Harvest Natural Resources Announces 2013 First Quarter Results

        Harvest Natural Resources Announces 2013 First Quarter Results

PR Newswire

HOUSTON, June 5, 2013

HOUSTON, June 5, 2013 /PRNewswire/ -- Harvest Natural Resources, Inc. (NYSE:
HNR) today announced 2013 first quarter earnings and provided an operational
update.

Harvest reported first quarter net income of approximately $36.1 million, or
$0.91 per diluted share, compared to a net loss of $1.0 million, or $0.03 per
diluted share, for the same period last year. The first quarter results
included exploration charges of $1.9 million, or $0.05 per diluted share and
unrealized gain on warrant derivative of $3.8 million, or $.10 per diluted
share.

Petrodelta reported earnings during the first quarter of $187.7 million, $60.1
million net to Harvest's 32 percent interest, under International Financial
Reporting Standards (IFRS). Included in Petrodelta's IFRS first quarter
earnings is a gain on exchange rate resulting from a revaluation of assets and
liabilities recorded by Petrodelta due to the Venezuela Bolivar/U.S. Dollar
currency exchange rate devaluation announced by the Venezuelan government on
February 8, 2013. After adjustments to Petrodelta's IFRS earnings, primarily
to conform to accounting principles generally accepted in the United States
(GAAP), Harvest's 32 percent share of Petrodelta's earnings was $39.6
million.

Excluding the effects of the Venezuelan devaluation, exploration charges and
unrealized gain on warrant derivatives, we estimate net income for the first
quarter of 2013 would have been approximately $4.3 million, or $0.11 per
diluted share.

Highlights for the first quarter of 2013 include:

Venezuela

  oDuring the first three months of 2013, Petrodelta drilled and completed
    two wells and sold approximately 3.36 million barrels of oil (MMBO) for a
    daily average of approximately 37,346 barrels of oil per day (BOPD), an
    increase of 13 percent over the same period in 2012;
  oPetrodelta's current production rate is approximately 40,000 BOPD and the
    2013 expected average production rate is 42,000 BOPD with capital
    expenditures projected at $210.0 million;
  oEffective February 9, 2013, the Venezuelan government established a new
    exchange rate for the Bolivar/U.S. Dollar currencies of 6.30 Bolivars per
    U.S. Dollar resulting in Petrodelta recording a $186.7 million gain on
    revaluation of its assets and liabilities;

Gabon

  oCompleted drilling activities on the Tortue exploration well (DTM-1), and
    appraisal sidetrack (DTM-1ST1) with oil discovered in both the Gamba and
    Dentale pre-salt reservoirs;
  oLog evaluation and pressure data indicate an oil discovery of
    approximately 42 feet of pay in a 72 foot column within the Gamba
    Formation and 123 feet of pay in stacked reservoirs within the Dentale
    Formation;
  oCommenced a program of studies to determine optimum development options
    for the Dussafu block;
  oEngaged Tudor, Pickering, Holt & Co. to manage a competitive process to
    farmout all or a portion of HNR's interest in the Dussafu block;

Indonesia

  oApproval of the transfer of operatorship to Harvest was received from SKK
    Migas, the Special Task Force for oil and gas upstream sector, on March
    25, 2013;
  oContinued work on an exploration program targeting the Pliocene and
    Miocene targets.

VENEZUELA

During the three months ended March 31, 2013, Petrodelta sold approximately
3.36 MMBO for a daily average of 37,346 BOPD, an increase of 13 percent over
the same period in 2012 and remaining at the same level over the previous
quarter. Petrodelta also sold 0.78 billion cubic feet (BCF) of natural gas
for a daily average of 8.6 million cubic feet per day (MMCFD). Petrodelta's
current production rate is approximately 40,000 BOPD.

During the first quarter of 2013, Petrodelta drilled and completed one
development well in the Isleño Field and one development well in the El Salto
Field. Currently, Petrodelta is operating five drilling rigs and two
workover rigs and is continuing with infrastructure enhancement projects in
the El Salto and Temblador Fields.

Petrodelta's production target for the year 2013 is projected to be
approximately 42,000 BOPD. The 2013 Petrodelta capital budget is expected to
be approximately $210.0 million. Petrodelta expects to drill 31 oil wells and
2 water injector wells during 2013.

On February 8, 2013, the Venezuelan government published in the Official
Gazette the Exchange Agreement No. 14 which establishes new exchange rates for
the Bolivar/U.S. Dollar currencies that became effective February 9, 2013.
The exchange rate established in the Agreement is 6.30 Bolivars per U.S.
Dollar. The Exchange Agreement also announced the elimination of the Sistema
de Transacciones con Títulos en Moneda Extranjera ("SITME") effective February
8, 2013. All exchanges of Bolivars must now transact through the Central
Bank. As a result of the February 8, 2013 devaluation, in the three months
ended March31, 2013, Harvest Vinccler recorded a $0.1 million gain on
revaluation of its assets and liabilities, and Petrodelta recorded a $186.7
million gain on revaluation of its assets and liabilities.

In March 2013, PDVSA requested an exemption from MENPET for the Windfall
Profits Tax under the provision in the April 2011 Windfall Profits Tax law.
The exemption was applied to several oil development projects, including
Petrodelta. The exemption is allowable under the April 2011 Windfall Profits
Tax law; however, MENPET has neither publicly defined the projects qualifying
for exemption, nor the guidance to be used in calculating the exemption. PDVSA
issued to Petrodelta its share of the exemption credit, $55.2 million ($36.4
million net of tax) ($17.7 million net to our 32 percent interest, $11.6
million net of tax net to our 32 percent interest) based on PDVSA's
calculation and projects PDVSA deemed to qualify for the exemption. Neither
Petrodelta nor Harvest have been provided with supporting documentation
indicating the properties have been appropriately qualified by MENPET, the
specific details for the exemption credit, such as which fields, production
period or production, or the supporting calculations. Until MENPET either
issues guidance on the exemption provision in the April 2011 Windfall Profits
Tax law or issues payment forms including the exemption credit, or written
approval from MENPET for this exemption credit is received by Petrodelta,
Harvest has and will continue to exclude the exemption credit from our equity
earnings in Petrodelta.

The average sale price for crude oil produced during the quarter was
approximately $94.41 per barrel.

EXPLORATION AND OTHER ACTIVITIES

Dussafu Project - Gabon (Dussafu PSC)

Operational activities during the three months ended March 31, 2013 included
completion of drilling activities on the Dussafu Tortue Marin-1 exploration
well (DTM-1), and appraisal sidetrack (DTM-1ST1). On January 4, 2013, Harvest
announced that DTM-1 had reached a vertical depth of 11,260 feet within the
Dentale Formation. Log evaluation and pressure data indicate that the Company
has an oil discovery of approximately 42 feet of pay in a 72 foot column
within the Gamba Formation and 123 feet of pay in stacked reservoirs within
the Dentale Formation. DTM-1ST1 was drilled to a total depth of 11,385 feet
in the Dentale Formation, approximately 1,800 feet from DTM-1 wellbore and
found 65 feet of pay in the primary Dentale reservoir.

DTM-1 and DTM-1ST1 are suspended pending future appraisal and development
activities. The drilling rig was demobilized and released on February 21,
2013.

A program of subsurface and conceptual engineering studies commenced with the
objective of evaluating the commerciality of Tortue and the other oil
discoveries to determine the optimum development options for the Dussafu
block.

In other parts of the block, activities during the first quarter of 2013
included the continuation of the Pre-Stack Depth processing and reprocessing
of the new Central 3-D together with the 2005 Inboard 3-D seismic,
approximately 1,300 square kilometers, which commenced in June 2012. The
Pre-Stack Depth processing of the merged 3-D project is expected to be
completed in July 2013.

Harvest is moving forward with the development plans for the resources
discovered to date, and is also planning the acquisition of 3D seismic over
the outboard portion of the Dussafu block to better define the exploration
prospects that have been identified on existing 2D seismic.

Harvest has engaged Tudor, Pickering, Holt & Co. to manage a competitive
process to farmout a significant portion of its interest in the Dussafu
block. This process is expected to be concluded in the third quarter 2013.

Budong-Budong PSC - Indonesia

In December 2012, we signed a farm-out agreement with the operator of the
Budong PSC to acquire an additional 7.1 percent participating interest and to
become operator of the Budong PSC. The assignment of interest was approved by
the Government of Indonesia on April9, 2013. Approval of the transfer of
operatorship was received from SKK Migas, the Special Task Force for oil and
gas upstream sector, on March 25, 2013.

Operational activities during the three months ended March 31, 2013 included
continued work on an exploration program targeting the Pliocene and Miocene
targets encountered in the previous two wells. Land acquisition, tender
prequalification and environmental studies are on-going.

Non-GAAP Financial Measures

These measures are included due to the significant nature of Petrodelta's
earnings to Harvest. In this press release, Petrodelta's adjusted EBITDA
disclosure is not presented in accordance with accounting principles generally
accepted in the United States (GAAP) and Petrodelta's financials are not
intended to be used in lieu of GAAP presentations of net income or cash flows
from operating activities. Adjusted EBITDA is presented because we believe it
provides additional information with respect to both the performance of our
fundamental business activities as well as our ability to internally fund our
future capital expenditures and working capital requirements. We also believe
that financial analysts commonly use adjusted EBITDA to analyze Petrodelta's
performance.

The Company defines adjusted EBITDA as net income (loss) before interest
expense, investment earnings, current income taxes and certain non-cash items
in the Company's statements of operations, including depreciation, depletion
and amortization, accretion of asset retirement obligations, deferred income
taxes, certain employee compensation charges and gains or losses from foreign
exchange. Although we present selected items that we consider in evaluating
our performance, you should also be aware that the items presented do not
represent all items that affect comparability between the periods presented.
Variations in our operating results are also caused by changes in volumes,
prices, exchange rates and numerous other factors. These types of variations
are not separately identified in this release, but are discussed, as
applicable, in management's discussion and analysis of operating results in
our Annual Report on Form 10-K for the year ended December 31, 2012.

A reconciliation of adjusted EBITDA to net income and cash flows from
operating activities for the periods presented is included in the tables
attached to this release.

Conference Call

Harvest will hold a conference call at 10:00 a.m. Central Daylight Time on
Wednesday, June 5, 2013, during which management will discuss Harvest's 2013
first quarter results. The conference leader will be James A. Edmiston,
President and Chief Executive Officer. To access the conference call, dial
888-455-2263 or 719-325-2463, five to ten minutes prior to the start time. At
that time you will be asked to provide the conference number, which is
7050198. A recording of the conference call will also be available for replay
at 719-457-0820, passcode 7050198, through September 4, 2013.

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, exploration
assets in Indonesia, West Africa, and China and business development offices
in Singapore and the United Kingdom. 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 2012 Annual Report
on Form 10-K and other public filings.

Harvest may use certain terms such as resource base, contingent resources,
prospective resources, probable reserves, possible reserves, non-proved
reserves or other descriptions of volumes of reserves. These estimates are by
their nature more speculative than estimates of proved reserves and
accordingly, are subject to substantially greater risk of being actually
realized by the Company.





HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
                                                  March 31,   December 31,
                                                  2013        2012
ASSETS:
CURRENT ASSETS:
 Cash and cash equivalents                        $  31,430  $    72,627
 Restricted cash                                  1,178       1,000
 Accounts and notes receivable, net
      Joint interest and other                    7,174       2,955
 Advances to and receivable from equity affiliate 455         656
 Deferred income taxes                            821         821
 Prepaid expenses and other                       1,242       1,460
      Total current assets                        42,300      79,519
OTHER ASSETS                                      6,885       7,613
LONG-TERM RECEIVABLE, EQUITY AFFILIATE            14,228      14,346
INVESTMENT IN EQUITY AFFILIATES                   462,294     412,823
PROPERTY AND EQUIPMENT, net                       103,330     82,536
                       TOTAL ASSETS               $ 629,037   $   596,837
LIABILITIES AND EQUITY:
CURRENT LIABILITIES:
 Accounts payable, trade and other                $   8,099 $     3,970
 Accrued expenses                                 13,880      30,748
 Accrued Interest                                 2,653       624
 Other current liabilities                        3,416       3,538
 Income taxes payable                             108         102
      Total current liabilities                   28,156      38,982
OTHER LONG-TERM LIABILITIES                       464         1,108
WARRANT DERIVATIVE LIABILITY                      1,685       5,470
LONG-TERM DEBT                                    75,473      74,839
COMMITMENTS AND CONTINGENCIES                     -           -
EQUITY:
STOCKHOLDERS' EQUITY:
 Common stock and paid-in capital                 264,896     264,104
 Retained earnings                                217,475     181,378
 Treasury stock                                   (66,145)    (66,145)
      Total Harvest stockholders' equity         416,226     379,337
Noncontrolling Interest                           107,033     97,101
 Total Equity                                     523,259     476,438
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $ 629,037   $   596,837





HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts, unaudited)
                                                  Three months Ended March 31,
                                                  2013            2012
EXPENSES:
 Depreciation and amortization                  $    95     $   105
 Exploration expense                             1,898           1,935
 Dry hole costs                                  -               5,546
 General and administrative                      3,662           5,842
                                                  5,655           13,428
LOSS FROM OPERATIONS                              (5,655)         (13,428)
OTHER NON-OPERATING INCOME (EXPENSE)
 Investment earnings and other                   46              69
 Unrealized gain (loss) on warrant derivatives   3,785           432
 Interest expense                                (1,198)         (92)
 Debt conversion expense                         -               (2,422)
 Other non-operating expenses                    (472)           (256)
 Loss on exchange rates                          91              (22)
                                                  2,252           (2,291)
LOSS FROM CONSOLIDATED COMPANIES CONTINUING
OPERATIONS
 BEFORE INCOME TAXES                      (3,403)         (15,719)
Income tax expense (benefit)                    39              (1,220)
LOSS FROM CONSOLIDATED COMPANIES CONTINUING       (3,442)         (14,499)
OPERATIONS
Net income from unconsolidated equity affiliates  49,471          16,896
NET INCOME FROM CONTINUING OPERATIONS             46,029          2,397
DISCONTINUED OPERATIONS
 Loss from discontinued operations               -               (115)
 Income (loss) from discontinued operations  -               (115)
NET INCOME                                        46,029          2,282
Less: Net Income Attributable to Noncontrolling  9,932           3,322
Interest
NET INCOME (LOSS) ATTRIBUTABLE TO HARVEST        $ 36,097        $(1,040)

                                 Three Months Ended
                                 March 31, 2013           March 31, 2012
NET LOSS ATTRIBUTABLE TO HARVEST Basic      Dilutive  Basic   Dilutive
PER COMMON SHARE:
 Income(loss) from continuing  36,097       36,097      (925)     (925)
operations
 Discontinued operations       -                        (115)     (115)
 Net income (loss)        36,097       36,097      (1,040)   (1,040)
attributable to Harvest
 Weighted average common       39,444       39,444      34,884    34,884
shares outstanding
 Effect of dilutive shares     -            191         -         -
 Weighted average common  39,444       39,635      34,884    34,884
shares including dilutive effect
Per Share:
 Income (loss) from continuing $   0.92   $  0.91   $ (0.03)  $ (0.03)
operations
 Discontinued operations       $     - $     - $    - $    -
 Net income (loss)        $   0.92   $  0.91   $ (0.03)  $ (0.03)
attributable to Harvest





HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
                                                  Three months Ended March 31,
                                                  2013           2012
Cash Flows From Operating Activities:
 Net income                                       $ 46,029       $  2,282
 Adjustments to reconcile net income to net cash
  used in operating activities:
  Depletion, depreciation and amortization        95             105
  Dry hole costs                                  -              5,546
  Amortization of debt financing costs            357            183
  Amortization of discount on debt                634            -
  Foreign currency transaction loss on            436            -
  revaluation
  Debt conversion expense                         -              1,939
  Net income from unconsolidated equity affiliate (49,471)       (16,896)
  Share-based compensation-related charges        680            886
  Unrealized gain (loss) on warrant derivatives   (3,785)        (432)
  Other current liabilities                       (122)          -
 Changes in operating assets and liabilities:
  Accounts and notes receivable                   (4,219)        1,602
  Prepaid expenses and other                      218            (533)
  Other assets                                    370            (378)
  Accounts payable                                4,129          (4,833)
  Accrued expenses                                (5,138)        (2,225)
  Accrued Interest                                14             (902)
  Other long-term liabilities                     (644)          41
  Income taxes payable                            6              261
  Net Cash Used In Operating Activities           (10,411)       (13,354)
Cash Flows From Investing Activities:
 Additions of property and equipment              (30,523)       (11,978)
 Advances to equity affiliate                     (117)          4
 Restricted cash                                  (178)          -
  Net Cash Used In Investing Activities           (30, 818)      (11,974)
Cash Flows From Financing Activities:
 Net proceeds from issuances of common stock      112            -
 Financing costs                                  (80)           (66)
  Net Cash Provided by (Used In) Financing        32             (66)
  Activities
  Net decrease in Cash                           (41,197)       (25,394)
Cash and Cash Equivalents at Beginning of Period  72,627         58,946
Cash and Cash Equivalents at End of Period        $ 31,430       $ 33,552







PETRODELTA, S. A.
STATEMENTS OF OPERATIONS
(in thousands except per BOE and per share amounts, unaudited)
                               Three months Ended      Three months Ended

                               March 31, 2013          March 31, 2012
Barrels of oil sold           3,361                   2,984
MCF of gas sold                778                     630
 Total BOE               3,491                   3,089
 Total BOE - Net of 33%   2,327                   2,059
Royalty
Average price/barrel           $94.41                  $108.75
Average price/mcf              $1.54                   $1.54
                               $          $/BOE - net  $          $/BOE - net
REVENUES:
 Oil sales                    $ 317,324               $ 324,497
 Gas sales                    1,201                   972
 Royalty                      (105,533)               (107,339)
                               212,992    91.53        218,130    105.94
EXPENSES:
 Operating expenses           26,533     11.40        21,581     10.48
 Workovers                    3,064      1.32         5,908      2.87
 Depletion, depreciation and  20,465     8.80         17,922     8.70
amortization
 General and administrative   8,780      3.77         4,983      2.42
 Windfall profits tax         66,046     28.38        84,738     41.16
                               124,888    53.67        135,132    65.63
INCOME FROM OPERATIONS         88,104     37.86        82,998     40.31
Investment earnings and other  1,400      0.60         1          -
Gain on exchange rate          186,721    80.24        -          -
Windfall profits tax credit    36,371     15.63        -          -
Interest expense               (2,750)    (1.18)       (1,913)    (0.93)
Income before income tax       309,846    133.15       81,086     39.38
 Current income tax expense   137,609    59.14        42,070     20.43
 Deferred income tax          (15,419)   (6.63)       (13,490)   (6.55)
(benefit) expense
NET INCOME                    187,656    80.64        52,506     25.50
Adjustment to reconcile to
reported Net Income from
 Unconsolidated Equity
Affiliate:
 Deferred income tax  23,647                  12,041
(benefit) expense
 Reversal of windfall 36,371                  -
profits tax credit
 Sports tax - over    (1,651)                 (345)
accrual
 Net income equity    129,289                 40,810
affiliate
Equity interest in
unconsolidated equity          40%                     40%
affiliate
Income before amortization of
excess basis in equity         51,716                  16,324
affiliate
 Amortization of excess     (553)                   (489)
basis in equity affiliate
 Conform depletion expense  (1,692)                 1,061
to GAAP
Net income from unconsolidated $  49,471              $  16,896
equity affiliate
Non-GAAP Financial Measures:
Reconcile NET INCOME as
reported under IFRS to
adjusted EBITDA:
 NET INCOME                  $ 187,656  $   80.64 $  52,506 $   25.50
 Add back non-cash items:
 Depletion, depreciation  20,465     8.80         17,922     8.70
and amortization
 Deferred income tax      (15,419)   (6.63)       (13,490)   (6.55)
benefit
  Gain on exchange rate
(net of tax) (non-recurring    (93,361)   (40.12)      -          -
item)
  Windfall profit tax
credit (net of tax)            (36,371)   (15.63)      -          -
(non-recurring item)
CASH FROM OPERATIONS          62,970     27.06        56,938     27.65
 Investment earnings and  (1,400)    (0.60)       (1)        -
other
 Interest expense         2,750      1.18         1,913      0.93
 Current income tax        44,248     19.02        42,070     20.43
expense
 Adjusted EBITDA            $ 108,568  $  46.66   $ 100,920  $   49.01
 Harvest 32% of Adjusted     $  34,742 $  14.93   $  32,294 $   15.68
EBITDA



SOURCE Harvest Natural Resources, Inc.
 
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