Harvest Natural Resources' Balance Sheet Remains Debt-Free
Harvest Natural Resources has announced 2008 fourth quarter and year-end earnings. Harvest posted a fourth quarter loss of $19.7 million, or $0.60 per share, compared to net income of $68.1 million, or $1.86 per share, for the 2007 fourth quarter. For the year ending December 31, 2008, Harvest's net loss was $24.3 million, or $0.71 per share, compared to net income of $60.1 million, or $1.59 per share for 2007.
Included in the fourth quarter and year-end results is $10.8 million, or $0.32 per share, in dry hole costs related to the Harvest Hunter #1 well, which is Harvest's exploratory well in its Gulf Coast AMI that was plugged and abandoned on January 9, 2009. Also included in the fourth quarter and year-end results is $16.4 million, or $0.48 per share, in exploration expense related to seismic in Indonesia, Gabon and the United States. For the year 2008, dry-hole costs and exploration expense totaled $27.2 million, or $0.80 per share.
Highlights for 2008 include:
- Petrodelta's self-funding drilling program increased oil production from a low of 12,200 barrels of oil per day (BOPD) in April 2008 to a current rate in excess of 20,000 BOPD;
- To date, Petrodelta has drilled and completed ten new wells since re-commencing drilling operations in April 2008, eight of which were drilled in 2008;
- Seismic data acquisition to support oil exploration projects in Indonesia and Gabon has been completed and processing and interpretation are underway;
- Preliminary engineering is completed and Harvest has submitted a permit application to the US Army Corps of Engineers for drilling the Company's second Gulf Coast AMI prospect in Texas State waters;
- Harvest acquired leases in the Company's Antelope project area in the Uintah Basin, Utah, resulting in a land position for Harvest and its partner of approximately 44,000 net acres as of the end of February 2009 (Harvest's net acreage position is 22,000 acres); and
- Harvest's balance sheet at year end remains debt-free.
Harvest President and Chief Executive Officer, James A. Edmiston, said, "Harvest took several major steps in 2008 towards realizing the value in its portfolio through production growth in Venezuela and further diversification of its portfolio through our exploration programs in the US, Indonesia and Gabon. We have demonstrated through our drilling program in Venezuela that significant production growth can be attained with internally generated cash flow, preserving Harvest's ability to execute our exploration and diversification program. Petrodelta was able to grow daily production 64% from 12,200 BOPD to in excess of 20,000 BOPD in less than a year from initiation of drilling.
"Notably, Petrodelta's first two wells drilled in the Temblador Field, which is one of the three fields awarded to Petrodelta in the conversion process, have met with outstanding results with each of the two wells producing in excess of 2,000 BOPD with very low water cut."
Edmiston continued, "Outside of Venezuela, we continue to make progress towards maturing our high impact exploration portfolio. In 2008, we completed seismic data acquisition projects in Indonesia and Gabon. Processing and interpretation of this data and of existing onshore and offshore 3D seismic from the US Gulf Coast, is currently underway. With our land acquisition program nearly complete, we look forward to drilling our first well in Utah on our Antelope project late in the second quarter."
EXPLORATION AND PRODUCTION PROGRAMS
During 2008, Petrodelta drilled and completed eight development wells and produced approximately 5.5 million barrels of oil, an increase of two percent over the previous year. Petrodelta also sold 10.7 billion cubic feet of natural gas, a decrease of 20 percent from 2007. The average sales price for Petrodelta's crude oil production was $83.22 per barrel and the average sales price received for natural gas was $1.54 per thousand cubic feet.
Petrodelta has been advised by the Venezuelan Government that production output will remain at approximately 16,000 BOPD effective January 1, 2009, consistent with OPEC production quotas. However, Petrodelta receives ongoing instructions from the Venezuelan authorities and has thus far been permitted to produce in excess of 20,000 BOPD. For the foreseeable future, Petrodelta will continue to receive and comply with such instructions from the authorities as they seek to balance supply to meets its OPEC quota.
United States -- Gulf Coast
Harvest drilled the Harvest Hunter #1 exploratory well in Calcasieu Parish, Louisiana in the fourth quarter of 2008 and undertook a testing program to evaluate three prospective reservoir horizons. On January 9, 2009, the well was determined not to be commercial and was plugged and abandoned. The cost of drilling and testing the well was $10.8 million and was written off to dry hole costs at December 31, 2008.
During 2008, 3-D seismic re-processing, site surveying and preparation of preliminary engineering documents were undertaken on the West Bay Prospect, the second exploratory prospect in the Gulf Coast AMI. In December 2008, Harvest filed an Application to Install Structures to Drill and Produce Oil and Gas with the US Army Corps of Engineers - Galveston District. At year-end 2008, the permit application was under review by the Corps of Engineers, and drilling is expected to commence in late 2009 or early 2010, upon receipt of the requisite permit from the Corps of Engineers. Harvest is continuing to re-process and refine the interpretation of its existing proprietary 3-D seismic data over the prospect in preparation for drilling of the initial test well.
United States -- Antelope
The Antelope project is targeted to explore for and develop oil and natural gas from multiple reservoir horizons in the Uintah Basin, Utah. Harvest will drill a deep gas exploration test well in 2009 and expects to spud the well during the second quarter. To date, Harvest and its partner have acquired approximately 44,000 acres (Harvest's net acreage position is 22,000 acres) in the Antelope project area and continue to build their land position. Harvest is the operator and has a 50% working interest in the project. Harvest will fund 100% of the cost of the first test well.
Indonesia -- Budong-Budong
Harvest opened a field office in Jakarta, Indonesia and completed a 2-D seismic data acquisition program in the fourth quarter of 2008 in the Budong PSC. Data processing and interpretation is currently underway. It is expected that the first of two planned onshore exploration wells will be spud in the second half of 2009.
Gabon -- Dussafu Marin
In the fourth quarter of 2008, the acquisition of 650 kilometers of 2-D seismic was completed. The data is presently being processed to determine the hydrocarbon potential of the syn-rift play on the license. The play produces in the adjacent Lucina and M'Bya fields. Also during 2008, Harvest began reprocessing 1,076 square kilometers of existing 3-D seismic to depth image the sub-salt structure and determine the potential of the prolific Gamba play that is producing to the north of the Dussafu license in the Etame fields. Based on the results of the seismic processing, Harvest expects to make a decision later this year regarding the drilling of an exploration well in 2010.
2009 PLANNED EXPENDITURES
Planned exploration expenditures for 2009 are $38.8 million to evaluate the Company's US and international prospect portfolio. Operations in Venezuela will be funded by internal cash flow. Harvest has sufficient financial resources to fund planned expenditures and maintain a cash reserve without having to raise additional capital.
Edmiston continued, "In spite of the current environment within our industry, Harvest will continue to invest in and add to our growth portfolio in 2009. Further, we expect that Petrodelta will continue to build on its string of success as it continues to develop and appraise its substantial portfolio of opportunities. The strength of Harvest's balance sheet coupled with the underlying robust economics of Petrodelta allows us to continue to move forward in this difficult, low-price environment."
- 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)