Harvest Completes Temblador, El Salto Study

US oil company Harvest Natural Resources (NYSE: HNR) has completed a technical evaluation and field development plan of two oil and gas fields near its South Monagas unit in Venezuela, the company said in its second quarter earnings statement.

Harvest signed an agreement through its Venezuelan operating company Harvest Vinccler with state oil company PDVSA to evaluate the two fields, Temblador and El Salto, in November 2003.

Harvest Vinccler has submitted a formal development proposal and has started discussions with PDVSA for the possible acquisition of the rights to develop the Temblador, El Salto and Isleno fields, the statement said.

Harvest's Venezuelan output through June 30 averaged 35,400 barrels of oil equivalent a day (boe/d) including an average of 20,800 barrels of oil a day (b/d) and 88 million cubic feet of gas a day (mcf/d). Average natural gas production in Venezuela is projected to be at the upper end of the company's 70-80mcf/d guidance, while oil production is expected to be at the low end of its 22,000-26,000b/d guidance.

The company expects production to increase to up to 38,000 boe/d in 2004 based on the expected success of its Uracoa field drilling program. Harvest began Uracoa drilling with two rigs in June, and has the results of two wells already, Harvest president and CEO Peter Hill said during a conference call Thursday.

The company expects to drill a total 16 wells on the field in 2004. The first two wells performed "as expected; these wells will produce something between 500-1,000b/d once stabilized," Hill said, adding one well is producing about 500b/d and the other just over 700b/d.

"We are increasing our Uracoa 2004 drilling program to 11 development wells and five recompletions, which is designed to take advantage of the high prices and to recover the lost oil production experienced as a result of the four-month delay in the start of our planned drilling," Hill said in the statement.

"We will then continue with those two rigs into 2005 and drill more wells, possibly upwards of 10," Hill said during the conference call.

Urucoa production has been declining since Harvest stopped drilling there in 2003. "We've got the benefit of the first two wells, we've got the benefit of being able to take gas off, the only thing you can do to drain the remaining reserves is drill more wells and support the reservoir with pressure, and that's what we're doing," Hill said.

Production will be some 25,000-30,000b/d at year-end and stay there until the field goes into terminal decline some time from 2008, he added.

Elsewhere in Venezuela, Harvest produces gas on its Bombal and Tucupita fields in its South Monagas unit. "We have additional gas to bring on at Bombal and we've then just got to manage the decline of Tucupita, Bombal and Urucoa, the three fields we've got, so that's the game plan," Hill said.

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