HARVEST NATURAL RESOURCES, INC. HOUSTON, Aug. 11, 2014 /PRNewswire/ -- Harvest Natural Resources, Inc. (NYSE: HNR) (Harvest or the Company) today announced 2014 second quarter earnings and provided an operational update.
Harvest reported a second quarter net loss of approximately $1.7 million, compared with a net loss of $4.5 million for the same period last year. The second quarter results included exploration charges of $1.6 million and non-recurring charges of $3.2 million in impairment costs related to the Budong Budong block. Adjusted for exploration charges and non-recurring items, Harvest would have posted second quarter net income of approximately $3.1 million, or $0.07 per diluted share, before any adjustment for income taxes.
Petrodelta, S.A. (Petrodelta), Harvest's Venezuelan affiliate, reported second quarter operating income, before taxes and non-operating items, of $35.0 million ($7.14 million net to Harvest's equity, under IFRS). Petrodelta reported net income for the second quarter of $42.3 million ($8.63 million net to Harvest's equity interest, under IFRS). After adjustments to Petrodelta's IFRS earnings, primarily to conform to US GAAP, Harvest's equity interest in Petrodelta's earnings was $8.2 million, compared to $6.1 million for the same period during 2013.
Highlights for the second quarter of 2014 include:
Venezuela
-- During the second quarter of 2014, Petrodelta drilled and completed four
development wells and sold approximately 4.1 million barrels of oil
(MMBO) for a daily average of approximately 45,073 barrels of oil per
day (BOPD), an increase of 18 percent over the same period in 2013;
-- Petrodelta's current production rate is approximately 40,840 BOPD and
the 2014 expected average production rate is 45,000 BOPD with capital
expenditures projected at $350 million;
Gabon
-- On March 26, 2014, the joint venture partners resolved that the four
discovered fields in the Ruche cluster are commercial;
-- On June 3, 2014, the Director General of Hydrocarbons (DGH) of Gabon and
the joint venture partners signed a Declaration of Commerciality (DOC);
-- On July 17, 2014, Gabon awarded an 850.5 square kilometer Exclusive
Exploitation Authorization (EEA) for the development and exploitation of
certain oil discoveries on the Dussafu Block;
-- On July 18, 2014, the Ruche cluster Field Development Plan was submitted
to the DGH;
-- Continued processing the 3D survey acquired in the fourth quarter of
2013, which provides the first 3D coverage over the outboard portion of
the block. The new 3D seismic data should also enhance the placement of
future development wells in the Ruche and Tortue development program;
Indonesia
-- In June of 2014, the joint interest partners decided to relinquish their
interest in Budong;
China
-- On July 3, 2014, the Company sold its entire interest in the WAB-21
block in the South China Sea for $3 million in cash.
VENEZUELA
During the second quarter ended June 30, 2014, Petrodelta sold approximately 4.1 MMBO for a daily average of 45,073 BOPD, an increase of 18 percent over the same period in 2013. Petrodelta also sold 0.68 billion cubic feet (BCF) of natural gas for a daily average of 7.5 million cubic feet per day (MMCFD). Petrodelta's current production rate is approximately 40,840 BOPD.
During the second quarter ended June 30, 2014, Petrodelta drilled and completed one development well in the Isleno Field, two development wells in the Temblador Field and one development well in the El Salto Field. Currently, Petrodelta is operating six drilling rigs and one workover rig and is continuing with infrastructure enhancement projects in the El Salto and Temblador Fields.
Petrodelta's production for 2014 is projected to be approximately 45,000 BOPD. The 2014 Petrodelta capital expenditures are expected to be approximately $350 million. Petrodelta expects to drill 19 oil wells during 2014.
The average sales price for crude oil produced during the quarter was approximately $88.77 per barrel.
EXPLORATION AND OTHER ACTIVITIES
Dussafu Project - Gabon (Dussafu PSC)
Operational activities during the six months ended June 30, 2014 included continuation of planning for development of the Ruche cluster and preparation of a field development plan. Field development options have been evaluated and key and long-lead equipment has been identified. Geoscience, reservoir engineering and economic studies have progressed, and the joint venture partners resolved that the four discovered fields (Ruche, Tortue, Moubenga and Walt Whitman) are commercial at an operating committee meeting on March 26, 2014. A DOC was signed with the Gabonese Republic (Gabon) pertaining to these four oil discoveries on the Dussafu Block on June 3, 2014. Furthermore, on July 17, 2014, Gabon awarded an EEA for the development and exploitation of the oil resources within the EEA area which covers 850.5 square kilometers.
The Company began reviewing the first high quality seismic data from the 1,260 square kilometer of 3D seismic survey during the fourth quarter of 2013. The survey provides the first 3D coverage over the outboard portion of the block where significant pre-salt prospectivity has been already recognized on 2D seismic data. The pre-salt is currently the focus of deep water exploration activity offshore Gabon, and seven new exploration licenses close to Dussafu were awarded by Gabon on August 8, 2014. The new 3D seismic data should also enhance the placement of development wells in the Ruche and Tortue development program and the development of numerous undrilled structures identified within the EEA.
Budong Budong PSC - Indonesia
In June 2014, we and our joint interest partner decided to relinquish our interest in Budong. We are working with the Indonesian government to complete the relinquishment which may take several months. As a result of these actions, the Company recognized a further charge of $3.2 million during the three months ended June 30, 2014, related to drilling obligations incurred in connection with the December 2012 acquisition of an additional 7.1 percent interest from our joint interest partner.
Conference Call
Harvest will hold a conference call at 10:00 a.m. CDT on Monday, August 11, 2014, during which management will discuss Harvest's 2014 second quarter results. The conference leader will be James A. Edmiston, President and Chief Executive Officer. To access the conference call, dial 719-325-2491 or 888-481-2844, five to ten minutes prior to the start time. At that time you will be asked to provide the conference number, which is 5523692. A recording of the conference call will also be available for replay at 719-457-0820 or 888-203-1112, passcode 5523692, through August 18, 2014.
The conference call will also be transmitted over the internet through the Company's website at www.harvestnr.com. To listen to the live webcast, enter the website fifteen minutes before the call to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay of the webcast will be available beginning shortly after the call and will remain on the website for approximately 90 days.
About Harvest Natural Resources:
Harvest Natural Resources, Inc., headquartered in Houston, Texas, is an independent energy company with principal operations in Venezuela and Gabon, and a business development office in Singapore. For more information visit the Company's website at www.harvestnr.com.
CONTACT:
Stephen C. Haynes
Vice President, Chief Financial Officer
(281) 899-5716
This press release may contain projections and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. They include estimates and timing of expected oil and gas production, oil and gas reserve projections of future oil pricing, future expenses, planned capital expenditures, anticipated cash flow and our business strategy. All statements other than statements of historical facts may constitute forward-looking statements. Although Harvest believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Actual results may differ materially from Harvest's expectations as a result of factors discussed in Harvest's 2013 Annual Report on Form 10-K and other public filings.
HARVEST NATURAL RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except per share data)
June 30, December 31,
2014 2013
---- ----
(Unaudited)
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $8,111 $120,897
Restricted cash 25 148
Accounts receivable, net 524 1,962
Deferred income taxes 81 81
Prepaid expenses and other 1,000 2,030
----- -----
TOTAL CURRENT ASSETS 9,741 125,118
LONG-TERM RECEIVABLE - EQUITY AFFILIATE 13,891 15,097
INVESTMENT IN EQUITY AFFILIATE 520,350 485,401
PROPERTY AND EQUIPMENT:
Oil and gas properties (successful
efforts method) 103,873 108,013
Other administrative property, net 255 378
--- ---
TOTAL PROPERTY AND EQUIPMENT, NET 104,128 108,391
------- -------
OTHER ASSETS 881 873
--- ---
TOTAL ASSETS $648,991 $734,880
LIABILITIES AND EQUITY
----------------------
CURRENT LIABILITIES:
Accounts payable, trade and other $1,402 $4,398
Accrued expenses 12,647 22,659
Accrued interest 74 380
Income taxes payable 45 2,178
Current deferred tax liability 38,282 43,162
Current portion - long term debt - 77,480
Note payable to noncontrolling interest
owner 6,109 6,109
Warrant derivative liability 1,953 -
Other current liabilities 158 419
--- ---
TOTAL CURRENT LIABILITIES 60,670 156,785
LONG-TERM DEFERRED TAX LIABILITY 33,597 29,787
WARRANT DERIVATIVE LIABILITY - 1,953
OTHER LONG-TERM LIABILITIES 108 558
COMMITMENTS AND CONTINGENCIES
EQUITY
------
STOCKHOLDERS' EQUITY:
Preferred stock, par value $0.01 a
share; authorized 5,000 shares;
outstanding, none - -
Common stock, par value $0.01 a share;
authorized 80,000 shares at June 30,
2014 (December 31, 2013: 80,000
shares); issued 48,666 shares at June
30, 2014 (December 31, 2013: 48,666
shares) 487 487
Additional paid-in capital 277,672 276,083
Retained earnings 82,623 92,282
Treasury stock, at cost, 6,572 shares at
June 30, 2014 (December 31, 2013: 6,551
shares) (66,316) (66,222)
------- -------
TOTAL HARVEST STOCKHOLDERS' EQUITY 294,466 302,630
NONCONTROLLING INTERESTS 260,150 243,167
------- -------
TOTAL EQUITY 554,616 545,797
------- -------
TOTAL LIABILITIES AND EQUITY $648,991 $734,880
- -
HARVEST NATURAL RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2014 2013 2014 2013
---- ---- ---- ----
EXPENSES:
Depreciation and amortization $58 $87 $134 $174
Exploration expense 1,648 2,007 3,481 3,737
Impairment expense 3,150 - 7,610 -
General and administrative 4,903 7,559 11,204 10,913
----- ----- ------ ------
9,759 9,653 22,429 14,824
----- ----- ------ ------
LOSS FROM OPERATIONS (9,759) (9,653) (22,429) (14,824)
OTHER NON-OPERATING INCOME (EXPENSE):
Investment earnings and other - 118 4 164
Loss on sale of interest in Harvest
Holding (391) - (1,357) -
Unrealized gain on derivatives - - - 3,785
Interest expense (15) (1,067) (62) (2,265)
Loss on extinguishment of debt - - (4,749) -
Foreign currency transaction gains
(losses) 259 (183) (210) (91)
Other non-operating expenses - (141) (220) (613)
--- ---- ---- ----
(147) (1,273) (6,594) 980
---- ------ ------ ---
LOSS FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES (9,906) (10,926) (29,023) (13,844)
INCOME TAX BENEFIT (88) (1,415) (1,042) (1,376)
--- ------ ------ ------
LOSS FROM CONTINUING OPERATIONS BEFORE
EARNINGS FROM EQUITY AFFILIATE (9,818) (9,511) (27,981) (12,468)
EARNINGS FROM EQUITY AFFILIATE 16,062 7,602 34,949 57,073
------ ----- ------ ------
INCOME (LOSS) FROM CONTINUING OPERATIONS 6,244 (1,909) 6,968 44,605
DISCONTINUED OPERATIONS (230) (1,006) (361) (1,491)
---- ------ ---- ------
NET INCOME (LOSS) 6,014 (2,915) 6,607 43,114
LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTERESTS 7,665 1,551 16,266 11,483
----- ----- ------ ------
NET INCOME (LOSS) ATTRIBUTABLE TO
HARVEST [COMPREHENSIVE INCOME (LOSS)] $(1,651) $(4,466) $(9,659) $31,631
-------
BASIC EARNINGS (LOSS) PER SHARE:
Income (loss) from continuing operations $(0.03) $(0.09) $(0.22) $0.85
Discontinued operations (0.01) (0.03) (0.01) (0.04)
----- ----- ----- -----
Basic earnings (loss) per share $(0.04) $(0.12) $(0.23) $0.81
DILUTED EARNINGS (LOSS) PER SHARE:
Income (loss) from continuing operations $(0.03) $(0.09) $(0.22) $0.84
Discontinued operations (0.01) (0.03) (0.01) (0.04)
----- ----- ----- -----
Diluted earnings (loss) per share $(0.04) $(0.12) $(0.23) $0.80
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 41,861 39,238 41,854 39,238
Diluted 41,861 39,238 41,854 39,349
HARVEST NATURAL RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Six Months Ended June 30,
-------------------------
2014 2013
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $6,607 $43,114
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 134 188
Impairment expense 7,610 -
Amortization of debt financing costs - 724
Amortization of discount on debt - 1,285
Loss on sale of interest in Harvest
Holding 1,357 -
Foreign currency transaction loss 1,468 436
Loss on extinguishment of debt 4,749 -
Earnings from equity affiliate (34,949) (57,073)
Share-based compensation-related charges 1,589 1,269
Unrealized gain on derivatives - (3,785)
Changes in operating assets and
liabilities:
Accounts and notes receivable 1,438 (374)
Prepaid expenses and other (249) 355
Other assets (8) 397
Accounts payable (2,996) (1,279)
Accrued expenses (11,229) (7,175)
Accrued interest (306) (253)
Income taxes payable (2,133) (3)
Deferred tax asset and liabilities (1,070) -
Other current liabilities (261) (1,560)
Other long-term liabilities (450) (705)
---- ----
NET CASH USED IN OPERATING ACTIVITIES (28,699) (24,439)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Transaction costs from sale of interest in
Harvest Holding (3,540) -
Additions of property and equipment (521) (37,888)
Advances to equity affiliate (262) (248)
(Increase) decrease in restricted cash 123 (212)
--- ----
NET CASH USED IN INVESTING ACTIVITIES (4,200) (38,348)
------ -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt repayment (79,750) -
Debt extinguishment costs (760) -
Contributions from noncontrolling interest
owners 717 -
Net proceeds from issuances of common
stock - 122
Treasury stock purchases (94) -
Financing costs - (195)
--- ----
NET CASH USED IN FINANCING ACTIVITIES (79,887) (73)
------- ---
NET DECREASE IN CASH AND CASH EQUIVALENTS (112,786) (62,860)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 120,897 72,627
------- ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $8,111 $9,767
PETRODELTA, S. A.
STATEMENTS OF OPERATIONS
(in thousands except per BOE and price amounts)
Three Months Ended June 30,
---------------------------
2014 2013
---- ----
$/BOE - net $/BOE - net
----------- -----------
Barrels of oil sold 4,102 3,477
MCF of gas sold 682 597
Total BOE 4,216 3,577
Total BOE - Net of 33% Royalty 2,811 2,384
Average price/barrel $88.77 $90.33
Average price/mcf $1.54 $1.54
REVENUES:
Oil sales $364,144 $314,088
Gas sales 1,050 922
Royalty (121,421) (104,229)
-------- --------
243,773 $86.72 210,781 $88.42
------- -------
EXPENSES:
Operating expenses 60,542 21.54 36,136 15.16
Workovers 5,454 1.94 5,389 2.26
Depletion, depreciation and
amortization 32,364 11.51 20,869 8.75
General and administrative 3,080 1.10 4,703 1.97
Windfall profits tax 52,123 18.54 51,928 21.78
Windfall profits credit reversal 55,168 19.63 - -
------ ----- --- ---
208,731 74.26 119,025 49.92
------- ----- ------- -----
INCOME FROM OPERATIONS 35,042 12.46 91,756 38.50
Gain (loss) on exchange rate 223 0.08 (5,335) (2.24)
Investment earnings and other 301 0.11 2 -
Interest expense (8,295) (2.95) (3,175) (1.33)
------ ----- ------ -----
Income before income tax 27,271 9.70 83,248 34.93
Current income tax expense
(benefit) (5,558) (1.98) 62,925 26.39
Deferred income tax benefit (9,460) (3.37) (44,488) (18.66)
------ ----- ------- ------
NET INCOME UNDER IFRS 42,289 $15.05 64,811 $27.20
Adjustments to increase
(decrease) net income under
IFRS:
Deferred income tax expense (30,359) (33,973)
Depletion expense (5,026) (7,948)
Windfall profits tax credit
reversal 55,168 -
Sports law over (under) accrual 689 (1,463)
--- ------
Net income under U.S. GAAP 62,761 21,427
Equity interest in equity
affiliate 40% 40%
--- ---
Income before amortization of
excess basis in equity affiliate 25,104 8,571
Amortization of excess basis in
equity affiliate (1,163) (969)
Earnings from equity affiliate
excluded from results of
operations (7,879) -
------ ---
Earnings from equity affiliate
included in income $16,062 $7,602
------- ------
PETRODELTA, S. A.
STATEMENTS OF OPERATIONS
(in thousands except per BOE and price amounts)
(unaudited)
Six Months Ended June 30,
-------------------------
2014 2013
---- ----
$/BOE - net $/BOE - net
----------- -----------
Barrels of oil sold 7,980 6,838
MCF of gas sold 1,244 1,375
Total BOE 8,187 7,067
Total BOE - Net of 33% Royalty 5,458 4,712
Average price/barrel $86.44 $92.34
Average price/mcf $1.54 $1.54
REVENUES:
Oil sales $689,798 $631,412
Gas sales 1,916 2,123
Royalty (230,505) (209,762)
-------- --------
461,209 $84.50 423,773 $89.94
------- -------
EXPENSES:
Operating expenses 105,606 19.35 62,669 13.30
Workovers 13,806 2.53 8,453 1.79
Depletion, depreciation and
amortization 58,676 10.75 41,334 8.78
General and administrative 9,645 1.77 13,483 2.86
Windfall profits tax 98,425 18.03 117,974 25.04
Windfall profits tax (credit) and
reversal of credit 55,168 10.11 (55,168) (11.71)
------ ----- ------- ------
341,326 62.54 188,745 40.06
------- ----- ------- -----
INCOME FROM OPERATIONS 119,883 21.96 235,028 49.88
Gain on exchange rate 168 0.03 181,386 38.49
Investment earnings and other 614 0.11 1,402 0.30
Interest expense (15,851) (2.90) (5,925) (1.25)
------- ----- ------ -----
Income before income tax 104,814 19.20 411,891 87.42
Current income tax expense 46,760 8.57 200,534 42.56
Deferred income tax benefit (32,698) (5.99) (41,110) (8.72)
------- ----- ------- -----
NET INCOME UNDER IFRS 90,752 16.62 252,467 53.58
Adjustments to increase
(decrease) net income under
IFRS:
Deferred income tax expense (24,048) (38,823)
Depletion expense (9,897) (12,178)
Windfall profits tax credit and
(reversal) of credit 55,168 (55,168)
Sports law over accrual 740 188
--- ---
Net income under U.S. GAAP 112,715 146,486
Equity interest in equity
affiliate 40% 40%
--- ---
Income before amortization of
excess basis in equity affiliate 45,086 58,595
Amortization of excess basis in
equity affiliate (2,258) (1,522)
Earnings from equity affiliate
excluded from results of
operations (7,879) -
------ ---
Earnings from equity affiliate
included in income $34,949 $57,073
------- -------
SOURCE Harvest Natural Resources, Inc.
