Harvest Natural Resources Reviews '08 International Exploration Projects
Harvest has announced guidance for its 32%-owned Venezuelan affiliate, Petrodelta, S.A.(Petrodelta) and planned expenditures for Harvest's 2009 U.S. and international exploration program.
Highlights and guidance for 2009 include:
- Oil production rates from Venezuela expected to average approximately 16,000 barrels of oil per day for self-funding operations. First quarter production rate expected to be approximately 18,000 barrels per day to comply with the Venezuelan government's market allocations of the OPEC quota.
- Planned exploration expenditures set at $38.8 million to evaluate the Company's prospect portfolio in the United States and international locations;
- Current financial resources are sufficient to fund all budgeted expenditures and maintain a cash reserve without having to raise additional capital;
- Harvest has successfully reduced its common stock outstanding to proximately 32.9 million shares as of December 31, 2008.
- Harvest has no debt.
During 2008, Petrodelta drilled and completed seven development wells, produced approximately 5.5 million barrels of oil and sold 10.7 billion cubic feet (BCF) of natural gas. Petrodelta has been advised by the Venezuelan government that 2009 production objective will be approximately 16,000 barrels of oil per day effective January 1, 2009, following the December 17, 2008 OPEC meeting establishing new production quotas. Petrodelta's production output for the first quarter of 2009 is projected to be 18,000 barrels per day to comply with the Venezuelan government's market allocations of the OPEC quota for the country.
Petrodelta shareholders have agreed the company will remain self-funding and rely on internally-generated cash flow to fund operations. The management and board of Petrodelta have taken actions to reduce both operating and capital expenditures. Currently, Petrodelta has two drilling rigs operating in the Uracoa and Temblador fields and has released three additional drilling rigs. For 2009, the initial drilling program includes utilizing two rigs to drill both development and appraisal wells for both maintaining production capacity and appraising the substantial resource bases in the presently non-producing Isleno and El Salto fields.
Harvest President and CEO James Edmiston said, "The management of Petrodelta will closely monitor market conditions and stands ready to increase its development drilling campaign as oil prices improve and/or production limitations are lifted." Mr. Edmiston continued, "Petrodelta will also begin the appraisal and testing of its large portfolio of undeveloped resources in Venezuela during 2009. Recent advances in drilling performance have cut drilling and completion times to 16 days over the past 3 months, so even with reduced levels of drilling activity, we expect the planned development and appraisal program to result in stable production and cash flow while increasing proved reserves during 2009."
During 2008, Harvest entered into exploration projects in Indonesia, Gabon and the United States. In 2009, Harvest projects exploration activities to cost approximately $38.8 million (net), including the drilling of two exploratory wells.
Hunter # 1 Well -- Calcasieu Parish, Louisiana -- United States
Harvest drilled the Hunter #1 Well in Calcasieu Parish, Louisiana in the fourth quarter of 2008 and commenced a testing program to evaluate three potentially productive reservoir horizons in the Vicksburg formation identified from well logs. All three zones were tested without achieving commercial flow of hydrocarbons. As a result, the well is currently being plugged and abandoned.
Antelope Project -- United States
Harvest plans to drill a deep gas exploration well to test a gas prospect in the Rockies and expects to spud the well in mid-2009. To date, Harvest and its partner have acquired approximately 40,000 net acres in the Antelope prospect area and continue to build their land position. Harvest is the operator and has a 50% working interest in the prospect. Harvest will fund 100% of the cost of the first test well. The projected 2009 capital expenditures for leasehold acquisition and exploratory drilling are $18.3 million.
West Bay Project - United States
Harvest has submitted to the Army Corps of Engineers Galveston District an Application for Department of Army Permit to install structures for drilling and production of oil and gas in West Bay. This permit is required to allow drilling of the initial exploration well on the West Bay Project. The initial exploration well will be drilled to a depth of approximately 18,000 feet to test a large section of normal and over-pressured Frio and Vicksburg sands on the flanks of an untested, deep-seated salt dome. Drilling is expected to commence upon receipt of the requisite permit from the Corps of Engineers, which Harvest expects to obtain in late 2009 or early 2010. The expected capital expenditures for this project in 2009 are $0.5 million.
Budong-Budong Project, Indonesia
In December 2008 the acquisition program of 650 km 2D seismic was completed. The data is currently being processed. Interpretation of the data and well planning will take place in the first quarter of 2009. It is expected that the first of two exploration wells will spud in the second half of 2009. In accordance with the farm-in agreement Harvest expects to fund 100% of the well expenditures to earn its 47% working interest up to a cap of $10.7 million; thereafter, Harvest pays in proportion to its working interest. The 2009 capital project costs for the first exploratory well are $8.1 million (net).
Dussafu Project - Gabon
Harvest will spend approximately $0.4 million (net) in seismic processing costs and engineering studies to advance the program to a decision on one conditional exploratory well to be drilled in 2010 relating to the Dussafu Block in Gabon. If the decision is made to drill the conditional well, Harvest will spend approximately $1.8 million (net) for required drilling materials.
Other International Exploration Projects
Relating to other international projects, Harvest is projecting to spend $2.0 million in leasehold acquisition costs, $4.5 million in seismic acquisition and processing costs and $3.2 million on other project related costs in 2009.
Mr. Edmiston said, "Our strong balance sheet provides Harvest with the financial resources to endure this current period of volatility and uncertainty in the commodity and financial markets. We have sufficient cash on hand to fully fund our 2009 exploration budget without having to go to the market. Having no debt, our plans are not limited by any borrowing agreements. In fact, our strong financial position provides us the flexibility to consider opportunistic asset acquisitions from other companies seeking to increase their liquidity. We expect 2009 to be a very busy year for Harvest as we advance our projects for building long-term shareholder value."
- Venezuela Wants Oil Firm Harvest Out, If It Can Find Deep-Pocketed Buyer (Apr 20)
- Harvest Scores Another Success Offshore Gabon (Feb 11)
- West African Find for Harvest (Jan 04)