Harvest Signs MOU for Venezuelan Mixed Company

Harvest Natural Resources' 80 percent-owned affiliate, Harvest Vinccler, C.A. (HVCA), has signed a memorandum of understanding with Corporacion Venezolana del Petroleo (CVP), to form a mixed company subject to certain conditions.

HVCA will own 40 percent of the shares of the mixed company (32 percent net to Harvest Natural Resources) and CVP will own the remaining 60 percent. The mixed company, which went into effect on April 1, will jointly develop and operate the South Monagas Unit fields, previously operated by HVCA. HVCA will receive additional consideration for contributing its interest to the mixed company to be mutually agreed upon at a later date.

"The MOU represents an important milestone for the conversion of our operating service agreement to a mixed company," said James A. Edmiston, Harvest Natural Resources' president and CEO. "We expect to finalize our agreements soon and look forward to working with our partner, CVP, to increase oil and gas production in Venezuela. We will also continue our work with SENIAT to resolve the tax claims."

After formation, the mixed company will receive a 20-year license to operate and develop the fields. Oil produced from the fields by the mixed company will be sold to PDVSA under a long-term marketing agreement. The mixed company will pay 33.33-percent royalty to the Venezuelan government, and the income tax rate will be 50 percent.

Conversion of the operating service agreement to the mixed company is subject to the following conditions:

  • completion of definitive agreements
  • approval by the boards of directors of the entities that control HVCA
  • approval by the shareholders of Harvest Natural Resources
  • approval by the Venezuelan Ministry of Energy and Petroleum and the Venezuelan National Assembly.