Harvest Natural Resources Bumps Up Venezuelan Reserves

Harvest Natural Resources has announced an increase in reserves attributed to Petrodelta, S.A. (Petrodelta), Harvest's 32 percent owned Venezuelan affiliate. Proved reserves net to Harvest increased to 47.6 million barrels of oil equivalent (MMBOE) at August 31, 2009, as compared to 43.3 MMBOE at year-end 2008. Proved, probable and possible reserves net to Harvest increased 59 percent to 211.1 MMBOE. The increase in reserves was driven primarily by the drilling of two appraisal wells in the largely undeveloped El Salto field. The reserves estimate was prepared by the independent petroleum consultants of Ryder Scott Company, L.P. (Ryder Scott) for Harvest.

 

As used in this press release, references to oil and gas reserves that are "net to Harvest" refer to Harvest's net 32 percent indirect equity interest in Petrodelta after royalties and do not refer to any working interest or other ownership interest held directly by Harvest.

Highlights of the interim reserves report include:

  • Combined proved, probable and possible reserves net to Harvest increased by approximately 59 percent to 211.1 MMBOE at August 31, 2009 from 132.4 MMBOE at December 31, 2008. By category and net to Harvest, proved, probable and possible reserves increased by approximately 10 percent, 35 percent and 104 percent, respectively.
  • Proved reserves volumes net to Harvest increased approximately 10 percent to 47.6 MMBOE at August 31, 2009 from 43.3 MMBOE at December 31, 2008.
  • The after tax present value of proved reserves net to Harvest and discounted at 10 percent increased by approximately 305 percent to $449 million at August 31, 2009.
  • Approximately 80 percent of the proved reserves are oil and condensate of which 30 percent are developed.
  • Proved reserves of the El Salto Field alone increased 42 percent.

Increase in oil reserves comprised the majority of the reserve additions from year-end 2008 with proved, probable and possible oil reserves increasing by approximately 12 percent, 49 percent and 108 percent, respectively.

The majority of the increase in proved reserves was the result of drilling two appraisal wells in the El Salto Field during 2009, which more than offset production from Petrodelta's existing producing developed properties. Proved reserves of the El Salto field net to Harvest increased 42 percent to 18.5 MMBOE at August 31, 2009 from 13.0 MMBOE at year-end 2008. Petrodelta operates six fields in Venezuela and approximately 39 percent of proved reserves net to Harvest at August 31, 2009 were associated with the El Salto field.

Harvest President and Chief Executive Officer, James A. Edmiston, said, "The interim reserve report was commissioned to re-assess the growth potential of the El Salto field and to provide input into Petrodelta's capital budget process for the rest of 2009 and into 2010. We estimate that there may be approximately 980 drilling locations in El Salto alone, providing many years of growth potential. We are excited about the opportunity for Petrodelta to prove-up additional reserves and value by drilling in El Salto and its other fields."

Edmiston continued, "The previous estimate of original oil in place for the El Salto field was upwardly revised by 48 percent to 5.4 billion barrels of original oil in place. The field represents a platform for significant growth with its stacked pay zones in eight different proven fault blocks as well as exploration potential for additional traps. Petrodelta began drilling appraisal wells in the El Salto field in May 2009 to evaluate its potential for supporting the company's self-funded drilling program. The appraisal wells drilled in this field have encountered pay zones thicker than anticipated, and the initial production rate of the El Salto #31 well has exceeded our original expectations, producing at the rate of approximately 3,000 BOPD limited by infrastructure constraints. The El Salto #30 has yet to be placed on production. The updated reserves report demonstrates the quality of Petrodelta's assets and how quickly drilling can convert unproven reserves to proved status."

The reserve estimate assumes a West Texas Intermediate crude oil price of $71.05 per barrel, which yields $64.48 per barrel after adjustment for location and quality. The natural gas reserves were based on a contractual price of $1.54 per thousand cubic feet (Mcf). Both oil and gas prices were held constant.
 

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