirmed the existence
of hydrocarbons within the secondary Miocene target and the effectiveness of
the trap and seal given the high pressure gradients. � We are now
turning our attention to the KD-l well, 50 miles from the LG location, which
will test the larger of the two initial structures on the Budong
Budong Block to be tested. � In Gabon, we will
spud the Ruche Marin well later this month with results expected before the
end of the second quarter of 2011. � In Oman, we are getting underway
with well planning and procurement to allow for drilling late this
year."
In
closing Edmiston added, "The sale of our Utah
properties provides the Company with the capital to reduce debt,
strengthen its balance sheet and fully fund its growth activities well beyond
2011. � This year's exploration program combined with our ongoing
strategic evaluation offers our shareholders multiple catalysts for growth
throughout the year."
VENEZUELA
During
the three months ended March 31, 2011, Petrodelta produced approximately 2.6 MMBO for a daily
average of 28,700 BOPD, an increase of 32 percent over the same period in
2010 and an increase of 9 percent over the previous quarter. � Petrodelta also sold 0.5 billion cubic feet (BCF) of
natural gas for a daily average of 5.2 million cubic feet per day (MMCFD), a
decrease of 29 percent over the same period in 2010 and an increase of 13
percent over the previous quarter.
During
the first quarter of 2011, Petrodelta drilled and
completed four wells, three of which were development wells drilled in the Uracoa, El Salto and Temblador
fields, and the fourth was the first appraisal well drilled in the untested Isleno field. � Currently, Petrodelta
is operating two drilling rigs and one workover rig
and is continuing with infrastructure enhancement projects in El Salto and Temblador.
Petrodelta's first well in the untested Isleno
field, ILM-8, was drilled and completed in mid-March 2011
and was tested at 1,800 BOPD with 2 percent water. � The horizontal well
was completed in the Lower Oficina Sand of the
northern fault block. � With an oil gravity of 15.5 API, this crude is
of similar quality to that being produced in the Uracoa
field, just seven kilometers to the north. � The current production of
approximately 1,600 BOPD is being trucked to the Uracoa
field, but plans are underway to build a pipeline connection between Isleno and the UM2 main production facility at Uracoa field.
Petrodelta's production target for the year 2011 is projected to
be approximately 36,000 BOPD. � The 2011 Petrodelta
capital budget is expected to be approximately $224 million
with a significant portion of that total related to infrastructure costs to
support the further development of the Temblador
and El Salto fields. � This program should be self-funding at a WTI oil
price of $70
per barrel in 2011. � Petrodelta expects to
drill 28 oil wells, two water injector wells and one gas injector well, and
the drilling program includes utilizing two rigs to drill both development
and appraisal wells for both increasing production capacity and appraising
the substantial resource base. �
UNITED
STATES- Antelope Project - Utah
On March
22, 2011, Harvest announced it has entered into a
definitive agreement with an affiliate of Newfield Exploration Company
to sell all of the Company's oil and gas assets in Utah's Uinta
Basin for $215 million in cash. The sale
has an effective date of March 1, 2011.
The net
proceeds from the sale are estimated to be $205 million
after deduction for transaction related costs. Closing is expected to occur
in May
2011 and the final sales price is subject to customary
adjustments at closing. Land related due diligence and operational transition
activities are in progress and on schedule.
The oil
and gas assets are located in Harvest's Antelope project area in the Uinta
Basin of Utah and
consist of approximately 69,000 gross acres (47,600 net acres), seven
operated oil wells and 15 non-operated oil wells. Harvest owns a working
interest of approximately 70 percent in the Uinta assets. � The
transaction includes wells operated by both Harvest and Newfield.
This
transaction is part of the Company's ongoing process of exploring strategic
alternatives announced in September of 2010.
EXPLORATION
DRILLING ACTIVITIES
Budong Budong PSC - Indonesia
The Lariang LG-1 well, the first of two planned exploration
wells, was spud on January
6, 2011 in the Budong Budong Block, West Sulawesi. � The well has been
drilled to a depth of 5,311 feet and has encountered multiple oil and gas
shows within the secondary Miocene objective. Wireline
logs and samples of reservoir fluids have 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. 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
drilling rig is currently mobilizing to drill the second exploratory well on
the block, the Karama KD-1 prospect, which is
located approximately 50 miles south of the LG-1 well. � The KD-1 well
will be drilled to a total depth of about 8,100 feet. �
Dussafu Project - Gabon
("Dussafu PSC")
The Dussafu PSC partners and the Republic of Gabon,
represented by the Ministry of Mines, Energy, Petroleum and
Hydraulic Resources, entered into the second exploration phase of the Dussafu PSC with an effective date of May 28, 2007.
� It has been agreed that the second three-year exploration phase will
be extended until May
27, 2012, at which time the partners can elect to enter
a third exploration phase. � Harvest expects to spud the Ruche Marin-A
exploration well late April 2011 utilizing the
Transocean Sedneth 701 semi-submersible drilling
unit on a one well contract. The Company will take possession of the rig mid-April
2011. � All critical materials required for
drilling the well have been purchased and received. �
Harvest
has established an operational and logistics base in Port Gentil,
Gabon.
� The Ruche Marin-A well will be drilled in a water depth of 380 feet to
test multiple stacked pre-salt targets to a planned total measured depth of
approximately 10,100 feet.
Block
64 Gas License - Oman
("Block 64 EPSA")
Block
64 EPSA, also known as Al Ghubar or Qarn Alam, is a newly-created
block designated for exploration and production of non-associated gas and
condensate which the Oman Ministry of Oil and Gas carved out of
the Block 6 Concession operated by Petroleum Development of Oman
("PDO"). The 955,600 acre block is located in the gas and
condensate rich Ghaba Salt Basin
in close proximity to the Barik, Saih Rawl and Saih Nihayda gas and condensate
fields. Harvest has an obligation to drill two wells over a three-year period
ending in May
2012 with a funding commitment of $22.0 million.
� To date, multiple existing 3-D seismic databases have been reprocessed
and integrated, and detailed geological and geophysical interpretation is
underway to refine the prospects and define drilling locations. Well planning
and procurement of long lead items is expected to begin in the second quarter
of 2011 in anticipation of spudding the first of
the two exploratory wells in late 2011.
About Harvest
Natural Resources
Harvest Natural Resources, Inc.,
headquartered in Houston, Texas,
is an independent energy company with principal operations in Venezuela,
producing and exploration assets in the United States,
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 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.